How you hold title will have a significant impact on the escrow process.
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| You must know how you want to hold title BEFORE we submit offers. Many banks will shut a deal down if the name is changed OR if the title needs to be held in an LLC. We also have to be aware of your marital status. Even if you haven't seen your husband in 20 years, he will get half of your property if you didn't get a divorce. Trying to hide a spouse is futile as title companies research names before closing. We lose a deal a year because some mysterious spouse pops up on title radar. If you have questions about holding title, ask us BEFORE we start submitting offers. |
It's important to understand what the seller / listing agent process looks like.
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| Listing agents accumulate about 20 offers before they send the top 3 or 4 to the bank. The bottom 4 offers are thrown in the garbage because the agent who made the offer didn't include proof of funds or the contract was "dirty" - too many weird contingencies. The bank (aka asset manager) will respond to these between 2 hours and 2 weeks. There is no consistent response time. If you put in 6 offers, you will get a response to each offer about every other day. Your last offer will be dead in about 2 weeks. |
The hardest decision you will make is when the bank accepts your offer.
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| The accepted offer is very rarely your favorite property. In fact, less than 5% of the time does an investor get their favorite property. We have seen investors hold out and throw properties away because they were waiting on their favorite property to get accepted. They often get their favorite property rejected and have to start the process all over again. NOTE: We will let you make this mistake just once. After that, you willl have to find another company. We have discovered that investors who can't make a decision become a liabilty later on. |
Stand by for a fire drill after you go hunting. DO NOT GO ON VACATION.
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| Nothing will happen for days and then, BAM, the bank will require us to sign several 8 page docuements, wire money, stand on one leg and bark like a dog. This is a major fire drill that many investors aren't familiar with and must be done immediately. You will complain because you will have to drop everything you are doing and run around town to complete this fire drill. This is pure pain and there is no way to avoid it unless you give us limited power of attorney. If you are on a cruise or drinking a margarita in Mexico when your offer is accepted we will probably have to start all over. |
Invest in a high capacity printer / scanner / fax machine.
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| About every 2 months, an investor loses a deal because they don't have the ability to send a 20 page document back via a fax or scanner. Amazingly, these investors lose deals even after we warned them a million times that they need to able to turn documents around quickly. Isn't that crazy? These people spent all that time and money looking for properties and then lose all that effort because they didn't invest in a $150 printer / fax machine. |
Line up any legal advice in advance if you want them to review contracts.
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| You will have about 24 hours to read and digest about 40 pages of content. Any accepted offer will include a 20 page addendum that is difficult to read and includes so many disclaimers it makes you wonder why we even start with a 11 page offer. The good news is that most counter offers are focused on process - not price. The bad news is that you have 24 hours to eat that addendum and run to the bank to wire money. If you want someone to read this stuff, make sure they are available for your fire drill. If you want to see a sample contract or addendum, we will be happy to provide you one before you go hunting. |
While you are in escrow, there is a ton of activity so stay in touch.
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| You can make a full month's income by deciding in advance what you want to do with your property. Now is the time to review your property management options and to get estimates for repairs. This chart below gives you an idea of the sequence of events. |
| Cash Timeline (most cash offers close in 20 days unless there is a title issue) |
| Day 1 |
Day 2 |
Day 3 |
Day 4 |
Day 5 |
Day 6 |
Day 7 |
Day 8 |
Day 9 |
Day 10 |
Day 11 |
Day 12 |
Day 13 |
Day 14 |
Day 15 |
Day 16 |
Day 17 |
Day 18 |
Day 19 |
Day 20 |
| Offer Accepted |
Funds Wired |
Inspection |
Property Approved |
Advertising Approved |
Estimates Approved |
Title Reviewed |
HOA Docs Received |
Disclosures Completed |
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Settlement Statement Approved |
Funds Wired |
Walk through |
Property Recorded |
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| Loan Timeline - Note: If you have "A" paper, there will be drama and panic about day 30. |
| Day 1 |
Day 2 |
Day 3 |
Day 4 |
Day 5 |
Day 6 |
Day 7 |
Day 8 |
Day 9 |
Day 10 |
Days 11-28 |
Days 29-31 |
Day 34 |
Day 34 |
Day 35 |
| Offer Accepted |
Funds Wired |
Inspection |
Property Approved |
Advertising Approved |
Estimates Approved |
Title Reviewed |
HOA Docs Received |
Disclosures Completed |
Appraisal Completed |
Loan Processed |
Loan Drama |
Panic |
More Drama |
Property Recorded |
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Did we mention that you need to stay in touch?
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| If you go MIA during the escrow process, you will lose your earnest money deposit and have to start over. It's ok to go on vacation for a couple of days in the middle as long as you can check email or text once a day. If you are not available the last few days, let us know so we can move the close of escrow date to accomodate you. You will have to wire the balance of funds 3 days before closing. |
Turn utilities on the day you close.
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| Electricty and water must be on to start repairs. Gas has to be turned on if we are repairing a gas related problem. If you are not a US citizen, this can be a major hassle. We charge $100 to manage your utilities if you want us to do it for you. Keep in mind that every day after you close will cost you at least $40/day in opportunity lost in placing a tenant. The clock is ticking and you are eating money every day utilities are not on. |