Title Companies

Title Companies

When facilitating/negotiating a Short Sale, the importance of picking a Title Company cannot be understated. There are many vital factors to consider when making the decision of who to work with, including responsiveness, customer service, and knowledge of the Short Sale process. Since Short Sales are very cumbersome & unpredictable, the Title Company you choose can make or break the deal.

The first thing to consider when choosing a Title Company is their responsiveness.  One of the first steps when tackling a Short Sale is to order a title search on the Property.  Since the Homeowner is undoubtedly facing a hardship, and there is most likely a foreclosure auction date posted, time & patience are your enemy. As such, it is absolutely imperative that your Title Company realizes the inherent urgent nature of the title search, and completes it as fast as possible.  Many Title Companies either do not deal with Short Sales, or experience very low Short Sale volume; and as a consequence, will take up to twice the amount of time generating the needed documents.

Furthermore, the responsiveness of the Title Company will directly impact the Short Sale progress by way of HUD1 changes & updates.  Each lienholder on Title will have different rules, guidelines, and stipulations for the HUD1 that must be met in order to allow the Short Sale.  Some guidelines are relatively minor, such as specific wording, but there are also major rules that pertain to HUD1 structure, Title fees, subordinate lien payoff amounts, etc. As you are making your way through the Short Sale process, there will be roughly 5 or 6 versions of the HUD1, so an unresponsive Title Company can accumulate weeks of unnecessary delay.

Another factor to consider when choosing a Title Company to work with is their customer service, and willingness to go the extra mile.  This is especially important during the closing phase, since the banks have very strict timeframes but poor response times.  It is a relatively common occurrence in Short Sales to have a small window for closing, and because of this, it is even more necessary to “babysit” the transaction during this time.  More often than not, Buyer’s lenders cannot perform final inspections, appraisals, etc. until the Short Sale approval letter is issued.  Combine this with the small window for closing, means that sometimes final Buyer lender figures are not received until the very last minute.  Additionally, because the Bank requires the final closing HUD1 ≥ 48hrs prior to closing, it is very common to be scrambling late in to the night, finalizing fees & documents.  A good Title Company will realize the time sensitive deadlines, go the extra mile, and assist the transaction as needed, even during their personal time!  A bad Title Company will only work the standard 9-5, and will not recognize the urgency of the request, greatly increasing the risk of Short Sale failure.

Lastly, choosing a Title Company that deals with Short Sales on a regular basis, or has in-depth knowledge of the Short Sale process is extremely crucial. As previously mentioned, many Title Companies do not deal with Short Sales, or have very little experience dealing with them.  Among other things, Title Companies that are not familiar with Short Sales or the process will take up to twice the amount of time as other Title Companies generating needed documents. Additionally, Banks are exceptionally picky & stringent on how the HUD1 needs to be structured & worded, so a significant amount of time can be saved by having a Title Company that knows these requirements.  There are also many fees & closing costs that Short Sale Banks typically will not agree to pay, so a good Title Company will know to preempt the Bank & structure the HUD1 accordingly from the beginning!

In this same vein, all Banks will have Short Sale program/bank/investor specific documents that will need to be signed at closing, and not all Title Companies know exactly how or why these closing documents must be executed.  After all, many Bank specific documents are redundant with the Purchase Contract, Listing Contract, and their addenda.  However, while these documents are seemingly pointless, the Short Sale can & will fail if they are not fully executed. Indeed, as it is not uncommon to be scrambling after closing, getting Bank specific documents signed, due to an inefficient or inexperienced Title Company.

The Title Company is an essential cog in the Short Sale machine. They can make or break the deal with very little ease, due to response times, customer service, and knowledge of the Short Sale process. A bad Title Company can/will cause undue stress, waste time, and prepare insufficient HUD1s; ultimately putting the Short Sale in jeopardy.  A good Title Company, on the other hand, will be the exact opposite.  They will respond to requests promptly, go the extra mile, and have extensive experience in closing Short Sales; consequently becoming an integral partner & team mate to ensure the best chance for success!