Host Mike DelPrete sits down with Chicago Title Agency’s DiAnna Jackman to do a deep-dive into the escrow process. Both Mike and DiAnna will walk you through the escrow process from start to finish – answering the questions you have as well as the questions you didn’t know you needed answering!
Mike DelPrete: 00:10 Alright, so I’m especially excited to be here today because we’re with DiAnna Jackman, Chicago title, who I did my first handful of deals with and she showed me the ropes and it was great, so thank you for being here, DiAnna. Thanks for having me. Today we’re going to talk about the escrow process, very basics of escrow so you can get a better understanding how it works when you get started. So tell us about yourself, DiAnna, and a little bit about Chicago title.
DiAnna Jackman: 00:40 Well, I’ve been with Chicago title for almost 30 years. I did start as an escrow officer and not my specialty was investor transactions and so that gave me a wealth of knowledge on how to clear title and help process unusual types of transactions. So I am currently now the Escrow operations manager for Chicago title and I managed the escrow staff and help to train them and make sure the transactions get through smoothly and appropriately.
Mike DelPrete: 01:09 Awesome. And I remember when I first started walking into his office over, it was the 101 and Raintree area.
DiAnna Jackman: 01:15 Exactly, Yeah.
Mike DelPrete: 01:16 Huge office. Super intimidated. I was like, I remember the first thing she taught me, never signed a contract with red pen.
DiAnna Jackman: 01:22 Exactly.
Mike DelPrete: 01:25 To this day. I always make sure I have to look. You got a black pen on me right here. So I’m so for everyone out there what, explain what is escrow.
DiAnna Jackman: 01:35 So people get very confused about the difference between escrow and title. So escrow is the function where we hold the funds, so we do have a fiduciary responsibility to make sure that all the monies that are received into our escrow accounts or a trust accounts are safely held and utilized only by the instructions of the parties to the contract. And that would be the buyer and the seller. Um, so that portion of what we do is, um, sometimes monitored by the Department of financial institutions, very heavily monitored by our state, local and federal regulatory, um, companies. And then the title side is regulated by the Department of Insurance. So we have lots of rules and regulations. So when I’m wagging my finger at you and telling you to do things a different way to make sure that you’re not getting yourself, your clients or anyone else in trouble, it’s because of those rules and regulations and they’re put in place to protect, you know, um, all of us to making sure that nobody’s a having a hard time up there. So, um, the title side that’s governed by the Department of Insurance, that is where you get the title insurance that guarantees once you buy that property, you’re going to have absolutely no issues when you go to sell, no one’s going to come up and place a claim to that title.
Mike DelPrete: 02:56 Perfect. So on the investors side of that, we want to close the deal. We want it done fast and quick. Simple, no problem. So when Diana says, hey guys, you got to do this, or you gotta get me this sign where you got to get this document. It’s for a reason. She’s is on your team. They’re looking at, like she said, she’s looking for all parties. So don’t get frustrated. Just follow the process and listened to her and it will workout. Also, when you said instructions, that meaning seller contract, buyer contract or or or everything in the agreement is your instructions to follow.
DiAnna Jackman: 03:33 Exactly. The contract is what we utilize as the instructions to our escrow, so we need to make sure that everything in that contract is going to make sense to the escrow brain, to the buyer brain, to the seller brain. An investor deal is a very different animal because you have to make sure everyone within the transaction feels very comfortable because they may not be working with an agent, a real estate agent. It may just be, you know, all of you coming together at the kitchen table and deciding, hey, this is the right price. We want to move forward so we need to make sure that everyone feels comfortable within the transaction and understands completely what they’re signing so that there’s no issues at the end of the transaction that come up to a haunt anyone.
Mike DelPrete: 04:15 And speaking of transaction on a normal investor deal, cash, hard money. Um, how long does that take?
DiAnna Jackman: 04:21 Well, the title company would like it to take us 30 days, but typically an investor transaction is going to go anywhere from one to five if we’re lucky 10 days, depending on what type of title clearance. So how, um, how much work we have to do to make sure that that property has a clean title for sale.
Mike DelPrete: 04:44 So if you’re talking to a seller that may be in a rush or you’re wholesaling a property, so top, call the title company. Call Your escrow agent and ask them how long they can get the deal done because you can definitely get, like she said, one day you can tell someone, hey, I’ll buy your house in 24 hours, but you don’t want to mislead the seller. So call your agent, see if they’re busy. Sometimes. What is it at the end of the month, you guys have a lot of retail sales closing. So I’m definitely reach out to your agent. Communication is very important.
DiAnna Jackman: 05:12 The other thing that’s really important to investors is how much it’s going to cost you. So sometimes if you close a transaction in less than a certain number of days, some title companies have escrow filed rates, which they have to follow up for the Department of financial institutions that there will be an additional charge for that. Some do, some don’t. So always ask the question, you know, how much estimate do you think this is going to cost me? And you know, what’s, how fast can you close this? They can take a cursory look at the title chain for you to see if there’s gonna be anything there haunting you. Um, so that you know, the timeline in which you need. So if they take a peek and it looks pretty clean, you could say, yeah, we can maybe do this in three to five days. If there’s bankruptcies judgments, three payoffs, you know, a bunch of different things that might need to be cleaned up. You may want to ask the seller, you know, hey, you’ve got to give me clear title. So we’re going to need to take a little bit of extra time depending on how you’re working the transaction. Some investors take subject to those items-
Mike DelPrete: 06:12 And that would be within an addendum. And do – does the investor create the addendum or do you help out with that or can you provide a document?
DiAnna Jackman: 06:19 If both parties direct title to do, um, escrow instructions in lieu of a contract or escrow addendums, we can facilitate that because you’re not working with a real estate agent. If you’re working with a real estate agent, they should probably check with their broker to see what the preferred method is to do that. But with, with like we said, we take instruction from both parties. So both parties are instructing us to create an addendum via escrow instruction. We will do that for you.
Mike DelPrete: 06:48 Perfect. You remember that? They’re there to help. So you mentioned a couple of things. I’m liens judgments and all those fun things. Um, okay, first I’ll take it back to, with the importance of going to a title company, like how, why is that so important?
DiAnna Jackman: 07:05 I can give you a very specific example. Um, if you, there’s a lot of times where people will go ahead and close the transaction, just hand over a deed and take it over. Um, and then you as the investor who just put money into the property, you’ve maybe fixed it up a little bit, you’ve maybe done those things and then you go to sell it and realize, oh, there was a judgment lean against that seller and now I have to get that cleared up. Oh, but the seller move to Mexico. So now I’m not going to be able to get that cleared up. Now what am I going to do? It’s going to cost you time. Time is money and it might actually cost you an attorney fee. Things like that to get that title cleaned up when you purchase title insurance, which is such a small amount, especially, um, in the price point that investors typically play in it really for let’s say $557 is our, is our low rate.
DiAnna Jackman: 07:59 That doesn’t include the investor discount, but to ultimately have a judgment pop up for, you know, $30,000. I’d rather pay the $500, make sure that it’s, it’s clear title insured, and if there’s any issues, then you can have the title company as a fall back. We recently had a client that purchased a property and in every title policy there is a fraud clause. The deed that was of record, was fraudulently created. They purchased this property for a million dollars and they are now coming back on the policy because the person who actually owns the property has come forward and said, hey, this is my property, what are you doing? And so now they, um, you know, they have at least the policy. So they’re going to get that policy amount back.
Mike DelPrete: 08:50 Yeah, that’s scary stuff. I have an example where, um, yeah, so when call off craigslist, when we’re always hunting for deals and this guy was wanting to sell me this house, once we got to escrow, we sign all the contracts. Everything was photoshopped and everything he provided that you guys, now you guys – your company – but the company at the time requested was all for it.
DiAnna Jackman: 09:09 That’s the other thing. Yeah. When working in investment properties, you have to be really careful of. There are a lot of, you know, not so friendly people out there, especially in transient states like Arizona. Um, there’s not a lot of people that, if you’ve noticed that are from Arizona, so, um, there, there’s a higher rate of fraud that happens in states like that. So you just have to be very careful that you’re acting appropriately so that you can continue to grow your business and be known as a good player in the industry and that your working with a good title company, a good attorney, all of these different partners so that you can make sure that you’re protecting your interest, which at the end of the day, this is your business and you’re in it to make money. You certainly don’t want to be going out of pocket for all of these pretty large expenses that can come up.
Mike DelPrete: 09:57 And these are all your partners on your real estate team. That lawyers, accountants, title companies. Like some red flags I’ve heard it a calling the sellers, hey look, let’s just go down downtown and do a quitclaim and bring some. Bring a cashiers check, bring, bring out, bring cash. So these are red flags if someone encourages that action and AZREIA is big on, is doing your own due diligence, protecting yourself. So use your team members, um, that are out there. So those, those are definitely some of the pitfalls.
DiAnna Jackman: 10:25 Well, I’m glad you brought up quitclaim deeds because there’s a lot of things that will happen when you’re doing a real estate transactions where title companies may say that certain things are illegal or not allowed assignments, which I’m sure we’re gonna get into in a minute. Quitclaim deeds is one of those things that title companies shy away from because there’s different types of deeds. A warranty deed is going to cover the chain of title all the way back and give some warranties from the seller to say, this title chain is, is great all the way from the beginning. A special warranty deed is going to guarantee that this title is great from the time I owned it to the time I’m giving it to you. And a quitclaim deed is basically like, Hey, I’m out of here. I’m giving no warranties to this title chain and so title companies just do not like to title insure them, so you would have a hard time getting that title insured, um, when you were going to sell or you’d have to jump through a lot of hoops and again, expenses to get that title insurance in place if you don’t make sure that the property was given to you in such a way that it’s titled Insurable.
Mike DelPrete: 11:25 Perfect. So we, we’ve done our research, we’re at the title company. Uh, we got our contracts, we got all our feelings on paper, we bring it to DiAnna. There’s something called EMD, earnest money deposit. So what’s the, why do we use the earnest money deposit?
DiAnna Jackman: 11:42 Earnest money is to sort of give an act of good faith to the seller saying, Hey, I’m going to buy this and here’s a little bit of money to secure and make you feel like this is going to happen. Earnest money as far as title companies, title companies will say they require it because they want to cover any costs that they incur to do that transaction. Should it not close, however, it’s not a requirement of it. It’s not a legal requirement for the title company. It might be a business requirement, it may not be a requirement of the seller, but it’s a nice act of good faith to say, Hey, I’m legitimate, here’s my money. And there’s a lot of contingencies within that contract that if you don’t watch out for that earnest money would then be given to the seller if you did not close.
Mike DelPrete: 12:27 So for instance, if you’re an investor and you put a, an inspection period, right? So if you do not back out before your inspection period is over, they, the seller gets to keep the money.
DiAnna Jackman: 12:40 Exactly.
Mike DelPrete: 12:41 Um, if you do it ah – yeah – if you do it before then you’re, you’re okay. Depending what the contract says, then you can get your deposit back. Um, what about contracts? I’m sure you get a lot of calls as a new investor. What kind of contracts do you have? Contracts you can supply. Um, I don’t know where to get one. So how do you handle that question?
DiAnna Jackman: 13:00 Well, I’m the Arizona contract, the AAR contract. That is the Arizona realtors contract, so unless you hold your license, you really should not be using that contract unless you’ve either gotten permission from them or purchased a contract or done something like that. That is typically just for realtors that have their license. A lot of investors use what I call a muted contract, which is basically just a word document that they in their attorney have created… they’ll usually have two versions, one for when they’re buying and one for when they’re selling because they’re going to have different requirements to protect them in different ways. So, um, those are, are all over the place. If you go to AZREIA, you can talk to your fellow investors, they share them with each other all the time. We don’t create contracts at the title company. However, in the state of Arizona, if you instruct us accordingly, we can create escrow instructions in lieu of a contract which are just as binding and just as secure. Um, but again, we would need that direction to come from both sides. And we have a little form that’s sent out that’s got a questionnaire. It has all the information we need, they send it back and we create the instructions that are signed off on by both parties that are used in lieu of the contract.
Mike DelPrete: 14:12 Perfect. I remember, um, I had one of my first deals, I downloaded the contract to wholesale a property on online and um, I remember negotiating with the buyer of the property and to buy the Condo I was going to sell and she was like, you’re going to pay the title insurance contracts says, of course I didn’t, you know, what title insurance was, you know, so definitely educate yourself. I think I lost like, was it five, 600 bucks on that deal? But it was a great learning lesson. So definitely have someone look over your contracts and get it from the right sources.
DiAnna Jackman: 14:44 That’s a great point. And that’s my number one point for new investors when you are buying, if you aren’t using your own contract and you’re using someone else’s contract or you’re buying a wholesale contract, um, and taking an assignment which we’re going to get into in a minute, you need to read through that entire document and make sure you understand what you were signing off on because that kind of legally binds you to do everything the contract is indicating. And sometimes there’s weird language in there like that your earnest money, you’re depositing goes hard, which means is nonrefundable and to be immediately released to the seller. So you just have to read through all of the requirements there to make sure that you want to be doing what it’s asking you to do.
Mike DelPrete: 15:27 Yeah. Because there’s so many different types of investors and they may have spent the money to them to share the agreement or contract with you, but they may have, they have it worded for their strategy so it just might not fit here. So definitely look into contracts and that leads us to assignments. So give us a little insight on what an assignment is.
DiAnna Jackman: 15:46 So an assignment is basically where, um, there’s two parties to a purchase contract, there is a buyer and a seller, so the buyer typically will have the right to sell that purchase contract, the interest in the contract itself, instead of taking it over, they’ll sell it to an end buyer so that, that end buyer then can take the property and purchase it, uh, under the original purchase contract. So that again, you want to read through the entire assignment which has all the terms and conditions between you and the original buyer as well as the original purchase contract, which are all the terms between the original buyer and the seller. So you want to be very careful so you can purchase a contract, um, from someone who’s already secured it by the seller and maybe, you know, pay them an assignment fee anywhere. I’ve seen them anywhere from $500 to actually $0. If someone realizes they just don’t want to deal with it anywhere from $0 all the way up to-
Mike DelPrete: 16:48 What’s your biggest – biggest assignment you’ve ever seen?
DiAnna Jackman: 16:51 Well, because we do commercial, so the biggest one I’ve ever seen was 5 million.
Mike DelPrete: 16:55 Wow. That’s awesome.
DiAnna Jackman: 16:58 It was definitely something we were having our legal department go over sample. It’s amazing. You know, they say to you, you know, a lot of title companies will say that if it’s over 20 percent of the value, they’re not going to handle the transaction. That’s not necessarily true of all companies. It really, each transaction stands on its own legs. So if someone hasn’t been able to do it in the past doesn’t mean they’re not going to be able to do it in the future. You have to remember with title insurance, um, it’s, it’s a liability game. So we just need to make sure that we’re getting to a comfort level that we feel that there’s no fraud being involved, that it is titled Insurable and that all parties are in agreement to the transaction. So – yeah.
Mike DelPrete: 17:41 You guys provided a- I think I may have got- I think to this day I still use an assignment contract provided by Chicago title. So can you guys provide that?
DiAnna Jackman: 17:49 Again – any, anything that we’re instructed mutually by the parties, we typically will have things, especially if we’re the ones creating the escrow instructions, we have disclosure forms, certainly when you’re talking about it as assignment, um, don’t think that you can sneakily assign that contract because the disclosures that are going to be made to all parties by your title company and that should be, you know, across the board. So-
Mike DelPrete: 18:16 Good point. So when you close the property, either everything’s on the hood, on the settlement, see me, the seller, the buyer, everyone’s going to see, uh, your fee, which should be discussed in open anyway as well as um, what else happened? So everyone sees everything. Yeah, it’s pretty much-
DiAnna Jackman: 18:31 Yeah, the settlement statement as a full disclosure statement. So everything that’s happening within that transaction is going to be disclosed on the settlement statement. That includes the assignment fee. Um, so people have tried to do things in different ways to hide the assignment fee, but typically if your doing a, a good negotiation with your seller, they’re getting what they want for the property. You’re getting what you want for the property and the end buyers getting what they want. You’re going to have no issues throughout that transaction and that’s all about really good communication with all of the parties, so don’t try to hide anything. It’s not really worth it in the end.
Mike DelPrete: 19:04 Is it important that- do you have to give your original contract with the seller to the buyer?
DiAnna Jackman: 19:11 Yes. I have not seen an assignment yet. Even ones created in word form from investors that do not say that the buyer is agreeing the assignee is agreeing to all of the terms of the original contract, so you should be getting that. Absolutely. Lot of times newer investors get confused and think that the assignment is their contract, but the assignment is just the agreement between the assignor in the assignee. On price for purchasing the contract, so you still have to close on the original contract with all of its terms and conditions, so you should be familiar with what those terms and conditions are and be ready to perform on that underlying contract.
Mike DelPrete: 19:53 And we mentioned settlement statements, so when I first saw that document, you know, being new to the business, you see bunch of numbers, right? It’s intimidating. You’re like all these zeros and everything’s all over the place and you just want to get the deal done. So we’re okay. That’s close to what I thought. And you might sign it, you know, I don’t recommend that. Um, so would you, would you someone at the title company help them understand a settlement statement? We’re all the funds go why they’re where they are at.
DiAnna Jackman: 20:19 Correct when people come in for their signing, your escrow officers should be going through the line items with you so that you can make sure everything you agreed upon within the contract is being disclosed on the settlement statement. You have to remember your escrow officer is a human being. She makes mistakes or he makes mistakes. Um, so you are the absolute. And this is your money. So you want to be reviewing everything that you put your signature too. And that especially includes the settlement statement because it has to do with the money. That’s the money piece.
Mike DelPrete: 20:48 Especially if you have a buyer coming in and paying all closing costs, which you see often in the investment world, sometimes they don’t get split or they don’t get pushed over onto the right side. So you want to be able to catch that and really understand the settlement statement.
DiAnna Jackman: 21:00 And it’s common practice in the state of Arizona. Most title companies have an investor discount. So, um, you also want to double check that the investor discount has been given to you. Some title companies may ask you to sign off on a form that says that you are an investor and that’s how you earn your living. Some title companies want to see that you’ve done a certain number of transactions. So it just depends on the situation. So always ask for whatever discounts are available to you because the title companies aren’t just going to automatically give those up. They typically wait for you to say, Hey, did I get that? So, um, you, you want to make sure, again, that all the numbers are jiving with what you, with what you want to happen.
Mike DelPrete: 21:40 Back to due diligence. This is your business. So pay attention to your numbers. You mentioned in addition to assignment, there’s also a double closing simultaneous closes. I remember not too long, a few months ago now, a year ago, I just went to a new title company, which I normally don’t do that often, but the seller was really requesting it. So I have my simple prequalification questions. Hey, do you do assignments? Do you work with investors? Do you double close? Yes, yes, yes. Oh Great. Great. So, uh, called me in for signing. So it was a double close scenario. And what time do you want to come in, Michael? Three o’clock. That’s fine. And Are you going to be bringing in a wire, a cashier for your phones? Cashier’s check. What do you mean? This is a double close. We’re taking the funds from the buyer to close on my transaction in the whole process. No, no, no. You have to bring the money in. So there was a, there was a hiccup there where I wanted to use the buyer’s funds where they say, no, we’ll double close. Just we’re going to close with you first and then we’re going to close with the buyer. So let’s talk about double closing.
DiAnna Jackman: 22:47 Yeah. Every title company has their different rules and regulations. Um, you know, most title companies shy away from simultaneous closings because there were a lot of fraudulent transactions that happened many years ago. Um, it’s really been cleaned up nowadays, so title companies are getting a little bit more investor friendly. We like the fact that you’re stimulating our economy here in Arizona, you know, so we want to try and, and uh, and be a part of that. Um, but so a double closing is instead of an assignment where you would purchase the contract, you would actually sign a purchase contract with the buyer. They don’t currently own the property. They’re in a contract with the owner of the property to sell it. And then the equity in that contract allows them to go into contract with their end buyer A-B, right? So that’s number one, A and B seller in investor.
DiAnna Jackman: 23:48 Correct.
Mike DelPrete: 23:49 Then B-C.
DiAnna Jackman: 23:50 Investor to end buyer. So there’s two different ways that you can facilitate that transaction. When you talk about double closes, simultaneous close, I think I may have invented that word because there are actually a double close just simply means that two closings are going to happen on the same or or near date prior to the owner of the property being in the title chain, so that’s what a title company considers it a double close. I add the simultaneous on it. If the end buyer plans on funding the first transaction so you can conceivably close on the first file and then close on the second file using the investor’s money for the first and the end buyers for the second. Not a lot of people like to do that because who wants to go to out of pocket money if they don’t have to, but sometimes there’s requirements.
DiAnna Jackman: 24:44 If there’s a hard money lender on the end that says, you know what, we will allow you to double close but we won’t let you use our money to buy that. You’ve got to close and then close over here. We’ll try to do it the same day or the next day, and that will be a requirement by maybe a hard money lender. No conventional lender is going to allow a double close or a simultaneous close. There are some lenders that have their own money that will allow it. Um, but you just have to find, again, that’s one of your partners. You’re going to find either a hard money lender, a lender that will allow these types of, um, you know, different transactions. So the simultaneous close, what you’re going to have happen is you’re going to be signing a disclosure on the upfront that says this is a double closing.
DiAnna Jackman: 25:28 Then you’re going to sign a disclosure on the back end that has to be signed by all parties. So that says, you know, this is the sale acquisition over here, sale over here. And then the lender would also have to sign off on that secondary if there’s a lender involved. That simply says we are allowing these monies to be released before we’re in a position to title insure the property, which is a scary document for anyone to sign, let alone a lender. So that’s why it’s, it’s difficult to do those types of transactions with a lender unless it’s a hard money lender that’s familiar with those different types of transactions. So there are some lenders that might fund it. Yes, there are some hard money lenders out there that will allow simultaneous closings. You just have to, you know, get with that partner. Um, and, and they will because they’re aware of how the transactions work.
DiAnna Jackman: 26:22 Some hard money lenders will say, Hey, I’ll do this if both transactions are at the same title company, but I won’t if your first transaction, is it title company a and your second is that the title company B. So, um, there’s lots of different ways around it, but the number one thing to realize within the double close comparatively to the assignment, which is my preferred way because it’s full disclosure, everybody’s aware and you don’t have to go into title and you don’t have to pay any fees, you just get an assignment based. So I think that’s the best vehicle for these types of different transactions. But the double close, unlike the assignment, those transactions are wholly separate, so no disclosures would be made except for the fact that it is a double close. So it would be a very responsible act for you to be very communicative in this transaction to make sure everybody’s feeling comfortable because the disclosures are not going, not as many disclosures are going to be made. So on the double closes, the, the disclosures are going to be less and you’re going to have two separate transaction. There’s going to be double. So double the cost-
Mike DelPrete: 27:36 Budget that there’s going to be a closing on the AB leg as well as the BC. And it’s up to how you negotiate it, who covers how much in what
DiAnna Jackman: 27:44 And the one thing you do need to bring up to your title company when you’re doing a double close is ask them about their hold open policy because that will save you a lot of money on the title insurance. That would be my one recommendation if you choose to go that route. But again my preferred would be the assignment. It’s quick, it’s easy, it’s less expensive and you never have to even be put into title on the property.
Mike DelPrete: 28:06 So when they open up the AB side asks for the whole open is, is that what you’re saying?
DiAnna Jackman: 28:12 Exactly.
Mike DelPrete: 28:12 Cool. So when you close on the set, so it does it save you costs or what does that mean?
DiAnna Jackman: 28:16 It does. You only have to pay the difference in liability. And so let’s say AB side is 150,000 the BC side. You’re selling for 250,000. You’re only gonna pay title insurance on 100,000 instead of 250,000. So it does save you money.
Mike DelPrete: 28:36 Awesome. Perfect. And what does- so if you do a double close or standard closing as a new investor, what do I bring the title? Do I bring paper pen?
DiAnna Jackman: 28:45 Just remember when you’re working with your escrow officer, the more information communication communication, just like when you’re working with your clients is key. So when you, they’re going to need obviously the contract, number one, they’re going to need the contact information for all the parties to the transaction. Um, and they’re gonna want to know what’s your communication style? Do you prefer to be communicated via email, phone call, text? What is your preferred communication? And better yet, what is your client, who’s maybe the seller or the buyer? What is their preferred communication? These are typically questions that the real estate agent knows just right off the top, that this is what the title company is going to need. But those are the most important things, um, that the title company is going to be looking for from you in the very beginning. Once the title commitment comes in, then you can let you know, sort of let them lead the charge there. There are going to be asking for a bunch of different things from you, but to speed the process up, communication is the way to get that transaction done the quickest. So contact information for everyone in the best way to communicate with them would be great.
Mike DelPrete: 29:53 When the commitment comes in and there are some liens and judgements, can the investor negotiate those? Have you seen someone negotiate liens down or judgments?
DiAnna Jackman: 30:03 Yes. Um, so one of the typical ones would be, you know, if there’s a judgment lien, um, then against the seller, the seller can contact and negotiate that down the title company because they do not hold a real estate license. They should not be negotiating items for the other party. And you as a buyer, unless you hold your real estate license, should not be negotiating short sales or anything like that for that seller. But you can work with the seller, the seller can do it themselves so you can work with this conversation with them.
Mike DelPrete: 30:38 And I, I had this situation where the leads are judgements popped up on a, on a property in the title company already requested the payoff. So when we had the discussion with the seller, they call them, they’re like, they wouldn’t negotiate because like, Oh, you’re selling the house, we don’t need to negotiate. So-
DiAnna Jackman: 30:54 And this comes up again, your partners make a big difference because our, at our title company at Chicago title, we do not contact judgment creditors because that is up for the seller to tell us to do. So we would have to actually had the seller sign off on a form that says we can contact these people because we don’t know if that judgment is about to drop off because they only last for a certain period of time, seven years, let’s say for sake of a number and we’re three days out from that seven days and the seller wanted to just sort of wait for that to drop off and we’ve now contacted them. That contact could conceivably extend the statute on that, another time period. So we have to get that written permission in order to do it and we have to check with the seller to see what do you want to do with this Judgment Lien?
DiAnna Jackman: 31:44 Is this yours? We have them fill out a whole form to see is this yours, you know, are you, you know, they could be talking to their attorney and wanting to because they’ve lived on the property and wanting to exempt it via the homestead exemption. So there’s all sorts of different things the seller could be thinking of doing with this if we just jump in and do it on our own because we know the attorney or we think we can do it and we’re going to speed things up and look like the hero. No. So again, good partners make a big difference in your business.
Mike DelPrete: 32:15 And can- if we weren’t going to go into the escrow process yet, or we just had a property as an investor, can we buy a settlement statement from you on her own or buy the, the research? What about opening escrow. Let’s say I just wanted to get the prelim, the prelims in. And that opened up rest score.
DiAnna Jackman: 32:33 Oh yeah, if you own the property, you can request a search on the property at any time. So we give you a full search in the property and the cost of that search would go towards, um, any closing costs that you, you know, your title, policy, premium, um, when you’re going to close so that you can order that at any time if you know that you’re thinking about possibly selling a property and you think there might be something sneaking around out there. A lot of title companies will have a property research department that can look and see what liens are on the property and they’ll give you that information sometimes for free. However, if you want a full search judgment search, uh, you know, the general index, we go and we searched to see – is there a judgment lien from any government agencies, you know, did you borrow your sister’s dress 100 years ago? And she placed a judgment against you and we got to clear it up. Those things that are not of, of a record with Maricopa county, you won’t be able to see without pulling a judgment search. And those are the sneaky things that always caused the delay. So running a full search is highly recommended. If you think there’s something out there.
Mike DelPrete: 33:40 Alright. And um, let’s see, what about scheduling, you know, we got, we, we went through the whole process. Do you schedule- who schedules the sellers and the buyers and do I do people ask. Oh, are they the sign at the same time? I don’t know. You know, people get nervous about things. So how, how’s the closing- the signing go?
DiAnna Jackman: 33:59 The signing is going to happen completely separate of each other. The buyer and the sellers don’t have to be present, but they can be. It’s really up to the party’s needs. A lot of documents can be executed before signing, but before closing. So, um, you don’t have to come in the day of closing and sign all your documents and then we record. We prefer to do as much upfront as possible. So typically your escrow officer is going to wait until she’s in a position to close to set the signing. But don’t be afraid to ask if you know you’re going out of town. Again, communication, if you know you’re going to be out of town or your seller is going to be out of town, make sure you let the title company know so that they can make, um, you know, any kind of effort to get everything possible signed.
DiAnna Jackman: 34:42 A lot of documents these days can be signed via docusign. Signed and faxed in. Um, when you’re talking about a cash transaction or a hard money loan, things like that. There are certain documents that don’t need to be notarized. Only the documents that need to be notarized and be recorded are documents, we need what’s called wet signatures on it. It’s really convenient these days. I mean, it’s easy peasy. Lots of times people don’t even come into the office. We’re kind of like lonely now at the title companies, everybody’s signing docusign and with notaries at their home and things like that. So they make all sorts of accommodations as long as that communication has been made to the escrow officer.
Mike DelPrete: 35:24 So we can come into the closing if we’d like, we can do docusign, I’m set for certain documents would be wet signatures over thosecan be made happen. We could also order a mobile notary to come out to your house or your place of business. Um, I’d even you guys even coordinated a signings with mobile notaries in different states. How do you guys do that? Is there just like another Chicago titles everywhere or-
DiAnna Jackman: 35:48 We own a signing service that’s national, but there’s many other signing services that are national that are also approved notaries for our company. So if you do need to have a signing out of state or somewhere other than in the office, making the escrow officer aware upfront is a great idea because we can pretty much accommodate. We’ve had people sign in other countries, so, um, and there are different rules and regulations for that. So if you know that someone’s going to be out of the country, make sure, again, you let us know way ahead of time so that we can accommodate for that.
Mike DelPrete: 36:22 And I had that scenario where the, there’s two sellers on the title, one was in jail in here in Florence and the second one was in Mexico City. So we had to go to-
DiAnna Jackman: 36:34 Probably the jail one was easier, right? Because they have notaries on staff.
Mike DelPrete: 36:39 Yes a notary on staff, you have to go through the proper channels and be persistent. But um, and then we had the lady in a Mexico City had to go to the embassy.
DiAnna Jackman: 36:47 Yes. And Mexico City is closer to the border. So there have been people that like meet a notary or us notary just across the border and sign at the border station. So there’s lots of different ways to do it if we know ahead of time how to, how to accommodate for that and it, you know, um, there’s- I mean we could go on and on and on with this, but yeah, signing is so easy now. That’s not a worry as long as again, that communication is in place.
Mike DelPrete: 37:14 Yes. Lay it all on the table the table in the beginning, your escrow agent will definitely help you out. Um, so we signed everything. Now want to get paid, right? So, um, what are ways we can get paid?
DiAnna Jackman: 37:25 So once all the documents are executed and we get all the money into our escrow file, then we are given permission by the parties to go ahead and record the transaction. Once the transaction is of record, then we can release the funds. So I just want to take a moment to touch on a huge fraud issue that’s happening right now and that’s wire fraud, cybersecurity. So if you are going to wire money into a title company, you want to make sure that you are picking up that phone and verifying the title companies wire information and not from an email you received from them, but from the original information you received from the other party that’s guiding you to the title company. Look them up online, get their contact information. Call and verify that information because you’re working a lot with cash transactions and the cyber criminals these days. They are so sophisticated. They’ll send an email to you that looks like it’s coming from your escrow officer because your email was hacked or the seller’s email was hacked and they know all the terms of the transaction. They’re going to email you and say, oh, here’s our wire instructions. Go ahead and send your money here. And let’s say your property is $150,000. You wire that money to the cyber criminal and it is gone.
Mike DelPrete: 38:41 So how do we protect ourselves? So do we say get the email and call you?
DiAnna Jackman: 38:45 Yes. Always verbally verify those wire instructions by phone. Always, always. Just be very, very careful about that. So once we do have those monies and we’re going to do the same for you because we don’t want to then go to pay you and pay a cyber criminal. So, uh, you know, it is our company policy that our employees pick up the phone and call you and verify your wire instruction. So if you haven’t gotten a phone call from someone about that, you should be calling them and saying, hey, nobody verbally verified my wire instructions. Can you tell me where you’re sending this money before you send it? But they should be. It is, it’s, it’s a very strict guideline that we have within Chicago Title in the family of companies with fidelity national financial. So just, it’s your money, so be very diligent about that.
DiAnna Jackman: 39:31 So if you give us wire instructions and depending upon the time we record, we will wire the funds out either the same day or the next business day. Just anticipate a 24 hour lag time because depending on, um, it has to go through the Federal Reserve and depending on your bank’s requirements and your banks timelines for posting it to your account, just assume that you will receive those funds. If we wired them the next business day into your account, it can be the same day, but the next business day, if you choose to pick up the check, that check is not a cashier’s check, although you could conceivably take it to the bank it’s issued on and cashier it. Um, so there’s many different ways to get your money. Just discuss it with your escrow officer, what your preferred method is, and help her understand the urgency of it. If you need it that day because you have to close on another property with that money or you’re going to lose your earnest money and all these other things, make sure you let her know that way ahead of time, not the day of closing because she can make accommodations to make sure she’s collecting funds and documents on this way ahead of time so that she can close in the morning and make sure you’re getting your funds. So again, communication is key.
Mike DelPrete: 40:38 Isn’t there a cutoff time when it comes to recording like 1:00, 2:00?
DiAnna Jackman: 40:42 We digitally record so we can record all the way up until like close to 5:00. Um, and most title companies are on that now where they will digitally record for you.
Mike DelPrete: 40:54 I mean if you want to get paid that day.
DiAnna Jackman: 40:55 If you want to get paid that day. I would say depending on if you’re getting, if you’re getting a wire, I would say it should record by noon. If you’re going to pick up a check, it can record by, you know, four, 4:30 so that you can pick that checkup if you need to get to the bank 4:00.
Mike DelPrete: 41:13 So we kind of walked through the whole escrow process from opening to closing. Um, another benefit Chicago title always provided that I noticed is marketing, right? So can you just kind of give us, maybe tell us where we can go to talk about what you guys can offer and who we should contact.
DiAnna Jackman: 41:30 Jill Bright is our investor rep and if anyone needs to contact Chicago title, you can give us a call at 602-667-1135. That’s my direct line. I can direct you to an investor friendly escrow officer or to an investor friendly marketing rep, but jill bright. I’m sure if you don’t know or you just google her, she’s all over the place. But I think one of Jill’s best assets and one of Chicago titles, best assets for the investor is it’s really hard to find properties and it’s really hard to find partners, uh, other investors, wholesalers. We have an investor unit, we are a part of as AZREIA, so we’re very investor friendly, so we have a lot of resources for investors. So if you’re just starting out, you may even want to make an appointment with Jill, um, and one of our investor friendly escrow officers and just sort of interview them, pick their brains and get to know all the services that they provide. There’s lists that they can provide to help you find properties. They have contacts to help you find partners. Um, so there’s just a lot that your title company can offer you in that arena if they’re investor friendly.
Mike DelPrete: 42:40 I think you guys have like some type of comping service to help give you, give you an idea of what a property’s worth. So I thought that super valuable.
DiAnna Jackman: 42:46 If you’re going to be an investor that is a fix and flipper that focuses on a certain area of town to. There’s, there’s walking apps, there’s, oh my gosh, it’s never ending. There’s so many things that um, we have to offer the investor. There’s, if you’re going to be someone that’s concentrating on estates transactions, we have a product that will alert you if someone seems morbid, but if someone passes away or is getting divorced in a certain area so that you can, you know, send your correspondence out to them to let them know, hey, I’m here for you guys. I know you’re going through a hard time, but you know, this is our specialty. We buy and sell these types of transactions. So there’s just a, there’s a lot. It’s a lot of information and so make an appointment block out like an hour and a half and get ready to be bombarded with information. So-
Mike DelPrete: 43:35 Awesome. Thank you DiAnna. I mean a lot of great information about the title process. Um, is there any last thoughts you want to share or let us know?
DiAnna Jackman: 43:43 You know, the one thing I always say to investors, especially new investors, is you’re not getting in this to have that one big deal and get rich and get out of the business. You’re doing this to become the way that you make your money. It’s a, it’s your business, you want to do it ethically, you want to get with the right partners, great wholesalers out there, the people that do it, do it right, um, and you, uh, want to make sure that you’re building it as a business and you’re playing fair with everyone and you’re becoming one of those really well known, reputable, um, investors in the valley because there really is just a handful. I mean, look at you. You started and you’re still here. You made it through the downturn because you did it all right. You know, and, and the people that try to do the get rich quick, they’re in and they’re out. They burned their reputation and then it’s very difficult for them to make money this industry. So it’s a small community of people and we trust each other and we know who to rely on and who not to work with. So be one of the good players.
Mike DelPrete: 44:39 Well said, and hopefully you guys learned a lot. I want to thank DiAnna in Chicago Title, title for being as real partners. And that’s what we got for to- that’s what we got for today. And thank you.
DiAnna Jackman: 44:50 Thank you.
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