Many investors and home owners are convinced that paying for title insurance is totally unnecessary.

Here, we uncover the hidden truths with real-life examples of deals, voice our opinion, and let you be the judge.

Title insurance is provided by your local closing agent (either a Title Company or a Real Estate Attorney depending on your State or Province) to protect you from the eventuality that it’s discovered you may have a problem with your property after you:

a)    Have closed and now own it, or

b)    Have sold it to another party

What kind of problem could arise that you’d need title insurance?

Let’s take this example, say for instance that you bought a property from a family that lived in a home for two years.  They had bought it from another family who’d built the house brand new.

But there’s a catch, you as the owner decide to dig up the backyard and put in a pool.  All of a sudden, you find there’s a submerged 100 gallon oil tank buried in the backyard and it’s leaking into the soil.

You could be charged for the environmental damages and levied a hefty fine.

Thanks to the investor that had title insurance on this property, they saved a bundle.

There are two types of title insurance policies to buy in each transaction: one for the seller and one for the lender.

So is title insurance a rip-off, a scam, or is it necessary?

Well, title insurance policy claims are low so yes – the insurance companies do win.  But you’re building a business that must be protected from unknown eventualities – like as if there was a submerged 100 gallon oil tank leeching into the soil that’s been unearthed after all these years.

Bottom line, it’s better to be safe than sorry…so pay the extra few hundred dollars to be on the safe side.  Just one claim against you could quickly burn one heck of a hole in your pocketbook.

Some people find this a very hard concept to grasp – determining market value.

Here’s what we want you to do.  Pick up the phone and dial your Realtor’s phone number.  Now ask them to send you “Comparables” on properties in a certain neighborhood or area of your city where you’re searching for deals.

They’ll send you via email or fax, all properties that have sold or been listed in that area for the previous six months of same type and size.

Now take all the prices of those properties, and divide it by the number of properties given, then you have an average price.

For example:
Property 1 - $190,900.00
Property 2 - $178,500.00
Property 3 - $199,900.00
Property 4 - $187,900.00
Property 5 - $182,500.00
Property 6 - $193,999.00
TOTAL        $1,133,699.00

Divide this number by 6 Properties and you get $188,949.83

That was easy, eh!?

Now here’s what YOU do.  Break down the price per sq ft of the listings. The formula is to take the square feet of all the properties, add them together, and in this example, divide it by the 6.

Now, take that figure and divide it into the average sales price we found above.

Welcome to the big leagues!  So if from that point on you arrive at a home that’s asking price is below or well below the average price per square foot of comparable homes in their area, you probably have a deal on your hands!

We know that Realtors get a lot of jokes lobbed their way – but we want you to consider something, they’re people too.

On top of that, they’re crucial for helping you find deals.  Here, you’re leveraging OPT and OPK.

Here are the 3 Ways you get them to Earn Their Keep:

1)    Realtors can represent you by Selling a property on     your behalf.  They deal with marketing to find a buyer, schedule and then show your property, and if they’re sales savvy, handle all aspects of closing the property for you while dealing with the Buyer, or the Buyer’s Realtor. Be sure to clearly define up front your objectives with the resale of your property.  Further, as always, only use a proven Realtor that has an excellent track record for sales.

2)    Realtors can represent you for Buying a property on your behalf.  You could sign an agreement with a Realtor having them act as a Buyer’s Agent to find properties which fall under certain guidelines that you’ve deemed fit.  This saves you time looking for deals and focusing on growing your     business…or just head out and play and wait for one of ‘em to call your BlackBerry on a ski lift in Vail to tell you they’ve got a property that has $90K profit in it for you!:-)

3)    Realtors can provide you with in-pocket deals.  That is, they can source deals for you BEFORE they hit the MLS (Multiple Listing Service) so you can get the first jump on a deal before     other investors find out.   Both us and our students are constantly coming across these deals because the relationships we build with our Realtors is first rate.  You beat other investors to the punch, which ensures the price doesn’t get bid up…which eats into your profit!

And, of course, a good Realtor has their own solid power team that you can Leverage.

The key is to finding a good realtor to work with.

When selecting mortgage brokers, understand what type of lending programs they have available to them to facilitate the types of deals you’re going to do.

Example #2:

An area of specialization for us is pre-construction homes. Usually, an investor or homebuyer will have to purchase a piece of land, and then go get a builder to build the home.  That means they need a loan for the land purchase, and then a loan for the construction.   They’d pay closing costs twice!

The lender we’ve chosen provides you with the ability to bundle the price of the lot, construction price of the home, plus the closing costs, all into one loan…and then you don’t have to make any payments on the mortgage until the house has a Certificate of Occupancy by the city (at which point, we’ve already sold the house at a profit to a new home buyer and gotten them in on a deal too!).

Students that have read our book know how to Leverage loan programs very well.

We’ll show you the #1 source to obtain funds for your Real estate deals. By far, you NEED to have at least one Mortgage Broker on your Power Team because you need a source of loans.

What’s imperative, though, is that you select a mortgage broker that deals with investors.   This is essential because they’ll have packages specific to investors needs.

Example #1:

A mortgage broker we know offers you the ability to buy a property below market, plus they’ll provide the funds for the fix up work!

That means, if we buy a foreclosed property for $100K when it’s worth $200K, and it only needs $30K in fix up work, they’ll loan us the entire amount (home mortgage plus fix up costs) all in one loan.

Then, we could resell the property when repairs are completed to a home buyer for $170K and get THEM in on a good deal, we make $40K profit, and I could even set the new home buyer up with our mortgage broker who will appreciate the repeated business.