Would you like to know a hidden way to reduce closing costs? More specifically, how about a quick tip to save hundreds on one of the largest closing costs on a closing statement? I am referring to title insurance.
Nearly every buyer of real estate requires a title insurance policy. As a real estate investor, in some cases, you are buying the property and pay for title insurance as the buyer. In other deals, you are selling the property and the buyer may require you to pay for their title insurance policy. Either way, as investors, often times title insurance is a significant closing cost you’ll be paying.
Title Companies – What Investors Should Know About Them To Save $$
It’s surprising how few title companies will tell you about this. It’s such a simple tip that can reduce your title insurance policy by $200 or more. Here it is. Before closing, to reduce the total cost of title insurance, simply provide the title company with a copy of the existing title insurance policy on the property. Then, they will give you a discount on the new policy.
That was easy, wasn’t it? That’s often the way it works in this business. Real estate truth is often times hidden but when you get to it, you can make a whole lot more money.
Title Insurance Policies
Where do you get the previous title insurance policy? The seller should have it in their big, thick folder of closing paperwork from when they bought the property. If it isn’t in there, find the contact information of the title company from that paperwork and contact them. It my take an extra few minutes but its worth hundreds in savings and any savings in closing costs is usually pure profit in your pocket.
For the experienced real estate investors reading this, you may be mentally calculating all the deals you have closed whereby you didn’t employ this simple technique. Ouch! But better late than never. For those reading this who are currently on the road to closing their first deal, the good news is that you don’t have to learn this lesson the hard way. Good for you for reading this article. Real estate education pays.
Real Estate Closing Costs
Closing costs can eat your profits alive. I spend quite a bit of time each week pouring over HUD1 Settlement Statements of my apprentices, finding ways to reduce closing costs. In most closings, the buyer, the seller, or both, are paying too much in closing costs. And rarely are the brokers, loan officers, title companies, and closing attorneys going to tell you where you are overpaying. It requires a trained eye, to spot where they may be trying to gouge real estate buyers and sellers.
This tip is just the beginning. But it is simple and applicable to almost all closings. Do you have any other tips for reducing closing costs?