Can you explain the escrow and title processes to your buyers and sellers?
For sellers, the real estate process is full of confusing processes, from choosing an agent to the final handshake.
Buyers have their share of headaches too… Take insurance, for instance. There’s PMI and MIP, homeowners insurance and title insurance.
The average real estate consumer knows little about many of these processes, leaving it up to agents to educate them.
Are you ready to do so?
The clearer you can explain the escrow and title processes, the better your clients will perceive a high level of customer service. And being known for that is the bedrock of a business built largely on referrals.
Yes, you learned the basics of these processes in real estate school. But the basics don’t cut it when coming up with a clear, concise way to explain the escrow and title processes for a client (especially a first-time buyer or seller).
What is escrow?
Throw the word escrow at a first-time buyer and you’ll most likely be met with a blank stare. It’s not a word we use in every day conversation.
As you were taught in real estate school, “escrow” describes the neutral third party that holds “… money, goods, or a written document …” until specific conditions are fulfilled.
These conditions are described in the escrow instructions. In real estate, the purchase agreement serves as the escrow instructions.
“Close of escrow” refers to the fulfillment of the instructions (funds disbursed, title transferred etc.).
Now that we’ve refreshed your memory, it’s your job to put this process into simple terms so that you can easily explain it to your clients.
Are you ready to explain the final closing statement (aka settlement sheet) for instance? Some of the items which may need to be clarified for the new real estate consumer include:
- Non-recurring closing costs
- Recurring closing costs
Get familiar with the closing statement your escrow company uses and look for anything that may confuse your clients.
From opening to closing, your clients should be aware of every step.
And title insurance?
Title insurance coverage provides assurances that no person or entity has a lien against or claim on the title of the property being purchased.
These claims and liens are commonly known as “clouds” on the title and you most likely learned about those that are the most common in real estate school.
Here’s a memory jogger:
- Surprise heir of a previous owner
- Delinquent taxes
- Clerical errors
The types of title insurance are confusing to newbies
The typical “who pays for title insurance” question is “it depends.” First, it varies by market. Second, you’ll want to describe that there are typically two types of title insurance.
One is lender mandated and covers the lender’s interests. The other is the buyer’s policy, covering the buyer.
You’ll quickly learn who pays for what in your area.
Explain the escrow and title processes
Sellers, especially, need to be fully informed about and have knowledge of the title process. If a cloud turns up, it will need to be cleared and, as you were probably taught, some of the clouds you may run up against can take a significant amount of time to clear.
Time is of the essence during a real estate transaction, and a problem with the title could prolong the sale and even derail it.
Learn everything you can about title searches by visiting rocketmortgage.com, homelight.com and bankrate.com.
Educate your clients
There are a number of ways to explain the escrow and title processes to your clients.
Many buyers’ agents hold buyer consultations with their new clients. Basically, it’s a sit-down to find out what they’re looking for in a home and where they want to live.
It’s also an opportunity for the agent to find out if the clients have seen a lender and just how real estate savvy they are.
Rather than use your precious time to do a verbal walk-through of the process, compile packets of information that they can take home with them. Or, a list of blog post urls on your website.
We like the packet idea because you can brand all of the included pieces, add your bio and any other information you think would be helpful.
Not many agents offer this, so it will definitely help you stand out in a crowded market.
Write a book
We know several successful agents who have both a seller’s and a buyer’s book, in published form, written by a professional writer. What they like best about these books is that they establish instant credibility.
But don’t let the cost of publishing and hiring a real estate writer stop you from creating a book. Ebooks are economical ways to introduce clients to your new business and the processes they will be going through when they work with you.
Explainer videos, as long as they aren’t too long, offer you a way to not only explain the escrow and title processes and reach potential clients, but to show your personality and professionalism as well.
Earlier, we mentioned pointing clients to educational blog posts on your website. This is probably the least time-consuming way to explain the escrow and title processes, and costs the least (you get free blog posts with your EAP website).
Plus, by cross-posting them to your Facebook page, you’ll attract new clients as well.
Welcome to the world of real estate!
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