As of July 1st, 2009, title insurance companies have responded to changes in insurance laws which restrict the services that they may provide, such as copies of recorded deeds, property descriptions and valuation (sales comparables). I think many investors, large and small, were caught off guard by this new legislation and are scampering to find alternative solutions.
As fewer services are made available for free, this creates a much larger hurdle for existing investors and would-be investors.
In effect, the lack of free services will weed out casual info requests and up the ante for people who might have done a few deals during the market frenzy or are contemplating a deal or two now. Hence, no more toe-in-the-pool to test the water temperature. It’s going to be a more ‘are you in or not?’ for better or worse.
Of course, investors who already have a ‘research machine’ in place will largely be unaffected.
I’m not in favor of scaring people off from real estate investing, especially when it’s due to limiting access to information.
However, there are a few arguments that support this:
One is that the information is still available for free at the county recorder’s office(s). People can still make arrangements to do their research at the real and true data repository. This is the metheod that Ward’s training is all about and it hasn’t changed much in a long time. It’s only been the last few years when online data was made available, for free, that many of us got lazy and used the title company in lieu of performing our own research.
Another argument in favor of this restriction is that it requires would-be investors to make something more of a commitment to investing. If you are going to do this business, you’d do well to learn how to do the research and be less dependent upon the (free) services of others.
Here’s how smaller investors and newbies can work around this change:
1. Make a decision. Are you serious about investing in real estate? If so, you’ll need to make a commitment, probably monetary, time and better training.
2. Learn how to do your own research. Once you’ve learned how to chain out title and make the habit of actually reading key documents, you won’t want to go back because you’ll profit from this knowledge.
3. Consider working with more experienced investors who have their research machine in place. Most experienced investors do not view newbies and casual investors as adding anything to their enterprise and, in fact, may view newbies as taking away valuable time, energy and potentially a few deals. So, before approaching the pro’s, best have a plan in place as to how you’re going to add to their operation. Hint: It better be pretty darn tangible.
4. It may be possible for someone to establish a working relationship with a title company in another state outside CA and pull nationwide data. That would get you back in to CA info. However, if you’re only getting data infrequently, it may be easier just to pay for it.
5. Be prepared to ante-up and pay for the service(s) that you need. You’ve had a great free ride an there’s no rule to say that title companies owe us this service. When I was new, I had to practically beg for a copy of a recorded document and they required me to pay up front to order a prelim.
6. Consider paying for shared-access by putting together little groups. This will still require you to pay, however you might keep your costs low and in control.
Some county recorders make real estate records available online; some free and some pay as you go. Los Angeles county isn’t one of them. If you don’t want to make the drive to Norwalk, try Courthousedirect.com. which offers limited access for LA county and you can pay for documents that you require.
You can also subscribe to any number of other services offered by companies like First American or Fidelity, as well as the big database repositories like Accurint, Titlepoint, etc.
Personally, I think that title companies are not the bad guys. If I was in their shoes I’d be pretty tired of providing free services (which most certainly cost them something to obtain, maintain, and dispense) to people who may, or may not, provide much or any business in return for the service. There are a lot of time wasters out there!
Ward says it best: “What’s bad is good!”
If you are serious about making money in this business and have made the commitment, you’ll do whatever is necessary to get what you need to do profitable deals. And, those who do the work will receive the benefits.
