Editor's note: This article appears in the April 2021 edition of DS News, available here.
Real estate investors will often buy or sell several properties at once, and whether that transaction is numerous single-family homes or a number of hotel properties, having one company to handle the entirety of the title work can streamline the process for all involved, from real estate agents to mortgage originators. Although many in the real estate industry may think of the work of a title company as focused on a single property at a time, bulk transactions are a niche market that’s important not to overlook. When investors need to move large portfolios of property, a single point of contact and single close can ease the process, particularly if the properties span numerous states. When partnering with title companies, those working with real estate investors should seek out companies experienced with and capable of closing bulk title transactions across the country.
What is a Bulk Title Transaction?
Simply put, a bulk title transaction is just what it sounds like: the sale or purchase of a number of properties, grouped together into one bulk transaction that delivers title work for each property, regardless of location. These can be found in both commercial and residential properties, and can range from a handful of properties to as many as 500. Often, bulk transactions are across multiple states which, given state law differences, complicates closing, insurance coverage and pricing. The process is further complicated by differences in recording costs and taxes at the city/county level.
By doing the transactions in bulk, investors get several benefits, including having a single point of contact as well as the potential for a single closing. By using one title company, the transaction can be streamlined, saving time and money by consolidating title work by jurisdiction and using a single point of contact to keep communication flowing openly and without the confusion of involving multiple parties.
Often these transactions may involve default situations, not only making quality title research even more critical, but also involving servicers that will benefit from consolidating the transactions into a single closing. Some investors or servicers may even engage a title company to complete title research without a specific transaction in mind to gather pertinent data on a particular portfolio of properties.
Partnering With the Right Title Company
Choosing a title company to partner with will involve some research for anyone working in the real estate industry. There are many factors to consider to ensure the customer is getting the best fit for their needs. When working with investors who will move several properties at once, it’s important to consider a title company that can handle such transactions and the various factors that will affect the transactions, as well as one that will best ensure customer satisfaction.
First, consider whether you’re working with a title agent that can choose the best products from multiple underwriters or from a direct title underwriter that offers just their company’s product. Next, how experienced is the company with bulk transactions? Do they have a dedicated group to focus on the special needs of these assets? Bulk transactions require special skills and knowledge to execute well. Also consider how large the company is: too small and they might not be able to handle the needs of a bulk transaction, but too large a company may get bogged down in bureaucratic hurdles that lengthen the process. Be sure to assess a company’s state coverage capabilities. If they only work in New England, for instance, but a client has properties across the U.S., you’ll need to look elsewhere.
The next aspect to consider is a bit trickier to pinpoint, but both research and asking the right questions will help you discover if a certain title company has what you need. Technology gets a lot of attention and has become something of an industry buzzword, but it is particularly important for bulk title transactions. When handling multiple properties with lots of documentation, it’s critical that the title company has the technology in place to not only handle such large quantities of documents, but also to streamline that information into usable data and create consolidated closing statements. Technology that is capable of this kind of streamlining frequently results in lower costs to the client and requires less time to close.
Another aspect to consider in terms of technology is how that tech relates to the customer experience. Can clients access and track their transactions? Do clients receive milestone notifications? How is communication handled? Don’t forget the importance of customer service in any transaction—even large ones such as these.
Having one title company to handle multiple assets can make a significant difference for investors, particularly if the properties span numerous states. Although different jurisdictions mean different rules for each title, companies capable of handling bulk title transactions can make this a smooth process for investors with technology that consolidates closing statements and allows for monitoring of transactions’ progress.
With the right title partner, investors can have bulk transactions transferred as quickly and efficiently as possible; these are exceptional transactions and it’s critical to have a partner that treats them as such. By finding the right title company to work with, those in the real estate industry can save time and ensure better communication for their clients.