Sometimes sellers and even buyers will try to 'outwit' the system and enter into an agreement to purchase or sell a property outside of these traditional closing methods. For what? To save a few thousand dollars on title insurance, and escrow fees? To save a little time?
I would strongly caution that any seller willing to participate in such a sidestep is very likely trying to cheat the other party. Without following the proper procedures in handling the close of a real estate transaction it is rather easy for a bad guy to sell his property to more than one buyer. He that records first is going to gain title and those that do not record first will be forced to sue the seller for fraud. Good luck with that.
These systems of closing involve disinterested third parties trained in the handling of escrow and title services. They are expensive, but they are effective. Even a for sale by owner transaction should by all means utilize the proper closing methods. A for sale by owner would be the likely type of transaction that a would be fraudster would utilize to perpetrate the misdeed.
Closing consists of among other details the following:
- Third party escrow holds all monies and documents until all procedures and contractual obligations are met. No one gets paid till the deal is properly done.
- Title policies insure that title is marketable and free of encumbrances.
- Escrow prepares statements in accordance with the law and with no favor towards either party.
- Escrow will record properly the sale upon the full execution of the contract to purchase.
These are important details and when handled by professionals the opportunity for fraud is severely curtailed.
I am truly amazed that people fearful of a $5,000 stock market transaction, will enter into a shady real estate deal, risking hundreds of thousands of dollars. Don't go there my friends. utilize the services of local pros like Realtors®, escrow officers, title insurance companies and/or your attorney. Real estate is a wonderful investment, a necessary commodity, and an opportunity for fraudsters to do harm. By all means buy real estate, just go in with your eyes open.