Here is what you need to know about starting a title company.
The real estate industry is huge! This covers several sectors including the insurance services sector.
So, if your specific interests lie in the insurance side of things, you may want to consider starting a title company.
This article seeks to show you how. We believe that with dedication on your part, you’d find these steps practical and vital to achieving your desires.
Also, you get to take advantage of the huge opportunities available to title companies.
Starting a Title Company Checklist
While we are certain that you know exactly what this means, other readers may need some help. So, in explaining a title company, it simply stands for an insurance company.
However, this doesn’t provide general insurance services but is restricted to the real estate sector. It works by acting as a go-between for buyers and sellers of real estate property.
Both parties (buyers and sellers) benefit from its services which centers on eliminating conflicts in transactions. For better understanding, a title company certifies ownership of properties before they are sold.
Thus, clearing all forms of deficiencies or flaws. This is very crucial when applying for sale financing.
Not all States Have Similar Requirements
The requirements for starting a title company will vary from state to state.
However, there are no vast differences. So, as an interested entrepreneur, you’d need to know your state’s specific requirements.
Having the Required Skill Sets
Persons with a background in the real estate or financial services sectors are better suited for this business. If you have non of the above experiences, all hope is not lost.
One way to go around such barrier is by working for one. This is a great strategy to learn on the job. But how much time is enough for sufficient knowledge?
Well, there’s no standard. However, we recommend a few years service.
The point is that you get to learn as much as you can. This enables you run your business smoothly. Competence is a key ingredient for success.
So, you should be able to handle all forms of problems related to it.
Raising Adequate Funding
This may seem vague but it isn’t. The required funding depends on what your state’s requirements are.
To get a better picture, certain states require a minimum of $35,000. This is meant to cover the cost of a guarantee bond.
Others include an Errors and Omissions insurance policy. This can cost as high as $250,000 or more.
Additional requirements include a specific fidelity bond. This has a minimum cost of $50,000.
There are also running costs to consider. Running costs will include your wage bill, rent and many others. These are important things you need to factor out before launching.
Choosing an Appropriate Business Structure
The structure you choose will determine how well your business fares. Whatever you choose is totally up to you. The most common ones include the sole proprietorship, corporation, partnerships as well as the limited liability company (LLC) models.
If you’re having challenges with this decision, then the services of a legal expert should be hired. This enables you avoid common mistakes that may result.
Do you know that you have the freedom to change your structure? Yes you do! You can start with any that offers more benefits.
However, this can be changed to accommodate existing realities. This is common practice for growing companies.
The next step is to file such paperwork with appropriate state and federal departments.
Perform Necessary Background Checks
This is another vital step to take in starting your title company. Most states require performing these checks on your agents.
As such, background checks should cover address as well as the social security numbers. This helps create a level of credibility.
It also protects potential clients by regulating the industry.
A title company needs to be fully registered before it begins business. This is a step you can’t avoid. While all registration procedures are important, one of them stands out. This involves registration with the department of financial services. This isn’t done at federal, but state level.
So, what does this entail? It relies on the provision of several requirements. These are necessary for full registration.
Such requirements include business office locations.
Others are federal ID numbers of the business, names of owners and partners as well as names managers for every office. This process checks all forms of fraud. It also ensures that only qualified personnel are hired.
Renting an Office Space
This is equally important. However for title companies, multiple office spaces may be necessary . This is more common during expansion drives.
As a result, an office space, or spaces will add up to your capital expenditures. The more the offices, the more your rent costs.
In any case, this is one of the steps to take in starting a title company.
Apply for a License
No title company can operate without a license. This is so fundamental to its existence and should be taken seriously.
So, who’s the issuing body? State insurance regulatory departments are. But for most states, licenses are issued only when you show proof of legal business registration.
Other requirements include background checks, insurance and bond documents.
To apply for a license, you’d have to pay a minimum fee of $50.
Sometimes, you may encounter certain difficulties. These are most common with online registrations.
However, you need not worry. This is because there are simple solutions to such problems.
An example is the browser you use. Certain browsers such as Microsoft’s Internet Explorer give better results. You also need to find out the payment methods available.
There you go! The process of starting a title company isn’t complicated.
Nevertheless, having the right right knowledge is vital. We have supplied you with as much as is necessary. You can confidently start the process of establishing your own title company with limited problems.