Title Insurance & Flying: It’s Not All Burritos And Love
Walking from a multi million dollar deal isn’t easy when you’re paid on commission. But I did it today.
I’ll tell you why, then you tell me if you would’ve done the same.
Years ago I gave a few flying lessons to a student who seemed heavy on the confidence side. Unusually confident. Most students walking into a flight school for the first time are demure. This guy was cocky and demanding. Loudly he announced that he pretty much knew how to fly an airplane; he just needed a good instructor. By “good” he meant an instructor good enough to recognize his extraordinary talents and after maybe one or two flights would sign him off for a final FAA checkride.
When we got in the airplane I realized Mr. Confident had a perspective rich with fantasy. Someone had given him a few lessons but he had a long way to go before becoming a pilot.
When Mr. Confident asked if he could buzz the school where his sister worked as a teacher, I became suspicious. Before 9-11 I would’ve been concerned about his judgment but post 9-11, as this was, I had several concerns. Is he just an idiot or could he be dangerous?
No Shoes No Service
You’ve seen the sign, No Shoes No Service? There should be a sign at flight schools, no common sense, no flying lessons!
I wasn’t making much in those days and I hated the idea of losing a student/client. On the other hand, I didn’t want to wake up to find CNN on my front lawn!
I talked with Mr. Confident over a delicious burrito lunch. Sometimes it’s best to interview students on the ground in a common environment. They’ll open up and give you insight. About half way through my burrito I determined he was surely an idiot but not intentionally dangerous. In fact in my estimation I deemed him too stupid to be dangerous.
About a year later I got a call from the FBI. But first…
Title Insurance And $xMM
There’s a lot of energy around any high value Real Estate transaction. Emotions and ego’s can ratchet up as the stakes get higher. A multi million dollar deal can sometimes get exciting.
In this case the listing agent was yelling at me.
Not always but often I’ve noticed when voices get loud facts get soft.
Mr. Loud was trying to bully his way through the transaction, a common old-school tactic. But in today’s world there are checks and balances in place to protect the consumer. There’s no room for old school tactics.
I held my ground
Stepping back and assessing the situation, here’s what troubled me:
The seller was well past 80 years old and a much younger relative stepped in to handle his affairs.
Red flag #1.
Anytime a party to a transaction is elderly there is concern about potential elder abuse. There are laws to protect the elderly because, believe it or not, there are bad people who prey on them!
Next: The buying agent stopped communicating.
Red flag #2.
Why would an agent stop communicating days before closing? Why wouldn’t the selling agent issue a notice to perform?
Next: The selling agent said it was an all cash deal. Escrow said there was a lender.
Red flag #3.
Why is there a breakdown on the most basic components of a transaction days before closing?
Next: The Title Unit asked for a copy of the appraisal. Common on high value deals because a property value has to be established in order for Title to issue a policy. Simply put, the insurer needs to know for certain how much risk they are incurring.
The buyer had an appraisal done but in this transaction no one except the lender is talking to the buyer, not even the buyers agent!
Of course the lender has a copy of the appraisal but the lender can’t provide it to anyone without the buyers permission. But remember the buyers agent is MIA!
So: The request for the appraisal somehow goes to the sellers younger relative who refuses to provide it because, well, without having a Real Estate License, unilaterally decides providing a copy of the appraisal just isn’t necessary.
Red flag #4.
Who’s controlling this transaction anyway? And why can’t we see the appraisal?
Three Strikes Your Out. Four Strikes I’m Out
I decided there was too much rick in this transaction and when I stood firm with my request for the appraisal the seller’s agent threatened to pull the deal and take it to another Title company. I surprised him by agreeing. I suggested he do just that.
Most Title Reps would sell-out before walking from a deal this big. In my less experienced days I would’ve done anything to keep this deal alive. But as you mature, you begin to see that shortcuts don’t necessarily bring you to success. Doing the right thing – counts.
In a previous post, Seduce Your Wicked Imagination / Reduce The Risk I wrote: Insurance company’s are in the business of managing risk, not taking on risk.
The selling agent continued to yell. He told me he’d have the deal closed in two days with another Title company. I told him to do it.
Flying And Mr. Confident
A year after asking Mr. Confident to find another flight school, I got a call from the FBI. Mr. Confident was being investigated for suspicious activity consistent with possible terrorist planning. I’m not at liberty to give up the details but I can tell you this much. My statement to the FBI suggested that if Mr. Confident were doing the things they were investigating him for in order to impress girls in a bar I’d say they were on right on track. But knowing how utterly incompetent he is I figured he’s not much of a threat to anyone other than himself. I never heard from the FBI again so I’ll pretend they came to the same conclusion.
What Would You Have Done?
Pick your area of interest:
Real Estate or Flying
Tell me below in the comments section what you would have done. Would you have closed the Real Estate transaction in-spite of the red flags? Would you have continued to give Mr. Confident flying lessons?
Mr. Loud came back a few days later and asked to keep the deal open. He would provide the appraisal. After three weeks he did provide the appraisal and we closed the deal successfully with all boxes properly checked. I can only presume the other Title company asked for the same documentation.