A Real Estate Transaction Coordinator (TC) enables real estate investors, and agents to double their income & scale their portfolios by organizing deal flow & providing accountability.
Real Estate Transaction Coordinators are an integral part of a real estate transaction. Despite the importance of this person, transaction coordination is sometimes misunderstood by the real estate industry, and often times transaction coordinators are looked at as only paper-pushers, or admins.
This couldn’t be further from the truth.
Both real estate investors, and real estate agents benefit from having a TC involved in their transactions. And, although the tasks a TC completes for each of these different demographics are similar, they are not totally the same.
In this blog post I will highlight the role of a transaction coordinator when hired by an investor buyer, and a real estate agent. You will quickly see that transaction coordinators are more than just paper – pushers!
What Does A Real Estate Transaction Coordinator Do For Investors?
Just like my opening paragraph states, transaction coordinators enable investors to double their income and scale their portfolios by organizing deal flow, and providing accountability. Organizing deal flow, communicating with all parties in the transaction, handling most of the paperwork, and keeping the investor accountable for their tasks saves that investor so much time.
If you are a real estate investor, or you know one, you understand that their primary focus is to close the next deal. Oftentimes their attention to detail, and organizational skills are lacking. The last thing they want to do is worry about making sure they have the right documentation, and paperwork to close their deals. Transaction coordinators can help eliminate the headache for investors associated with paperwork, and hold them accountable to completing the tasks necessary to move their deals through the closing process.
A transaction coordinator’s main role when working with investors is to save them time by making sure the deal keeps moving through the entire process of opening escrow, all the way to the end of closing the transaction. Transaction coordinators will communicate with title agents, escrow agents, attorneys, real estate agents, and sometimes the sellers of the property if necessary, and permitted by the contract. This is important so the investor can focus less on having to initiate communication with all parties involved, and focus their time on looking for more business.
Often times there are so many parties involved in a transaction, that without the TC keeping everyone “in the loop”, and on top of their tasks to get paperwork filled out, many deals would fall through, and not close.
Although there are administrative tasks to the TC role, their most important attribute is their ability to communicate, maintain relationships with important people during the transaction process, and provide knowledge to ensure the correct documentation is taking place.
They are the glue that holds transactions together.
Some Of The Creative Investor Transaction Coordinator Tasks Include:
- Reviewing the completed initial contract to purchase the property with the buyer/investor to make sure it is filled out accurately
- Gathering contact information for all parties involved in the transaction
- Communication with title, escrow, and closing attorneys throughout the transaction process
- Opening escrow and requesting title reports/id statements
- Keeping track of time in order to meet deadlines, contingency periods, and due diligence dates
- Communicating with the sellers side as necessary & allowed by the contract
- Reviewing title reports when they come back
- Assist all parties at solving problems as they arise
- Helping the buyer/investor prepare additional negotiations if necessary, including any addendums necessary
- Obtaining signatures as needed, and communicating with title/closing attorney, and escrow any changes
- Reviewing closing documents, and settlement statement for accuracy that was prepared by title/escrow or closing attorney
- Verifying wire information for the buyer, and having them verify do the same
- Assisting with loan servicing set up, and the post closing process of setting up ins, utilities, HOA etc…
Here is what the deal flow of many creative investor real estate transactions look like.
What’s Up With The Real Estate Contracts
A transaction coordinator’s job does not include filling out purchase contracts, writing promissory notes or drafting deeds of trust. They are not attorneys. Completion of legal documents is the responsibility of the buyer/investor, or their attorney.
That being said, a transaction coordinator is 100% able to assist in the completion of these documents by ensuring the buyers/investors have filled out the documents as their intention dictates. In addition, they can review these contracts to help the buyer/investor understand them. And, they have the knowledge to inform their buyer/investor what documents are needed for various transaction types. If documents are missing from a file, the transaction coordinator will assist in the communication for their buyer with the title/escrow company, and closing attorney to get the proper documents necessary for file compliance. Additionally they will review all signed documents to make sure there is nothing missing.
There is ample paperwork associated with the real estate transaction process when dealing with investor clients. Most transaction coordinators understand their role when it comes to filling out paperwork knowing what they should, and should not do. However when pushed hard enough by investors who do not understand the scope of a transaction coordinators responsibilities, they are sometimes challenged to fill out legal documents that they are not qualified to complete.
Educating real estate investors is the first step in eliminating this situation from happening. And, the transaction coordinator needs to stand their ground when it’s suggested they do things they know they are not technically qualified to do.
What Are Some Deal Types A Transaction Coordinator Files For An Investor?
There is a vast difference between the transaction management a transaction coordinator provides investors compared to what they provide real estate agents. Investor files are typically creative, and more complex than handling standard home closings that take place between an agents primary home seller, or buying clients.
Because of this transaction coordinators working for investors need to be familiar with so many more transaction types that can occur. Additionally it is a great idea for transaction coordinators to have good relationships with local title, escrow, and closing attorneys in order to help facilitate getting these transactions closed in a timely fashion.
Here are some types of deals transaction coordinators may assist on for investors:
Subject To transactions
A property is purchased with the seller’s existing lien (home loan) staying in place. The buyer continues to make payments on behalf of the seller while taking title, and ownership of the property.
Seller Carry transaction
A property owned free and clear (house is paid off) with the seller acting as the bank to “carry” the loan for a new buyer. They will likely charge interest, but lower than a traditional bank would charge.
Private Lending transaction – short or long term
Many times a buyer needs short term or long term lending for a transaction. They will use private money lenders (PML) for these loans rather than a traditional bank. The process of loaning money for short term transaction funding or long term secured funding can be complex. Sometimes lenders will secure an equity position in the deal, while others will receive a flat rate for the lending fee.
Wholesale transaction
A wholesale transaction is one in which an investor will purchase a property without the intent to own it. There is an A-B contract from the seller to the investor, and a B-C contract from the investor to the end buyer. The end buyer may use the property as an investment, primary, or secondary residence.
Standard Cash transaction
A house is purchased using either cash or a hard money. There is no lender or financing contingency periods on the transaction.
Hybrid transaction
A property is purchased with the seller’s lien(s) staying in place, AND all or a portion of the seller’s equity is held as a second position lien. This type of transaction is considered a “hybrid” of a seller carry, and subto transaction.
Novation transaction
This agreement is often used when a seller has a desire to profit from a renovation on their home but they do not have the finances available. The investor will then partner with the seller to renovate the house, and share profits on the sale. This is often considered a “risky” investment.
Wrap – Dispo transaction
This type of transaction usually occurs after an investor has bought a non cash flowing property, and they need to build in their own equity. The investor buys the property subject to the original seller’s loan, and then “wraps” that loan into a new loan that they have built their own equity into for an end buyer to purchase the property.
Agreement For Sale (Executory Contract) transaction
Sometimes known as a executory contract, contract for deed, land contract or bond for deed. These agreements are the same as when you purchase a vehicle. The buyer does not receive legal title to the property until the agreement is satisfied, or the property is paid in full. The title to the property stays in the seller’s name, and the buyer retains what’s called “equitable” title. This type of agreement helps sellers avoid the foreclosure process when there is a default, and can instead go through a non judicial forfeiture process.
Loan Servicing Setup
A transaction coordinator will help end buyers set up taxes, insurance, mortgage payments, and any additional obligations to a third party company that receives monthly payments from buyers, and disperses funds to lenders.
Post Closing Set Up
The work is not done when the property closes. There are administrative tasks that need to be taken care of in a timely fashion related to the property transferring ownership. Meeting deadlines for these tasks is very important. The post closing process can take anywhere between 30-60 days.
These tasks can include:
- Mortgage insurance set up
- HOA transfer info or set up
- Utilities
Standard Financing transaction
This type of transaction is the transaction type that is typically used when buyers or sellers are working with a real estate agent. The property is financed using a traditional bank with a financing contingency.
How Is A Transaction Coordinator Able To Help A Real Estate Agent?
Despite the fact transaction types are vastly different, and more complex when compared to working with an investor client, real estate agents still benefit from having a transaction coordinator. Just like the investor real estate professionals, agents can benefit immensely from the time savings a great transaction coordinator will provide. There are administrative aspects in any transaction coordinators role, however the relationships this TC maintains for an agent are priceless.
Some states place regulations on the types of tasks a “non licensed” person can do for a real estate agent or office broker. Ensuring that the real estate agent, and the transaction coordinator are aware of what these regulations are is important so there is no violation. The National Association of Realtors lays out these state by state regulations to make it easy for everyone to stay in compliance.
Some Of The Real Estate Agent Transaction Coordinator Tasks Include:
- Open escrow, obtain file number, request escrow instructions, commission instructions, and other preliminary documents
- Contact all parties involved in a transaction, and introduce your role in the transaction as the point of contact, and person who will help facilitate closing. Additionally ensure that the contact info of all parties involved is in the management software.
- Review the purchase agreement, as well as any amendments, negotiations or counter offers to make sure all documents are fully executed with proper dates, initials, signatures and agent/broker information
- Ensure all parties involved have access to the documents associated to the file via some sort of document sharing platform typically set forth by many brokerages
- Order any state specific reports, and disclosures required such as a national hazard report, termite report, and other disclosures necessary. Ensure that the buyers have access to the completed signed reports via the document sharing platform. Send the reports to title/escrow.
- Ensure that all contract timelines are adhered to such as earnest money deposits, property inspections & other deadlines set forth in the purchase agreement
- Communicate with escrow to make sure they have received all documents in the file, including the termite report, any zoning reports, home warranty/inspection invoices, commission instructions, and any other required documents.
- Maintain weekly contact with all parties involved. Prepare status updates as well as continue to keep track of items needing attention, and update all parties as these situations occur.
- Fully complete, and deliver the completed digital paper file when the transaction closes
- Take pictures of listed properties, so agent or TC if allowed can upload to the MLS
- Market on social listing & help schedule any open houses, or leads coming in for the property
Below are some tasks that a transaction coordinator will hold the real estate agents accountable to, but could be considered “out of scope” for transaction coordinators to handle as they are directly related to negotiating contracts, or drafting legal documents, which in many states can only be handled by the licensed real estate agent listing the property. Again, check the state by state guideline set forth above for your guidelines.
- Review the Draft Escrow instructions.
- Review the Preliminary Title report.
- Schedule all Appointments (Home Inspection, Termite, Final Walk Thru, etc…).
- Negotiate repairs or any changes to contract.
- Complete Agent Visual Inspection.
What Skills Should A Transaction Coordinator Have?
A successful transaction coordinator will have certain qualities about them, or skills they posses that make them exceptional at their job. Some of these skills are:
- Attention to detail
- Ability to learn quickly
- Be able to respond & adapt quickly
- Organization skills
- Time management skills
- Calm personality
- Excellent social & communication skills
Because this role involves having to deal with so many different people, it’s extremely beneficial for a transaction coordinator to be able to communicate well, even when tackling minor issues, or major setbacks in a transaction.
How Much And How Are Transaction Coordinators Paid?
There is a bit of a difference how a TC is paid when working for an investor vs working for a real estate brokerage, or real estate agent.
When a transaction coordinator is working for an investor, they are typically paid a commission or flat fee per file. The fee is different depending on the complexity of the file type. For example, when referencing the different types of investor transactions above, a transaction coordinator will charge somewhere between $700-$800 for a simple cash transaction, $1000 – $1200 for a subject to/seller carry, private lending transaction, and upwards of $1500 – $2000 for more complex files such as wraps or hybrid transactions.
A transaction coordinator will require 50% of this fee to be paid up front in order for them to start the transaction, and open escrow. The reason for this downpayment in creative real estate transactions, is because often times these deals are not vetted well by in experienced investors causing a lot of time up front for the TC. If the deal falls through, and the TC spent hours starting the file, if the they had waited until closing to be paid, they would not be compensated for their time.
Some investor teams have an in house transaction coordinator, while others hire independent transaction coordinators. A good transaction coordinator will be retained by their investor clients over, and over again.
Real Estate Agent Transaction Coordinator Pay
Because the transaction coordinators role in an agent relationship is a bit different, often times the fee is not quite as much. Many transaction coordinators in the traditional real estate field charge between $399 – $599 per file. They often don’t require payment until the transaction closes.
Sometimes a brokerage will have an in house transaction coordinator, or other times they may outsource the role. Transaction coordinators that are hired in house are typically paid a salary or hourly rate, and are used by multiple other real estate agents in the brokerage. A transaction coordinator may also be hired to complete some of the administrative duties the agency needs done too, not related to coordinating files.
Wrap Up
Given all we’ve learned in this article about the expansive role, and positive contributions a transaction coordinator brings to the real estate transaction process, I hope you can see why they are beneficial. If you are an investor, or agent considering a transaction coordinator, I suggest you ask yourself the following questions:
- How much time are you spending filing paperwork, and communicating with a ton of other parties on your deals?
- Do you lose track of deadlines, forget to have documentation filed, and simply feel scattered being pulled in many directions?
- Do you lack time to look for more deals because you are busy focusing on the closing work associated with the deals you have in contract?
If you answered yes to any of these questions, then you need to hire a transaction coordinator today!
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