Buying at the steps - Posted by Shogan

Real Estate Investing Real Estate Financing
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Posted by JT-IN on August 05, 2007 at 15:49:09:

“attorneys tell me they like working with my firm just because of the weird deals”

I have heard that from a few Attys. They in the title biz for the most part are creatures of repetition, the same-old-same-old. And then a spicy investor deal shows up, which requires some thought, creativity and bravado. It revives them, I think, and in another sense, they wish the gahunies to get knee deep into the pile and do so themselves… Most simply don’t. They live vicariously thru guys like you and me…

I have been there with becoming a bit lax on due diligence, only to find out that I should have been more detailed. Yep, then you figure out just how Houdini did some of those escape tricks… or something like that. Best not to have too many of those, so as not to find out you just couldn’t get loose of that really nasty deal. I have had a few…

Appreciate the stories… Thanks.

JT-IN

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Buying at the steps - Posted by Shogan

Posted by Shogan on August 02, 2007 at 13:00:48:

If you are buying foreclosures at the steps, how do you get a title report before the auction? Does a title company charge for this? Any other ways to obtain a title report before the auction?
Thanks!!

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Re: Buying at the steps - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on August 04, 2007 at 19:27:47:

The pro’s learn to perform there own title searches, or at least delegate this task to well-trained persons in their organization.

Amateurs can and do buy at sales and some do OK, at least for a while. It’s a numbers game. If you work enough deals, you number’s gonna come up. Clouded. Better to see it and know how to either avoid it or tackle it.

I’d really hate to make the mistakes that I’ve watched some others make and try to fix, typically without success, later.

I have made some really bonehead title errors in my early years. It’s amazing that I didn’t get hurt more than I did. Missed HOA and IRS liens, that kind of thing. I was lucky, really lucky.

About 20 years ago I started studying title and by about 15 years ago I began to feel pretty confident. I got a lot from people like John Beck (before his obsession with tax liens) and Ward Hanigan. I don’t suggest that you follow my lead; rigorously study title in the beginning.

Nowadays, my title skills are probably my most valuable real estate investing assets, and they permit me to make informed decisions, often from my desk, that other investors shrink away from.

I no longer see title problems as problems, but as opportunties that scare off other investors.

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Define: Buying at the steps - Posted by stan

Posted by stan on August 02, 2007 at 14:59:06:

Are you talking about the Sheriff’s tax default sale or the Trustee’s sale? Both are on the courthouse steps.

If you are talking about the Sheriff’s sale, JT is right, it is risky with title problems galore.

On the trustee’s (or equivalent in your state) there is little risk. The lender will generally have clear title and you will probably be getting title insurance.

stan

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Re: Buying at the steps - Posted by JT-IN

Posted by JT-IN on August 02, 2007 at 14:23:16:

Gun:

You need to understand title work, or in my opinion you should, before you entertain the idea of buying @ sheriff sale. Sure, you can have someone run a title report on a property in advance of sale… some title companies might do so for a small fee… the problem here is that what they do for a small fee isn’t warranted info, meaning you cannot rely it as Gospel, nor will they issue title insurance upon a freebie, or nearly freebie look-see.

Over the years I have certainly looked at and intended on bidding on a 1000 houses, that I didn’t end up buying. I would be a poor man if I had invested in title searches at a cost on each of these properties. I relied on my expertise of viewing the title myself, prior to bidding. This is not to say that there is not still risk and margin of error, because there is; period. Anytime buying at sheriff sale the element exists that you could end up with a clouded title, and this risk is NOT for everyone. Make certain you can absorb the hit if the worst happens, or don’t enter the arena…

Educate yourself on what you are looking at doing title work, and when competent, fire away at the sheriff…

Just the way that I view things…

JT-IN

PS. I differ with James’ response; there is much more to worry about than the IRS Liens. His statement is correct if the suit and sale is performed flawlessly, but Attys and their Legal Assts are human, and they tend to make lots of mistakes on these repetitive lawsuits… They simply overlook things and an error in their process can leave Liens and Interests to survive the sale. The end result is that the new buyer has inherited a mtg that is not discharged or an unpaid lien… Make sure you cover your assets… by doing it right.

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Re: Buying at the steps - Posted by James

Posted by James on August 02, 2007 at 13:07:32:

It’s a clean report. I would hope.

IRS leins would be the only thing that could screw you. Ok, not only, but biggest obsticle.

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Much depth and wisdom in this post - Posted by JT-IN

Posted by JT-IN on August 04, 2007 at 20:53:25:

Rich:

To many, these may be just words. To someone who is IN the foreclosure and damaged title business, your sentiment resonates full tilt here. One can make far more from a RE deal by spotting that little niche opportunity by simply understanding that it exists, when others trip right over it and go on. Often in search of a mediocre play.

Here, here to those title skills.

JT-IN

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Thanks, but I still have a lot to learn… - Posted by Rick, the Probate Guy

Posted by Rick, the Probate Guy on August 05, 2007 at 14:18:25:

JT - Thanks for the nice words.

I must confess that I’m become a little lazy and tend to have become a “ready, shoot, aim” kind of investor once I see the equity and overall title picture.

That means that, as long as I’m ok with the equity and understand the title flaw, I’m usually ok with moving forward. But that doesn’t mean that I know HOW I’m going to fix the problem up front.

I watch skilled craftsmen make mistakes and don’t sweat things. Their years of experience includes knowing how to fix their own mistakes. So, I typically have plans A, B, C, D, and maybe more, but I often change plans as new information is revealed. Flexibility and willingness are essential.

I mention this because, along the way, I make a lot of mistakes and spend money that wasn’t always budgeted for, however, as long as I focus on the big picture, and don’t worry about extra time delays and capital required, things always seem to work out.

I’d never want to pass these bad habits on to others. I’d prefer that they keep on thinking that I’m really methodical. Actually, there’s a lot to say about being persistent and hiring better experts. Several of my attorneys tell me they like working with my firm just because of the weird deals
that they get.

In the final analysis, most of us get to a point where mundane deals become boring and we want to be challenged mentally. More than one person has come right out and suggested that I was mentally challenged.