Please Advise! (Thanks) - Posted by Mike M

Real Estate Investing
#1

Posted by Jim IL on December 19, 2000 at 21:24:15:

Mike,
Alright, you don’t even have $100 for a title search, fine.
Personally, I’d barrow it from a friend, relative someone and get the title search done.
But, you can also at least goto the recorders office and look yourself for free.
Go there and look in the public records area.
Play with the data base looking up the property by address, parcel number, legal description, the sellers names, last, first, just last, and anything else you can think of.
If you do this while sitting next to a title company rep with a laptop, (they’ll be there, there are ALWAYS HERE!), and act frustrated slightly, they may help you.

Just AT LEAST LOOK for some things.

I could not proceed as you are with a clear conscience.
I’d feel real funny even advertising a home that I was not sure I could sell with a clear title.

But, to each his own.

Happy Holidays, lets hope YOUR gift is a clear title,
Jim IL

#2

Please Advise! (Thanks) - Posted by Mike M

Posted by Mike M on December 18, 2000 at 22:35:44:

I finally got a seller that just deeded me the house. They wanted out fast so I took it. I got a signed deed and all. I didn’t get the title checked yet
because they were leaving the state. What a great way to make money! I now own a house and it didn’t cost me a dime!

Do I really need to get the title checked if I sell with a Land Option or Contract? This is where I get confused. Will the option provide me with
enough to pay the payments or should I ask for best offer in my ad? I’ll say to the buyer that the taxes and insurances are not included and that
they must pay them.

I can’t believe that I got a house so easy! This is a great way to work!

Any suggestions on if I should be approaching this differently. I have Carlton Sheets contracts that I use

Mike M

#3

Re: Please Advise! (Thanks) - Posted by Linda

Posted by Linda on December 20, 2000 at 11:01:01:

It will cost you alot more than the cost of a title search by not taking care of things now!

#4

Many are willing to deed you a house, but… - Posted by Anthony - OH

Posted by Anthony - OH on December 20, 2000 at 02:19:34:

After doing my due diligence I have not bought one! They all are over-mortgaged to the point that L/O them is not profitable.

They all seem to have refinanced into 125% firsts, so negotiating is worthless.

The ones I have found worth doing, have lots of principal paid down on thier first mortgage, but have second mortgages that I would try to negotiate.

These people are too stubborn to give me thier house and would rather make the bank take it back.

Ticks me off, but I would never even waste my time without knowing all of these details.

#5

Re: Please Advise! (Thanks) - Posted by Jim IL

Posted by Jim IL on December 19, 2000 at 19:00:31:

Mike,
Alright, you have the deed.
Is it recorded?
I hope not yet.
My advice is to check title ASAP.
You need to know about any liens on the home that exist.
Do NOT rely on what the seller told you, if anything at all.
Find out for sure, and then if you have clear title, sell the home any way you choose.
If you have liens that were unexpected, then contact the seller ASAP and get out of the deal.
If you cannot, you may be able to negotiate the liens down or away depending on who holds them.

Bottom line, when taking a property subject to or any other way, ALWAYS check title.

For me, when I take a home “Subject to”, I get all the docs signed by the seller, but include a clause in my “purchase and sale agreement” that states the deal is dependent on clear title and other factors.
In other words, I have the deed, but will only record it and make the deal final when/if all due diligence is done and satisfies me 100%.

And, of you have clear title, rather than pat yourself on the back, take a deep breath and say, "Whew, thank goodness."
And then congrats on your deal.

Take care,
Jim IL

#6

ALWAYS check Title! … - Posted by Rick(CA)

Posted by Rick(CA) on December 19, 2000 at 04:13:13:

…especially before offering it for sale and before you pat yourself on the back too much.

I sincerely hope you have clean title. If so, I’m happy for you on your first deal.

#7

Re: Please Advise! (Thanks) - Posted by Mike M

Posted by Mike M on December 19, 2000 at 19:08:41:

I already recorded the deed . I didn’t want to risk the profits involved. I’m not so concerned about the title because I already checked with the neighbors and they said that they have lived there for a while, and I’ve been watching the house for a few weeks. They really do live there.

I doubt if there are any liens. These people seem to be pretty decent, and are just so happyt that I took their headache away from them.

I’m having an open house now to sell with owner financing. Now will my buyers need title insurance or can I just transfer it from here (at no cost)?

Thanks for all advise

Mike M

#8

Re: ALWAYS check Title! … - Posted by JoeS

Posted by JoeS on December 19, 2000 at 07:17:16:

Yes, always check the title, you may have gotten lucky and have a clean title. Maybe there is $150,000 worth of liens on the property…how do you know? Ask the seller? I don’t think so. I always get title done, at my expense, BEFORE the deed is passed. You can put a place under contract subject to seller giving you good and insurable title. Happy investing.

#9

Oh my! - Posted by Jim IL

Posted by Jim IL on December 19, 2000 at 20:10:41:

Mike,
PLEASE, do not take this as a slam, but you completely missed what we are all telling you.
FORGET what ANYONE says about your sellers.
They probably are nice people, and I’m sure the neighbors do actually live there. (This is who you were talking about “living” there, right?)
If a seller becomes motivated because they can no longer afford to make the payments on the house, what else could they not afford to pay for?
Water bills?
Sewer bills?
Electricity?
Cable?
Phone?
Taxes?
Second mortgages?
Equity lines?
City Repair loans?
Car payments?
Anything loan or note, or debt they have taken out EVER?
All of these can be recorded as “liens” against the home, and the seller may not even know about it, let alone the neighbors.
CHECK THAT TITLE!
I promise you, if you sell to someone “Seller financed” or not, title WILL be checked at some point, and if you pass this on to someone else, it will cost YOU CASH!!!$!$!$!$!

Do not EVER rely on “how nice” or “How honest” someone appears to be.
VERIFY EVERYTHING YOURSELF!
In my area, I can goto a title company and have them check title for under $100, and it is WELL WORTH IT!!

You will not be able to pass the title on to a new buyer without first knowing the title is clear, UNLESS that buyer is willing to take the title and ALL encumbrances associated with it.

And, if this does not sink in, then I may have some BIG deals for you.

(/Sarcasm off)

Seriously though, PLEASE check title, and save yourself hassle down the road.

If you do not know enough to check title, then how on earth are you going to sell this home successfully using owner financing?

Good luck,
Jim IL

#10

Re: Please Advise! (Thanks) - Posted by JohnBoy

Posted by JohnBoy on December 19, 2000 at 19:48:06:

That isn’t a reason for NOT checking title. What neighbors may say have NOTHING to do with anything. ALWAYS VERIFY EVERYTHING! NEVER take anyone’s word on something like this and NEVER just ASSUME things must be OK because other people may say good things about someone.

HOW do you know these people never took out a second mortgage that they may have forgotten to tell you about??? HOW do you know their isn’t a lien of some type that was tied to this property the sellers forgot to tell you about??? HOW do you know what equity you have until you VERIFY title FIRST???

Now you are ready to just sell this with owner financing without even knowing FOR SURE that your selling price will in FACT be for more than what is really owed against the property??? Well, WHAT IF, it turns out that their IS some other liens against the property OR that IF the sellers owe MORE than what they THINK they owe on the property…and now you ended up selling this for LESS than the amount owed??? Do YOU have the funds ready available to make up the difference just in case you might be WRONG about this and find out later you need several THOUSAND bucks to out of YOUR pocket in order to deliver clear title to YOUR buyers???

BEFORE you sell this to ANYONE, go down and VERIFY title FIRST!!! Otherwise you just might end up with the surprise of your life by finding out after it’s TO LATE that you will need to cough up THOUSANDS just to deliver clear title because you THOUGHT everything was fine just because the sellers did live in the house!

What does the fact that the sellers live in the house and that they lived their for some time have to do with anything??? That means absolutely NOTHING!!!

Get down to the county courthouse and CHECK the title on this!!! If you’re not sure on how to do this then have an attorney or local title company do this for you. It is WELL WORTH the couple hundred bucks to COVER YOUR A$$!!!

#11

Re: Oh my! - Posted by Mike M

Posted by Mike M on December 19, 2000 at 21:16:09:

I don’t have the cash to pay for that right now. I’ll do it after I get some cash from my buyer!
That’s the only way I know “No Money Down”

I can always back out at a later time.

Mike M

#12

Worst Case scenario… - Posted by Anthony - OH

Posted by Anthony - OH on December 20, 2000 at 02:08:50:

A buyer sees the house and hands you a contract with his signature at the bottom and a deposit check. Oh and he wants to close with his lawyer in a week.

You go and have a title search done cuz everyone here is paranoid.

All the people that could possibly have leans on the property DO… Lets say its a 100K house financed with a second MTG at 125%

So now you are panicking.

Tomorrow the lender calls and says you have until the end of the week to come up with the money or they are foreclosing on YOU!

You are thinking of leaving the country when the buyer’s lawyer calls you and says they are suing you for not performing on the contract.

This business is about limiting risk. Ok so you don’t have the $100. Go to the courthouse and ask someone to help. They will act like you’re an annoyance, but thier bosses are elected, so they usually are helpful.

You were able to get the deed recorded, but you didn’t pursue finding out if the property had other liens on it???

#13

Re: Oh my! - Posted by JohnBoy

Posted by JohnBoy on December 19, 2000 at 23:26:52:

How can you back out at a later time? You already recorded the deed in your name! YOU now own the property, period! If you sell it and collect money from your buyer, how can you back out of that later??? You would have already entered into a binding contract and you could not just back out of it later!

Also, if you recorded the deed in your name instead of having the seller deed the property into a trust first and naming the seller as the beneficiary of the trust and then having the seller assign his beneficial interest to you…you will have left yourself wide open for the lender to find out about the transfer of title. If the lender was to check title for any reason and found out you are the person on title now instead of the owner, they can call the loan due. If that was to happen, can you qualify to get new financing in your name in order to pay off the lender so you can protect your buyer’s interest?

Did you disclose to the seller about the risk of the lender being able to call the loan due if they ever found out about the transfer of title? Did you have the seller SIGN a disclosure statement to protect yourself in the event something like this ever happened?

Did you sit down and READ the mortgage the sellers have on the property? Is it a fixed rate loan, variable rate? Does it have a balloon due or is it a 30 year fixed?