Seller, Buyer, and Title! Oh My!

[Matt Smith]

Investment Info:

Single-family residence wholesale investment in Kenedy.

Called on a FSBO sign while following up on another property I manage. The goal was to compare their asking price, since I viewed it as a healthy comp to my property. It would turn out to be such a great deal that I got under contract and assigned it to a hungry investor. Win, win, win. Seller got quick cash close, buyer got great deal, and I got a bonus...right? NOPE!

What made you interested in investing in this type of deal?

FSBO Sign piqued my interest. I'm always looking for my next seller finance deal. You never know unless you ASK.

How did you find this deal and how did you negotiate it?

I called on the FSBO sign and asked about the property. Thinking i would be ball park range of my expectations, I could hardly contain myself when it was offered at HALF! This was an opportunity, no doubt.

How did you finance this deal?

This was offered as a seller finance deal, or straight cash deal. The cash price was so good I felt I could save some time and energy simply by locking it up and assigning. So that's what I did.

How did you add value to the deal?

I added value by promoting it to a hungry investor. A title issue nearly killed it. This deal took lots of time, and lots of legwork. Value was added by solving the title issue in the 13th hr when buyer is about to give up. Most investors, I suspect, would have given up on the deal. It was truly a lesson in dealing with a lazy title co., a family affair that clouded the title, and a lack of trust between the buyer and the seller. Seller didn't believe title problem...at first.

What was the outcome?

Not at all the smooth outcome that I expected. Seller sets price. Buyer (Assignee) agrees on price. But, for some reason they don't trust one another. I mediated for a month. During which a title problem surfaced that involved the seller's family scandal unbeknownst to them. After playing detective, being cross with lazy title service, and driving 8 hrs out of my way (4 hrs each way), I was able to settle the title issue with the attorney that signed a vendor's lien over 15 yrs ago.

Lessons learned? Challenges?

Always ask, especially on FSBOs. You never know when you'll be pleasantly surprised by the offer. Never assume smooth sailing. Great if it is, but prepare for some challenges, and then don't give up when they occur. Always use title service/insurance when dealing with free and clear property. This property seemed fine, but turns out, there were some title problems that needed to be fixed before closing. Be stern with title service and don't let them drag feet.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No agents were involved in this transaction; however, the title company is a big name in Texas, and dealing with the branch manager was PITA. She needs to retire, or remember what it's like to be hungry.