All Forum Posts by: John Cournoyer

Hey everyone. I'll cut right to the chase. I'm a wholesaler in the Seattle area and I'm looking for a way forward. 

I have been operating as a franchisee of one of those home buying outfits for the last 2 years and quite frankly I'm unable to make the business model work right now. Based on the overall analysis of my business, the key problem is cost per lead. When the leads come in, we can close them at a consistent rate, but since I got started, the average cost per lead (through our exclusive advertising partner) has essentially doubled, with a lot of volatility over time. It's very difficult to build a business model around this volatility. I'm being careful not to talk bad about about the company here. In a lot of ways it really works. The bottle neck is affordable lead generation, and my hands are essentially tied as far as alternative ways to generate lead flow, due to exclusivity agreements and such. 

It's a real shame, because nearly every other aspect of the business is really great. I have a lot of good contacts and love the business. My buyers say I bring them good deals and they really want me to keep feeding them. I treat my sellers well, and they write me recommendation letters. The problems is I don't see a way forward without significant recapitalization. 

Is anyone else having this problem? What am I missing? Who should I try to reach out to?

Thanks for the help guys. I looked into it further and the judgement is indeed wiped out. They were properly notified. The code department could just slap it back on there but I'm trying to figure out if they will play ball with me. 

I also cornered my title guy and got it figured out that 3 years is the limitation on contesting the sale in WA. The quiet title action seems more expensive in this state though. I only called one lawyer who was recommended to me by another investor, but he said 5-10k and 3 to 6 months to get it done. My investor partner is ok with keeping it as a rental for 3 years either way, so I'm not as worried about that. It sounds like it's not cheap in my area though. Seems like we can do the deal if the house can be brought to code. It's just a matter of getting a straight answer on that from a seemingly limitless number of different government agencies. Wish me luck!

Thanks @tan su Yeah we've considered doing quiet title but it's mainly the time problem. I don't know if the seller is willing to be in contract all that time and the seller would have to be involved since it's not our title yet. I guess you have to post something in the news paper for like 3 months and then get in front of a judge. It's not really our main issue since we are willing to keep it as a rental for 3 years anyway. We can always pursue quiet title once we buy it and we are rehabbing it. 

I did look into it deeper and I have another title company who is saying they wiped the judgements. I'm supposed to call her later today. That could be good news!

Yeah I get what you're saying on the code violations. In this particular case I'm more concerned about wiping out the $14,000 judgment against the property DUE TO code violations. I realize the code problems are there until we fix them, it's just the big fat judgment I'm trying to wriggle out of, and then work with the county to get the place up to snuff. 

Thanks for the reply Jonathan. Yeah I talked to the title company again and they didn't even look into the judgments about the code violations because they were turned off by the situation the house was auctioned under. He said the owner was deceased at the time so that opens up the can of worms of all his potential heirs potentially contesting the sale. They're still willing to insure after a quiet title action but that can take 6 months and mucho $$$$. So yeah the title company should be doing for me but they pretty much looked long enough to say "no" lol. I've really loved my experience with them in every other aspect though so it's tough. I think I'm going to work with the seller in tracking it down from the county's records. 

Hey Everyone,

I've never posted here but I ran into an interesting scenario I figure someone here has come across in the past. I am primarily a wholesaler in the greater Seattle market and came across a property with a unique situation. The owner of the property purchased the property at a tax foreclosure auction. This is not an IRS foreclosure, but a foreclosure due to state or county property tax delinquency. The owner has the deed to the property but, my title company is telling me they cannot provide title insurance on the property for 3 years due to it being the subject of a tax sale. I guess this has something to do with the redemption period that the former owner or their heirs can object to the sale or contest it somehow. My specific question is about this 3 year period of time. Does everything get magically resolved in 3 years or is there still a clouded title that needs to be resolved?

My title officer is telling me they can insure the title prior to 3 years if it goes through a "quiet title action" which, after talking to a lawyer, sounds like a really cheap and fun thing to do that everyone should try sometime [sarcasm]. 

So that's the setup. To skip to the end, basically I have a partner that I assign things to who is actually comfortable with a lot of risk, and I tied it up so low there's a lot of up-side if I can sort out all the issues with title. My partner is ok with taking title to the property and just keeping it as a rental for 3 years and then trying to sell the property at some point 3 years from now or later. He has cash, so interim financing is not the issue, it's just disposal of the asset is a problem if the title can't be insured. Can anyone explain to me what is materially different about the property 3 years from now?

Second question: There are some judgments on the property. In my experience with trust deed auctions, the judgments always rolled off, but this property is still showing a judgement from the county for code violations. How do I figure out if those are rolled off? I feel like my title officer is not really being that helpful, but i don't really know the right questions to ask since I'm fairly ignorant of the mechanisms of a tax auction. I'm also not the owner of the property so I'm not sure how much anyone will tell me about it if I call. Anybody go through something like this in King County Washington State?

Thanks for any help on this!