How to Close the Deal on a Piece of Land (LA 916)
Steven Butala: Steve and Jill here.
Jill DeWit: Hello.
Steven Butala: Welcome to The Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWit: I’m Jill DeWit, broadcasting from sunny Southern California.
Steven Butala: Today we talk about how to close a deal on a piece of land. Somebody signs your offer and they sent it back, what the hell do you do now?
Jill DeWit: It’s like, “Uh-oh, what do I do know?” We can help.
Steven Butala: We’ve all been there.
Jill DeWit: Exactly.
Steven Butala: Before we get into it, though, let’s take a question posted by one of our members on thelandinvestors.com online community, it’s free.
Jill DeWit: Jason asked, “I have recently been scrubbing out anything that has a business name such as LLC, Inc., corporation, et cetera. I was never getting any deals from these so I thought I’d just exclude them from the start. Does anyone else leave them in or out? I’m curious what others have seen. Thanks.”
Steven Butala: Jill?
Jill DeWit: I know what we do. We leave ’em in, but I don’t send ’em 40. If the same person … If you see the same LLC owns 40 deals, they don’t need 40 letters. They’ll figure it out. You just … You can send them one. That’s okay, and you don’t even have to put all of ’em on there, you can just send them the one and they’ll get it, ’cause all of our stuff is in LLCs. You never know who you might be missing because … It’s not even just us, there’s a lot of trusts and other entities that people choose to take ownership in. That doesn’t mean that it’s someone that wouldn’t want to get your offer, so if you take those out you could be missing some good deals.
Steven Butala: She’s absolutely right. You absolutely want to keep those in. Those are the professional people that are in the real estate business-
Jill DeWit: True-
Steven Butala: That want to own real estate, especially for info lots. Those are the people who own lots that they’re gonna build on. They’re the people who are gonna buy this property from you when you buy it, so-
Jill DeWit: Ding ding! That’s right, too. Once you close on the other one [crosstalk 00:01:56]-
Steven Butala: Don’t take those out.
Jill DeWit: Call them, too. By the way, hang on to that data.
Steven Butala: We buy property from churches and companies all the time. What you do want to take out is the City of Los Angeles or the city of whatever. Any municipality, Bureau of Land Management, any government agency, hospitals, and just stuff where you know there’s such a small chance that they’re gonna actually sell the property, too.
Jill DeWit: Right, that it was like it’s a mistake or something. That’s cool.
Steven Butala: Today’s topic, how to close a deal on a piece of land. This is the meat of the show. I’m also happy to report it’s Jill’s show.
Jill DeWit: Well, you know that’s the whole thing about us and how we got … How this has been the core theme of how we run our business. It’s always been, “Steven, make my phone ring”, and then once the phone rings, whether it’s on the buy side or the sell side, that’s my job, is marketing. What does this mean? Steven did all his work. He picked the right county. He priced them perfectly. They went out. Now they are … They now want to sell. They signed it, they sent it back. What do I do and how do I close this deal? I’m not gonna talk about due diligence and what you need to do there, but I’m just gonna talk about the actual deal. I’m gonna tell you … The deal comes in, you’ve done your due diligence, it passes all your test. You checked everything. Your pricing was spot on or you got it to where you needed it to be and you’re now ready to do it. What do I do?
Jill DeWit: You have two ways to do this. You could either do a self close or you could do an escrow or attorney close, a traditional kind of close, like how we usually buy a house. If you’re doing a self close, this would be … I’ll tell you what that’s for and I’ll tell you kind of the steps and then I’ll tell you the other way. A self close is usually for a property that it’s not very expensive. Maybe it’s a couple thousand dollars. Let’s just say it’s $2,000. We usually tell people starting out, under $5,000 or whatever your comfort level is, that’s where you set that amount. It also is one that you’re very easy to find all the information. There’s no weird things with the title. Everybody’s alive and able to sign. You went back in your due diligence. If you’re a member of ours you have TitlePro247.
Jill DeWit: Let’s just say you went to TitlePro and you looked back and saw, “Wow, they owned it for 20 years and then right before his Dad owned it for 10.” Okay, it passes all my tests. You’ve checked your … Everything … Nothing that tells you there’s anything to be concerned about. It’s very easy to do this. What you’re actually doing is basically completing the transaction yourself. It’s like buying a car not needing to use a salesman. We all know we can [crosstalk 00:04:57]-
Steven Butala: A dealer.
Jill DeWit: Or a dealer, right. We all know I can buy my own car off Craigslist. I don’t have to go to a dealer and I don’t have to go stand at the DMV to do this with the guy. I can do it and I can walk in and just get it done, get it recorded kind of thing. It’s the same with property. I can do it myself. Literally, I could actually do this with my house. This dollar amount that I’m setting, by the way, is my personal preference. You could literally sell me my … Your house or something. You could sell me something huge if I want to. We could write a purchase agreement on a cocktail napkin and do it, so I want you to know there’s nothing not real about it. It’s very … It’s …
Steven Butala: It’s legit.
Jill DeWit: It’s legit. What do you do is basically now you gotta recreate the thing. If you have a car, you have a pink slip. Well, for the property you have a deed, so what you’re gonna have to do is … Normally you’re buying it. I’m saying Arizona, traditionally how it goes, and my seller … What’s his … I’ll give you a real example. Let’s say I’m in Arizona, property I’m buying is in California and my seller lives in Illinois. Very, very common, so what am I doing? I’m gonna create the deed. I’m going to set up a notary in Illinois to close the deal for me and issue the payment and get it back to me. Am I going into too much detail? Or do you want [crosstalk 00:06:16]-
Steven Butala: No-
Jill DeWit: Keep … Okay.
Steven Butala: No, this is great.
Jill DeWit: Am I talking too much?
Steven Butala: Heck no.
Jill DeWit: Okay.
Steven Butala: This is important.
Jill DeWit: Okay. I’m getting kind of detailed here, so I want to make sure that I’m … It’s where you want me to go. What I’m gonna do is basically we use Deed Perfect, that’s a company that we made that spits out a deed. I’m gonna make arrangements with the seller and say, “All right, Mr. Seller, thank you very much. We’re gonna buy your property. We all agreed on $2,000. I’m gonna send you a cashier’s check on … What day’s good for you? Tuesday, great. All right. Here’s what we’re gonna do. I’m gonna arrange a notary to come to your house. Make sure your wife’s there ’cause you’re both on the deed. Would you say two and four o’clock? Great, I’ll set it all up. Make sure you both are there and they will present the deed and at that same time they will hand you a cashier’s check for the $2,000.” Yay! That’s what you’re doing.
Jill DeWit: Now, I’m gonna hang up the phone. This is on Thursday. I’m calling the notary, making all the arrangements with the notary. Usually I pay about $50. 50, $75 for a service like this, and you can go to like Notary 123, I think that’s a company that I’ve used in the past. There’s a bunch out there now that you can find online. You’re just calling a notary in the area of the seller, saying, “Hi, I need you to sign. I’ve got two sellers, husband and wife. I’m gonna overnight you a one-page warranty deed and a cashier’s check. I’m gonna have an envelope with payment in there for you to give to them and here’s their address. Here’s their contact information. Fantastic.”
Jill DeWit: Basically, you’re just setting up the closing for ’em. You’re gonna overnight the documents to the notary The notary’s gonna go to their house, meet them, get the signing of the deed and hand them the check. Now the seller’s all done and then they’re gonna put that in an envelope and send it back to you. What do I do? Well, I just send it in to get recorded. That is basically the gist of a self close. No title insurance was needed, too, by the way. They’re not involved in this part ’cause it’s that low of a property. I feel that good about it. It’s rural vacant land. No one’s gonna build on it right away. It’s not needed.
Jill DeWit: Do you want me to add anything before I go to the next one?
Steven Butala: No, I think you covered it all. More and more and more there’s a lot less of this happening in our group.
Jill DeWit: That’s true.
Steven Butala: This is-
Jill DeWit: They’re doing bigger deals. Yeah.
Steven Butala: Jill will talk about now the importance of a title escrow attorney close. Can’t build on … Can’t lend against a piece of property that doesn’t have title insurance on it or unless it’s very unconventional. It’s very popular with rural vacant land. You buy a 40-acre property for 10,000 bucks, sell it for 20. Everybody just, you know …
Jill DeWit: They just want to hunt on it-
Steven Butala: Yeah, or-
Jill DeWit: Maybe use it for motorcycles [crosstalk 00:08:55]-
Steven Butala: Maybe build a shack themselves, you know?
Jill DeWit: Something different [crosstalk 00:08:59]-
Steven Butala: Yeah, or they just want to own it or [crosstalk 00:08:59]-
Jill DeWit: Park their RV on it now and then.
Steven Butala: It … How you close on a property depends on how it’s going to be used afterward. If you intend to sell a property to a builder who’s gonna build a house on it and probably lend against it, and certainly the person who buys it’s gonna get a mortgage on it, you need to do it the way that Jill’s gonna describe now.
Jill DeWit: You don’t have to know going into it, too, by the way, can you get title insurance after the fact? Yes. You can get it later on. You don’t have to do it-
Steven Butala: That’s right.
Jill DeWit: At that time, so don’t think you’re making a mistake-
Steven Butala: Yeah, you can always go back.
Jill DeWit: If you don’t get it right then and you say, “Oh shucks, I need title insurance ’cause this guy wants to do something with it.” That can be added later on. You can do it, so perfect. You can actually just do it when you go to sell it. At that point, do the title insurance.
Steven Butala: There’s some risk associated with that, because just depends on who you close it through, but … Go ahead.
Jill DeWit: Okay. Want me to go the next-
Steven Butala: Yeah.
Jill DeWit: The other way?
Steven Butala: Yeah.
Jill DeWit: Okay. Now, the other way … Okay, so you sent out the mail. Past your due diligence. Comes back. You’re all excited, ready to do this. We’re talking $20,000. I’m not gonna do a self close for $20,000. I don’t feel that good about it. Heck, that’s a lot of money. I have a lot to lose and I just want to make sure it’s done right, and/or, the wife passed on, we got a trust. There’s a thing going on over here. I’m not gonna do a self close on this one, too. I need to get it done right.
Jill DeWit: There’s two ways to do it. It all falls into … It’s like an attorney/escrow, and you … They don’t go together, it’s one or the other. Let me throw this out to you. My first choice … Like I’m doing Land Academy deal funding now, so one of my new processes on these larger deals, first thing I’m gonna do is I’m gonna see if I can find … It’s real easy to go online to Google, “real estate investor attorney.” That’s what these guys do. They don’t divorces, too, and custody cases or whatever, they just do real estate investor transactions. You want to call them first and find one in the state that the property is in and … Or actually, it doesn’t have to be, but for that state ’cause some attorneys will do others.
Jill DeWit: Anyway, you basically … They can do the transaction for you. They can complete the whole thing with or without title, and it’s so nice and I feel so comfortable going to their attorney, and guess what? This is all they do, by the way. They are faster and often less expensive if you can find the right guy. I know people that have got it down to between $750 and a thousand dollars, believe it or not, going through an attorney with this kind of transaction and they’re doing all the work for you, by the way. They’re doing the notary, they’re taking care [crosstalk 00:11:45]-
Steven Butala: Right, and they’re doing it [inaudible 00:11:45] directly.
Jill DeWit: Yeah, they’re doing it the right way. They’re going to deed for you, you don’t have to think about it. Check this out, it’s the best part. Some of them are even so fast and so dialed in to doing this that they can do them in 24 hours if you don’t need title and they can do ’em in 72 hours if you do need title. I mean, even if it’s twice that, I’m thrilled.
Steven Butala: That’s … [crosstalk 00:12:05] I mean, a regular deal takes for us usually takes 30 to 45 days.
Jill DeWit: Exactly. It can take a lot longer. That’s my first way. Now, when it comes through, if I’m not able to find an attorney in the area that I can do that, then my next backup plan or just my backup plan is a traditional escrow agent, and you would go through an escrow. It’s just like you would … You’re buying your house or selling your house going through escrow. When you call, call around and check the rates, ’cause there are different rates. You’d be surprised what they charge. It’s all over the place for the same thing. You’re gonna go with the hack. Why would I choose this one? Or, why would I choose this one? If you’re like us, you’re an investor. Ask for investor rates.
Jill DeWit: You’re reselling, so I want you to ask for a hold open policy, ’cause what that means is they’re gonna open title and do everything for you on the buy side, but you know you’re just gonna turn around and sell it. You’re not living on it. This is not your thing. You’re gonna try and sell it. It’s kind of like it stays in limbo if you will, and then it’s cheaper and faster when you go to sell it to close escrow on the sales side.
Steven Butala: They already ordered the title work, all of that stuff. One escrow, one number literally closes. You own the property. They reopen another escrow to put all the files in there and all the work and the research and stuff-
Jill DeWit: It’s all done.
Steven Butala: Is done. They just refile a deed and assign that title policy.
Jill DeWit: Exactly.
Steven Butala: It takes literally hours instead of a month.
Jill DeWit: Exactly, and it’s yet less expensive. You’ll pay … I traditionally pay a couple hundred dollars more on the front end, but it saves like a thousand on the backend is really how it goes. They do the work for you. Now, the hardest part of this is dealing with an escrow agent, ’cause we all know time kills deals.
Steven Butala: That’s for sure.
Jill DeWit: Whether you’re buying or you’re selling. I have backed out of deals and said, “They goofed up. Time killed the deal here. I moved on. I don’t want it now. I have a better deal over here. I’m walking.” That could happen, so that’s the hardest part about an escrow close. They’re doing all the work. They’re … The notary and the title work and getting the signing and the deed and the closing, but it takes longer and it … They just have to kind of … It shouldn’t, which is interesting because all of the deals that we’re doing are all cash, even though we all tell ’em, they still just … I just think they just have their way of doing things, ’cause there’s no inspection needed. There’s not a mortgage. Half the documents when you buy the … It’s like six pieces of paper versus 60 pieces of paper for what we’re doing, but still it’s you have to kind of get ’em going.
Jill DeWit: Once you have a good escrow agent and you have that relationship, hang on to ’em. Use ’em, run all your deals through them. Some will do in different states, it doesn’t have to be in that state. Do you want to add some more?
Steven Butala: Yeah, so with escrow agents, nobody ever talks about this. With escrow agents, they’re very emotional for a lot of reasons and they’re very overworked and underpaid.
Jill DeWit: It’s true.
Steven Butala: Lawyers are not. Lawyers have no emotion at all. They could care less about this transaction, so consequently-
Jill DeWit: This is awesome!
Steven Butala: Consequently, it gets done really fast. He expects to get paid. He actually probably pays himself right out of the HUD-1 Closing Statement, and it’s just another deal.
Jill DeWit: It’s true.
Steven Butala: The more the better, so dealing with lawyers is … There’s 180 degrees from what we used to teach even three or four years ago. Dealing with lawyers that this is all they do is a really good idea. You do not want a family law lawyer or a trial attorney closing your real estate deal.
Jill DeWit: Right, then it’ll take 60 days.
Steven Butala: Go on Google and … Yeah. Go on Google and there are lawyers that this is all they do. They do a thousand deals a month.
Jill DeWit: Exactly. That’s how we do ’em right now. Exactly how we do ’em. That part hasn’t changed.
Steven Butala: Great work, Jill.
Jill DeWit: Thank you.
Steven Butala: Well, [inaudible 00:16:22] to spend another, I don’t know, 20 minutes listening to The Land Academy Show. Join us next time where Jill talks about, now you own it, how do you sell a piece of land on the internet?
Jill DeWit: Cool, and we answer your questions posted on our online community, landinvestors.com. It’s free.
Steven Butala: You are not alone in your real estate ambition.
Jill DeWit: Good stuff.
Steven Butala: Good work.
Jill DeWit: Thank you. That’s a lot.
Steven Butala: Closing these deals is … Closing these deals … What I learned about closing deals is that I never want to close a deal anymore, and so [crosstalk 00:16:58]-
Jill DeWit: Do a self close.
Steven Butala: What we teach … No. No, no, no. Just have somebody else do it. In a perfect world, in a way of … People … Members now who have been in our group for a year or two years, they don’t do any of this stuff anymore. They have an assistant or two assistants handling all the stuff for ’em. Even with dealing with the transaction coordinators and/or the attorneys or however it works, but you needed to know about it.
Jill DeWit: Exactly.
Steven Butala: You do need to close a bunch of deals yourself so you know what’s involved.
Jill DeWit: Exactly. It is good to do to get your feet wet a little bit. Do a couple little ones, even when you just … You could buy something cheap. You know what? This is a good thing we haven’t talked about. You buy something cheap, it’s your first property. You got it in your name now. Sell it to your wife and then have … When it sells again, your wife deeds it to that guy. Still-
Steven Butala: It’s just a practice.
Jill DeWit: A little practice, getting it recorded and what that’s all about, and then you sell it and how to do that. That’s really good.
Steven Butala: First one’s the hardest, then it’s easy-
Jill DeWit: Exactly.
Steven Butala: Then you don’t want to it anymore at all.
Jill DeWit: That’s true. Wherever you’re watching or wherever you are listening, please rate us there. We are Steve and Jill [crosstalk 00:18:04]-
Steven Butala: We are Steve and Jill. Information-
Jill DeWit: And inspiration-
Steven Butala: To buy undervalued property.
If you have any questions or comments, please feel free to email me directly at steven@BuWit.com.
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