Why Delinquent Tax Sellers are Problematic They are Dead (LA 1055)

Why Delinquent Tax Sellers are Problematic They are Dead (LA 1055)


Steven Butala:                   Steve and Jill here.

Jill DeWit:                            Hola.

Steven Butala:                   Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.

Jill DeWit:                            And I’m Jill DeWit from sunny southern California.

Steven Butala:                   Today Jill and I talk about why delinquent tax sellers are problematic, and it’s usually because they’re dead. I actually have a lot to say about this topic. There was an interesting lawsuit in Arizona, very recently, less than 12 months ago. I’ll talk all about it during the show.

Jill DeWit:                            Cool.

Steven Butala:                   When people have passed away and they’re the sole owner of a property and they have heirs, it’s very difficult now in some states to foreclose without giving notice to the heirs. That all changed less than 12 months ago. I’ll give all the details on the show here. But before we get into it, let’s take a question posted by one of our members on the landinvestors.com online community, it’s free.

Jill DeWit:                            Nick shares: “I plan on using PATLive for my second mailer.” That tells me he got overwhelmed the first time, which is good. “I found it difficult to answer calls at work. With PATLive will I be able to call sellers back after work hours? Will the sellers find this unusual to receive calls after normal work hours? I don’t want to give the impression that I’m a part time land investor, which I am. Or am I overthinking this?”

Steven Butala:                   So there’s a ton of answers on this question.

Jill DeWit:                            Can I give mine first?

Steven Butala:                   Yes, I would love for you to, and then I chose one of the answers [crosstalk 00:01:31]

Jill DeWit:                            Okay. First of all, just so everybody knows and is clear, PATLive is a great solution and we really encourage people, especially in situations like this where you can’t hire someone, maybe you don’t have the budget to hire someone to answer your phone, or you are working a job. We have a great deal that we offer to our members, its 20% off. Which, by the way, I have to say, that’s the most I could get out of them, is 20% of their normal rate. And so then what they told me was so cool, they said, “We’ll give you 20% off if you want to keep 5, 10, 15%, give them whatever discount you want, you can do it.”

Jill DeWit:                            But you know what, we’re the kind of people, this is how we roll. We give our people the full 20% off. I don’t get anything from it. I want our people to be successful and it’s a good deal.

Steven Butala:                   Land Academy was put together by Jill and I to help people.

Jill DeWit:                            Exactly.

Steven Butala:                   To provide the data and the tools that we use to be successful buying and selling land. It’s not a profit center for us, it never will be. The real benefit that we get out of it is providing these tools to you and educating you so you and I can go be business partners together long term and make tons and tons of money.

Jill DeWit:                            Ding ding.

Steven Butala:                   And so there’s lots of people who have a different take on this out there, I’m noticing recently, that feel like they need to somehow participate in this from an education standpoint to their own benefit. And so it saddens Jill and I, quite honestly.

Jill DeWit:                            It does. It’s not the right reasons.

Steven Butala:                   Yeah, we look at this like a .org and we always have.

Jill DeWit:                            It was a .org at one time. That’s true. Maybe we should go back to that, we still have it. Okay. So here’s one of Nick’s comments from one of our members, which is really cool. Oh, you know, I was going to say also, I didn’t answer the question. Answer the question, Claire. That’s your line. I had to get that in there.

Jill DeWit:                            So I will answer the question. No, as long as you properly convey, the sellers could think that you’re just on another line. They could think that you’re out looking at property. They don’t necessarily know the reason why you’re not able to get to the phone at that time. So all you do is set up with your script, and we provide all kinds of information free, to help you with coming up with a little script to get them going.

Jill DeWit:                            And then just have the people who answer the calls for you say that “he’s not available right now, he is available to call you back in this window, does that work for you? Or is there a time better for you?” And that’s how you solve it. And that works out perfect. And I know we have lots of members that do it that way. And it’s great.

Steven Butala:                   Here’s what’s going on in the head of a seller when they call you back: they’re usually in one of two camps. One, don’t ever contact me again, because your offer’s silly, and that’s fine.

Jill DeWit:                            Or they don’t want to sell for whatever reason.

Steven Butala:                   Right. Or number two, I can’t believe I just got a letter in the mail where these people want to give me $4000 for something I never cared about. They will find you.

Jill DeWit:                            And they’ll wait for you to call you back.

Steven Butala:                   Those people don’t care if you’re a part time investor, a full time investor, or if you have two heads. They want a cashier’s check from you in a couple of weeks. And they’ll call and call and call. And then to a much lesser degree, maybe the minority, there’s a few in there where Jill or her staff have to go in and say, “you know what,” like we talked about yesterday on the show, “16,000’s not going to work for us for an acquisition price, but 2500 will. And here’s why.” And then it goes 50/50 on that.

Steven Butala:                   Sometimes they take it, sometimes they don’t.

Jill DeWit:                            And that’s okay.

Steven Butala:                   Yeah. So I’m trying to prepare people who have never sent a mailer out but listen to the show, that’s really what happens. And it’s been happening since the ’90s the exact same way. Nothing changes.

Jill DeWit:                            Let’s pick a day and let’s just make a recording day. A call recording day that we’ll just share a handful of my best calls, good, bad, and otherwise.

Steven Butala:                   Well I think what I’m going to do, and we talked about this yesterday, is I’m going to start a whole new podcast, and we’ll do one or two-

Jill DeWit:                            Stop, really? How cool is that?

Steven Butala:                   Yeah, but it won’t be us. It won’t be us at all, it’ll be audio only, and it’ll just be you or your staff or phone calls. Maybe one or two a day.

Jill DeWit:                            How fun is that?

Steven Butala:                   Because we get a million a day. Yeah. And that’s the whole show.

Jill DeWit:                            I love it. “Here’s some of the calls I took today.” That would be great, I think that would be hilarious. You know what else I could do, I could do Facebook Live, I don’t know I’m thinking ahead. I could take some live calls on speakerphone, let them hear me. That would be so flipping funny.

Steven Butala:                   Oh my gosh, that’s brilliant.

Jill DeWit:                            Could you imagine?

Steven Butala:                   Very conscious of not giving us more stuff to do.

Jill DeWit:                            I know. Thank you. Okay. Here’s one of the comments from one of our members: “Nick, don’t worry about letting people know you’re a part time land investor. I actually tell my sellers that I’m just a regular guy, trying to buy real estate on the side.”

Steven Butala:                   He nailed it.

Jill DeWit:                            “and don’t worry about calling the sellers after work hours. As long as it’s not too late, check the time zone, they won’t mind. Especially if they’ve given positive info on PATLive. I talked to a nice gentleman at 8:00 on a Sunday evening once, he was just sitting down watching some television, wanting to sell his 40 acre parcel that he never uses.”

Steven Butala:                   That’s it.

Jill DeWit:                            “just send the mail and return the calls when you can.”

Steven Butala:                   That’s it.

Jill DeWit:                            There you go. They don’t care, it’s okay. And you know too, some of it is just really how you approach it. Like, “I know I’m calling really late, I just got your message, I’m so excited to talk to you.” And then that defuses it all right there.

Steven Butala:                   Can I say this too, because Jill and I have been working in the same office again, like it’s 2010, I have to tell you, Jill is a big personality on the phone. She’s super positive, like she is on the show. She’s super positive, she really creates, within seconds, creates a relationship with whoever’s on the other end of the phone, so that it makes it very difficult for them to be angry. They want to please her.

Jill DeWit:                            Thanks.

Steven Butala:                   And so we have a bunch of people who work with us on our staff, both in and out of the office, in a transaction coordinator type role, and the ones who really succeed have a big personality. They want to call her, they want to talk to her. After five or ten seconds of Jill answering the phone, they want to sit there and talk to her. They want to sell a property and please her. So it really counts. This phone thing, you’ve heard me for years if you listen to the show, just say, “Man, I don’t like talking on the phone, I’m not that kind of person. I’m the data person,” and all of it. You have to have somebody on your team whether it’s you or somebody that’s your partner be the phone person and be that personality.

Steven Butala:                   It really brings this whole business model home.

Jill DeWit:                            Thank you. Oh, that was a nice compliment, thank you very much.

Steven Butala:                   Today’s topic: why delinquent tax sellers are problematic, and it’s usually because they’re dead. This is the meat of the show. As I mentioned right in the beginning, there’s a case where a person went and purchased a tax lien in Arizona and foreclosed on it. Not all tax liens are forecloseable, but some are, and I’m not going to get into that now. But this one was forecloseable, the buyer of the tax lien, just by buying a tax lien in any back tax amount in a year, you get equitable title to the property. Which means you have an interest in it, but you don’t own it yet, but you have an interest in it.

Steven Butala:                   And if you have an interest in it in Arizona, the way the statutes are written, you can foreclose on it. And the seller has one of two options: they either pay you the amount of the back tax of the lien that you purchased, pay you plus interest, plus some admin fees and stuff on top of it, or you get the property if you foreclose on it. And if you’re dead, and your heirs aren’t anywhere to be found, and you show notice according to statutes and stuff, you own the property. And there’s a very good chance you’re going to have a successful foreclosure suit if the person’s dead, obviously.

Steven Butala:                   Well the court ruled actually, in Arizona, that the heirs do have a claim, and that there’s a statutory period now, following the foreclosure where they can come in and say, if the seller’s actually dead, and he’s the only one on the deed, or she, that they do have a claim. And that you have to, in your process of foreclosing on the property, find the heirs and serve them, just as you would the owner.

Steven Butala:                   So this big long speech here, if you’re in the foreclosure business like we are, it adds time and money and it’s a lot of steps. And it’s okay because what we’re doing now is we’re altering the properties that we choose to foreclose on. If the person’s passed away, we just leave it alone. And that’s it.

Jill DeWit:                            It’s not that it’s impossible, it’s just extra steps and extra time and extra length. And as long as you know what you’re getting into, do your homework, you can do it.

Steven Butala:                   This is another reason why we just don’t focus on delinquent property.

Jill DeWit:                            True.

Steven Butala:                   So there’s other programs out there that just focus on back tax property, whether it’s tax liens or tax deeds, and I’ll tell you, you’re asking for a lot of trouble if that’s your only business.

Jill DeWit:                            Right.

Steven Butala:                   Back tax property, there’s a reason that properties fall into a delinquent state. And it’s because there’s issues. There could be liens, there could be all kinds of stuff going on, so it really takes the right type of personality. Unfortunately for Jill, I have that personality to work through all this stuff and systematically make it work for us.

Jill DeWit:                            Jill has therapy twice a week because of it, just kidding.

Steven Butala:                   So to be super clear, we dramatically make way more decisions out of what comes back in the mail than we do on delinquent tax properties. But I’ll tell you, I foreclosed on a property once, a very large piece of property in Maricopa County, that was all subdivided into 40 acre properties, and I netted $1.2 million on it. So it’s worth it.

Jill DeWit:                            Can I add something now?

Steven Butala:                   Yeah.

Jill DeWit:                            Okay, I want to make sure this is clear. Just because someone’s behind six months or a year, is not a big deal. So there are many people that they stopped paying maybe a year or two ago, and they get your letter and now here you come. Don’t be worried about it, I just rolled right into the offer price. Once I find out, oh they haven’t paid their taxes in two years, I might change my offer price going, “I’m going to catch you up at the same time I’m doing this. My offer price is now this.” And they get it. And they know it. So those kind of situations are very easy, no problem, it’s a normal purchase. Nothing funny or special that you need to do.

Steven Butala:                   And that’s the deal with sending out mail. Here’s a fishing analogy: buying a tax lien and foreclosing on it is like dropping a line in the water, without any electronic fish finding devices or whatever, and just kind of see what’s going to happen. Sending out mail is like casting a two mile wide net. And you’re going to catch every single fish within two miles and drag it up into your boat. Because when you send the mail out, you hit the back tax people anyway. You’re going to get it all, and then you’re going to decide which ones you really want to buy. So the delinquent property thing happens to be what this episode is about, but it’s not our business model by any stretch.

Jill DeWit:                            Right.

Steven Butala:                   So I don’t want to leave the impression that, you know there’s these late night TV shows on, and they show picture of a beautiful house that somebody bought for 1200 bucks on a back tax sale. That’s all possible, extremely unlikely in the real world.

Jill DeWit:                            Right. I bet the lottery numbers are higher.

Steven Butala:                   Yeah.

Jill DeWit:                            That’s so funny. That’s good, I love it.

Steven Butala:                   Hey, we know your time’s valuable, thanks for spending some of it with us today anyway. Join us next time for an episode called “It’s time for us to hire staff again”.

Jill DeWit:                            I feel like we’re always doing this.

Steven Butala:                   So do I, Jill.

Jill DeWit:                            Oh my goodness. And we answer your questions posted on our online community found at landinvestors.com. It is free.

Steven Butala:                   You are not alone in your real estate ambitions.

Jill DeWit:                            I am not going to get too into the hiring thing right now, because we’re going to talk about it tomorrow, but I’ll just leave it at that. Wherever you’re watching, wherever you’re listening, please subscribe and rate us there. We’re Steve and Jill.

Steven Butala:                   We’re Steve and Jill. Information-

Jill DeWit:                            And inspiration-

Steven Butala:                   To buy undervalued property.


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