Start to Finish Documents Needed to Buy and Sell a Parcel of Land (LA 1431)
Start to Finish Documents Needed to Buy and Sell a Parcel of Land (LA 1431)
Transcript:
Steven Jack Butala:
Steve and Jill here.
Jill DeWitt:
Hi.
Steven Jack Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWitt:
And I’m Jill DeWitt broadcasting from sunny Southern California.
Steven Jack Butala:
Today, Jill and I talk about start to finish documents that are needed to buy and sell a parcel of land. Again, this is a requested topic by our customer service staff because a lot of people are asking about it.
Jill DeWitt:
I’ll make it really easy. I promise. You know what’s funny? I made some notes here and I’m thinking about what are all the documents? It sounds like, “Oh no, this is going to be hard,” but it’s actually very easy and there’s not a lot. And I’ll explain each and everyone and let you know what’s important.
Steven Jack Butala:
Good. 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. And if you’re a Land Academy member already, please join us on Discord.
Jill DeWitt:
Kyler wrote, “Has anyone had a title company refuse to handle your closing because the purchase price is three times lower than the assessed value? Only two title companies in this county and they said they can’t do it. Never heard of this. With that said, if anyone knows a normal title company in Northern blank state, please refer them.” That’s the stupidest thing I have ever, ever heard. Could you imagine?
Steven Jack Butala:
I responded to this. I actually responded to this and what I said, I’ll say it here again. I’ve been dealing with this in some way my entire career, whether it’s a know-it-all title company or real estate agent that gets wind of the deal and says, “You know what? For that, I’ll buy it,” or, “Hey, I can even do better than that,” or somebody’s sister-in-law says, “What do you mean you’re selling that property for 10 grand. I’m happy to buy it from you for that. Don’t give it away,” so this is part of this business and it needs to be accepted and dealt with. And probably you just need to accept it.
Jill DeWitt:
It’s amazing. It’s almost like I want to say to the title company, “Oh, I’m sorry. Excuse me. What should I be buying it for? What the hell? You shouldn’t be involved in it at all.” It’s like-
Steven Jack Butala:
In small counties, I know this from personal experience, all the title agents talk to each other, regardless of the company that they work for. The people at the county talk to the title companies. If there’s HOA’s anywhere, they all talk to each other.
Jill DeWitt:
All of four them.
Steven Jack Butala:
And date each other. Really I mean it. They’re married to each other or their sister works there or something crazy like that.
Jill DeWitt:
I would just like, go find an attorney then. Go rogue, find another way to do this. If you need title insurance, do you even need title insurance, Kyler? I would maybe get the deal done and then after the fact. That might be the way to do it, close the deal, get it done then saying, “Now let’s get title insurance.”
Steven Jack Butala:
That was exactly my final point like, is it really that necessary?
Jill DeWitt:
Mm-hmm (affirmative).
Steven Jack Butala:
Get it. Buy it. It’s over. Now get insurance and you don’t need to do that at a local company. You can cross state lines on that. Today’s topic are start to finish documents needed to buy and sell a parcel of land. This is the meat of the show. Start us off Jill, what’s document number one?
Jill DeWitt:
Okay. The first document in our business is a combo document. It goes out in the mail. It’s a cover letter, introducing ourselves and our mailer and a purchase agreement with the offer price. So that’s it. It’s mailer/offer, which includes a purchase agreement. Do you want me to keep going?
Steven Jack Butala:
Yes, please. So they sign the document.
Jill DeWitt:
Mm-hmm (affirmative). They send it back.
Steven Jack Butala:
We sign it.
Jill DeWitt:
They take that purchase agreement. They accept our offer. They sign it. They scan it back to me, take a picture of it. I don’t care. I have a copy back now. I can do two things. I can open escrow with that document. I don’t need a book to do this, and I’m going to go through this two ways. I’m going to do self close and then a broker. So don’t worry about it. I got a couple of things, or the escrow way. So the first way is that it sends back to me, and then I can open escrow or I can just close myself. So what’s the documents going to be needed is going to be a deed. That’s kind of it.
I’m talking to him on the phone. I’m figuring out when we want to do the signing. I’m going to be happening to sending them a cashier’s check with the notary, however we’re doing that. That’s not the important part. It’s the documents. So the next thing’s a deed and I’m going to do the deed. It’s going to get to them and the person’s going to… they’re going to sign it. The seller’s going to sign it. It’s going to come back to me and I’m going to go get it recorded. And the only other document I have really is sometimes along with the deed depending on the state, might be an additional P-Corp or some kind of affidavit of property value. There might be an additional document that goes along with the recording, just because they want to keep track of sales prices for the treasurer, for assessment and things like that. They want to know, I don’t know, just tracking the transaction. So that’s it.
Steven Jack Butala:
So it’s just as easy as titling your car?
Jill DeWitt:
Mm-hmm (affirmative). It really is.
Steven Jack Butala:
So if you could create in a word processor, the actual title, and there wasn’t a form to get your car title in your name when you buy a car, that’s as easy as this is.
Jill DeWitt:
Mm-hmm (affirmative).
Steven Jack Butala:
People ask me, every time I get interviewed on a show, 99% of the time, Joe’s with me, they say, “How’d you get into this and how would you buy and sell land and sell it on internet? It’s strange. What happened?” And my answer is, I was involved at the early part of my career in the most complicated real estate transactions you can possibly imagine, buying and selling hospitals and post-acute hospitals and nursing homes and stuff, and their paperwork and the amount of time, and the lawyers that are involved is insane. It would kill the deals. So the pendulum swung all the way back and I consciously started looking around for the easiest transaction to do and Jill just described it.
Jill DeWitt:
Mm-hmm (affirmative). Now, if there’s a broker involved, it’s going to be all the same forms, but times 50. Maybe not 50. Maybe 20, let’s just say because they have all their disclosures and it’s the funniest thing. Every now and then, someone will go, “What the heck?” And I go, “Yeah, you’re right.” There’s even now COVID disclosures that you have to sign for rural vacant land. We’re not even talking to anybody. We’re not seeing anybody and nobody’s touching anything. No one is in the same space. But even though apparently just on the phone, I can catch COVID. I don’t know. It’s stupid, but you still have to find, sign those stupid forms. It’s just a formality. And it’s because brokers are like real estate agents. They’re required to do all these documents, whether or not they apply. And then the same thing with escrow, the documents that I described are the core documents that are required. That’s all that’s needed. All the other fluff is their stuff to make their company [inaudible 00:07:32], their president [inaudible 00:07:33]. It’s part of the escrow requirements. I don’t even know if that’s even… Whatever. Or just the state. Really it’s all around title insurance with the escrow company. That’s really it. So what would you like to add?
Steven Jack Butala:
Jill, when you become a real estate agent, nobody thinks about this for some reason. You go to a class, you take a test, you pass it, you find a brokerage to hang your license on so to speak. You pay probably four to $5,000 at this point for education and association fees and all kinds of stuff. And then as soon as that gets all approved and you physically hang your license on that person’s wall, that broker’s wall, you have opened yourself up to an incredible amount of liability. No one tells you this. They don’t tell you in school about it. They don’t tell you your broker’s never going to sit you down and say, “Wow, you now have to do all these forms,” and they’ve dreamed it up. The local real estate agents, Department of Real Estate in Arizona, it’s ADRE. They’ll dream up new stuff just like this COVID thing that Jill’s talking about.
So in a lot of ways, it’s like getting married. There’s all this stuff. When you’re married, there’s real and implied contracts. Nobody signs anything. You sign a marriage license in the recorder’s office. There’s massive legal and financial ramifications to doing that. No one tells you that. Nobody ever told me that and I’m writing a book called, Stuff Your Father has Never Told You. And believe me, I talk all about that in a chapter about this is… I get that you love this girl. I get it completely. I’m in love with the girl too, but I’m not sure that you understand what you’re getting yourself into and I really wish somebody would have sat you down and explained it like I’m about to.
Jill DeWitt:
Thanks babe.
Steven Jack Butala:
But she loves me. I don’t need a prenup. Mm-hmm (affirmative). Famous last words.
Jill DeWitt:
Exactly. Nothing’s going to happen. This is forever. Oh my gosh. Could you imagine? And now we’re pregnant. Isn’t that great? Oh, don’t get me started.
Steven Jack Butala:
We owe it to the world to do a show on this.
Jill DeWitt:
Yeah. That would be so good. Let’s see. Why undoing a marriage and undoing a contract or something… I don’t know. Why buying a house is easier and better? I don’t know.
Steven Jack Butala:
I have experience on doing both real estate deals and marriages. It’s tough.
Jill DeWitt:
Yeah, you’ve done more than me on both of those, so you are the expert. Oh, that’s funny.
Steven Jack Butala:
Did you cover the second way now?
Jill DeWitt:
Well, the second way was like just broker. It’s really just real straight broker stuff. It’s like the same core documents really apply, but put your helmet on. It’s just probably a drinking word, but… and every broker is going to have their own way of doing them in different forms, even if they’re in the same state. Just don’t worry about it. What you really need to know going into this is just reading things, paying attention, watching, and anything you don’t like, don’t sign or cross it off. That’s what we do all the time. People don’t know that. I think that’s one of the things that you and I talked to all the time. Some of our bigger transactions, we sit and read them. We cross things off. We initial it like, “Oh, heck no,” and things that they just don’t apply. They don’t even make sense.
So you need to know that you have the power and the authority to do that. When there’s a broker, here’s a huge one. Broker’s will, the way we buy and sell properties, I’m usually not… I’m definitely not representing anyone. I’m representing myself and no one’s representing me. So when brokers slide that in there, I’m like, “Hmm, well…” because maybe usually, it’s when I’m selling a property, I will have buyers come forward and there might be a broker involved and they want to get in there and get more money and make it look like they’re representing me. And I’m pretty adamant saying, “No. No. You’re not representing me. I’m representing myself here.” And you have the power to say that and sign it accordingly. So I just want you to know that.
Steven Jack Butala:
It’s called dual representation. And I’m not saying this to you Jill because you know this times 80. I’m saying it to everybody else. Dual representation some lawyer’s bright idea of making sure no one gets sued. If I have a real estate agent, there’s a listing agent who has a property and this happens to Jill and I once in a while, especially with houses where we just find a deal that we know is undervalued, but it’s listed. We will call the listing agent. Never ever bring my own real estate agent in. That’s another person that doesn’t need to stand in the way of me getting a deal done. And every single one without exception, checks that dual agency box where they’re going to represent us and they’re going to represent the seller that they have listing with, so that now I can’t sue them if something goes wrong because they’re representing everybody, not just me or not me.
And Jill and I have just, I don’t know why, we agree on this stuff. Jill and I agree on like 98% of this stuff all the time. I don’t think that. Philosophically, I have a problem with that. You’re going to represent me and get in my corner with me or you’re not. Either way is fine. I mean, if you’re not, then that’s going to be a negotiation target. I just think that’s the way the rule is, the world is I mean.
Jill DeWitt:
Mm-hmm (affirmative). Exactly.
Steven Jack Butala:
Jill, I know that one of your peeves is an endless request for documents by an escrow agent.
Jill DeWitt:
Yes. I can’t take it.
Steven Jack Butala:
So what did they ask you for? I’m not sure you covered that first time around, like what documents do you have to provide an escrow agent or a title agent?
Jill DeWitt:
Well, proof of who you are. Sometimes copies of IDs, maybe proof of funds if it’s a cash thing. We often buy and sell property in company names, so they do want to see some of the incorporation document, so they know that even though I’m putting it in the name of an LLC, that I have the authority to sign. I’m trying to think what else, but it’s sometimes endless and it’s stupid stuff. Like one title company will handle a scanned image back of the HUD-1 and one will require a wet signature, I’m like, “Okay, what’s the difference?” It’s really not. It’s just how they do it. And sometimes it is down to that agent. They’ll be agents in the same office that do things differently and that’s just how they were trained. And it’s probably appropriate. Scanned images are fine, but one just says, “Nope, I need hard copies. That’s just who I am.” Fine. And you have to deal with it.
Steven Jack Butala:
But nine times out of 10, it’s okay. That’s the exception because you’re kind of painting a gruesome picture here.
Jill DeWitt:
Oh, I’m sorry. I didn’t know. Okay. I didn’t mean it like that. No, don’t worry. Just read it, know what it is, and the little things, I just sign them and I don’t care. Like the COVID thing, I giggle. I sign it and I giggle like, “Yep. I promise every time I’m going to be on the property with the person, which I never will be. I will have a mask on and stand six feet apart.” If I need to sign this for you, I’m happy to do that. It’s hilarious.
Steven Jack Butala:
So what do you do? On my desktop right now, I have all the closing documents for each company. So make it easy on yourself. 90% of them should be in there. Maybe they’ll ask you for some weird stuff. The weirdest one that I get is you have to prove, please send the articles of incorporation for the bylaws that say you own the company, Jill owns the company, who can sign. Are you the managing member? They need those documents sometimes. If it’s in a trust, they need a copy of the trust. So just have it all in one place, really easy at your fingertips, so when they ask for it, you can zip the file up and email it to them. That’s the way to do it.
Jill DeWitt:
And that’s what we do. And the nice thing is to, if you’re doing a couple, if you’re like us and you’re working in one area and you’re buying a lot of things through escrow, and you’re going to get a nice established relationship with somebody and they don’t need you to provide it every time, it’s great. They have it. It just makes every deal go faster and smoother and often cheaper. So make sure you ask for these investor rates because of those reasons like, “Hey, we’re doing 10 deals together this month. You guys need to cut me a break.” Yeah, it’s good. Happy you could join us today. Five days a week, you can find us right here on the Land Academy Show.
Steven Jack Butala:
Tomorrow, the episode on the Land Academy Show is called Our New Land Academy Job Board. You are not alone in your real estate ambition. I am personally excited about the Land Academy land investors job board.
Jill DeWitt:
Yeah. Hey, I’m sorry. I didn’t mean to like scare people. Was it bad?
Steven Jack Butala:
No. It’s just a little salty because you can’t help it because after this many deals, we all had a teacher in high school… for me, it was social studies. The guy was just ready to retire. I mean, he just didn’t want to be there. And so I think when you teach the same course material, listen to me talk about course material five days a week for 25, 30 years, I think at the end of that, you’re like, “Yeah, I don’t care about World War II anymore. I just don’t care about talking about it or teaching it.”
Jill DeWitt:
I don’t want to be that guy.
Steven Jack Butala:
That’s all right, so you’re a little saltier like, “Yeah, you got to do this and you got to do this. [inaudible 00:18:04]. One person wants it this way.”
Jill DeWitt:
Got it.
Steven Jack Butala:
The truth is, listener, Jill doesn’t do any of this stuff at all. She’s got a whole staff that does it probably because she’s salty about it.
Jill DeWitt:
No, and it’s not that bad. It’s really not that bad. I really don’t want to get the point across is it’s very easy when you really sit back and look at the documents, and truth time, you really only need a deed. Let’s cut to the chase. Do I need a purchase agreement? No. Do I need the stuff in their hands? No. Do I need it in writing? I could meet you in Starbucks. We could have a phone call and I’ll say, “I’ll give you a thousand dollars for that,” and you say done, and you and I meet in Starbucks, you sign the deed and my notary’s right there, and I hand you a thousand dollars. Now we’re done. So we could really get it down to one document. So don’t worry and don’t stress about this. And for those of you that are part of Land Academy, that’s why we’re here and we won’t let you fall that far.
Steven Jack Butala:
Early in my career, I would meet people at the Maricopa County’s recorder’s office. And they had this one person in there was a notary and I would bring the deed, the person would sign it, sign her notary book, she would stamp it and we would get it recorded. And this is in all of, count to 60. It took that long to do the entire thing. This is before fingerprinting and all of that. Talk about an easy deal. Then, you just hand the person a cashier’s check.
Jill DeWitt:
How great is that? That was smart. That’s good. If you need access to any sort of ownership or property details, including phone numbers and FEMA overlays, check out neighborscoop.com, created by investors, that’s us, for investors like you. We are Steve and Jill.
Steven Jack Butala:
Information-
Jill DeWitt:
And inspiration-
Steven Jack Butala:
To buy undervalued property.
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