What is Marketable Title (CFFL 0234)
What is Marketable Title
Jack Butala: What is Marketable Title. Every Single month we give away a property for free. It’s super simple to qualify. Two simple steps. Leave us your feedback for this podcast on iTunes and number two, get the free ebook at landacademy.com, you don’t even have to read it. Thanks for listening.
Jack Butala: Hey, Jack Butala with Jill DeWit.
Jill DeWit: Hi.
Jack Butala: Welcome to our show today. In this episode, Jill and I talk about what is marketable title. Great show today, Jill. Let’s take a question posted by one of our members on SuccessPlant.com, our free online community.
Jill DeWit: Okay. Ariel wrote, “Hi, all. Finally closed two properties from our first mailing with one more to close. Now the fun part – selling and getting paid. When it comes to selling, we have two types of buyers, as Jill explains: the end user and the other investors. It sounds like selling to other investors is a simpler, much quicker transaction, which I understand as wholesaling the property, whereas selling to an end user can be a longer transaction with more guiding the buyer through the sale. Is this a retail sale and when selling retail, is there a difference in pricing? If my understanding of retailing the property’s correct, I’d be willing to invest extra energy to maximize my return while the volume of deals is low.”
Jack Butala: Jill, you are so way more qualified than me to answer this question. I will give my two cents, though, at the end.
Jill DeWit: Okay. Awesome, Ariel. Talk about well-thought out and putting all the little pieces in here to get all the answers. I love it. Let me chip away at this. First of all, the selling. Yes, you have two options, you’re right. You can wholesale it to another investor, which like we talk about how we do all the time where it’s almost now to the point we just send out a list with parcel information and a price and my buyers go, “I want this one, that one, this one, that one.” We don’t really talk about it. They know the area and all that good stuff. Yeah, I don’t have to do any work. There’s nothing involved in there. Bingo. That is wholesaling. You are right.
Now the other one is yeah, the end user. That’s where you’re making it look different and appealing. You need to make it look great because this person is not an investor. They don’t know the area. They don’t know that property. They don’t really maybe even know what an assessor’s parcel number is, the APN. They know there’s an address and if it’s a property, they don’t understand why it’s not an address. There’s lots of little things. You’re going to do more to it in pictures and, yeah, probably might be a longer process and you might be a little more hand-holding. As you put in your GPS coordinates so they can go look at it because they might want to drive out and look at it and stand on it because they’re the end user. They’re buying this from you because they want their cabin there or whatever it is they want to put there; their tiny house there. That is a retail sale. You are correct. Now can I mark it up and price it differently? Heck yeah. That’s what I do.
Jack Butala: Way different prices.
Jill DeWit: Totally. You’re going to even price it differently whether you’re going to cash sell it to the end user at retail, or you’re going to sell it on terms or payments. That’s a whole other thing, too. You’re going to mark it up even more if they’re going to make payments on it. You’re doing great. All of that really is just personal preference. How do you want it to go? Jack and I choose to flip them, be wholesalers, flip it, move on, and let the next person do that work, so they’ll still make a great profit on it and everybody wins. Jack, what do you want to add?
Jack Butala: Yeah, this is good for you, by-the-way. Bought a couple of properties. That’s awesome and I’m sure you’re going to sell them quickly. I take a pretty hard look at all of our members and see who’s selling what, and everybody seems to be selling really well. Here’s my point. Usually there’s two camps and Jill and I are super fortunate because we’re partners and she’s kind of a sales person and I’m an acquisition person, so we’ve got it covered, but if you’re a one-man show, you either love acquisitions or your love sales, in general. That’s been my experience.
If you love acquisitions, you just find a ten or fifteen wholesale buyers and that’s done. You can just wholesale the heck out of property all the time. In fact, that’s what we do with houses. We have exactly one flipper customer that we’ve had for awhile and we mark it up ten grand and sell it to them. If he doesn’t want it, if the property doesn’t fit it, we just pass and we move on to the next deal. Whatever you do, make a machine out of it. That’s really my advice. Don’t do different stuff all the time or you’re going to spend a lot of time and energy, “Oh, maybe I’ll sell this one retail. Maybe this one …”.
Jill DeWit: That’s true.
Jack Butala: I used to do that and you need a lot of staff.
Jill DeWit: Yeah, and, “This one’s perfect over here and this one’s perfect over there.” You don’t want to do that, too. Like, “I’ll put this one on Zillow and I’ll put this one on eBay and I’ll put this one over here.” Yeah, don’t do that. Just do them all the same way, like you said, Jack. It’s great advice.
Jack Butala: If you have a couple of strong buyers that you’ve done business with before in wholesaling, all you have to do is send them the APN, the assessor’s parcel numbers. You don’t have to do the maps. You don’t have to do anything. They know what to do. They know how to look it up and they can do it on their phone. That’s a huge benefit, in my opinion, Jill. You just don’t have to sell anybody anything or explain it. They’ll say, “I love it. I love it at ten grand, but not at eighteen, like you have it.” Then we say thanks.
Jill DeWit: Exactly.
Jack Butala: Next. They know that, too. Or we say, “All right, fourteen and shut up.”
Jill DeWit: Exactly. I love it.
Jack Butala: If you have a question and you want to be on the show, call 800-725-8816. Today’s show is, “What is Marketable Title?” Should come up more often, I guess, but once in awhile it comes up and I’m going to answer it once and for all here.
Marketable title. The simplest explanation I can give is it’s sellable property. It doesn’t have liens and stuff. The best, simplest example I can give is your house. If you have a house, it’s worth $100,000 and you have a $180,000 mortgage on it. Another word for a mortgage is a lien or an encumbrance. You can’t sell it. It’s no sellable. The strict definition of marketable title is property that is lien- and encumbrance-free so you can sell it. Is this starting to make sense? We only buy property that doesn’t have a mortgage because the seller actually has the power to sign whatever we put in front of them. They don’t have to check with the mortgage company. When there’s a loan on a property, there’s not just a lender involved. There’s lots of people involved. Mortgage insurance people, usually real estate agents, and all kinds of stuff.
Marketable title, for the purposes of this show, is a title that you can convey that is lien- and encumbrance-free. You can sell it. Non-marketable title can mean a lot of things, but it usually means there’s a sizable mortgage on it to the point where you have no control over your property. That was the meat of the show. It was short. Jill loves that it’s short. Jill thinks this show should be four minutes long.
Jill DeWit: Where do we go from … You know it’s funny. I’ve been tasked with coming up with quotes as we do our shows so we can use them on our social media. I’m trying to come up with a quote here. So far the only one I got is, “Let’s just meet at $14,000 and shut up.”
Jack Butala: “Let’s meet in the middle and shut it.”
Jill DeWit: Okay. You know, I think I might do that.
Jack Butala: I have a lot of stories about negotiating like that. You know what, of the two of us, Jill’s a way better negotiator. She has way more patience. She keeps everybody at the table. I’m like a spoiled child in a sandbox. I want it to happen and I want it to happen in two minutes or less, or I’m done.
Jill DeWit: I know.
Jack Butala: Look how quiet she is.
Jill DeWit: I’m writing this down because this is hilarious. I really am going to do that. Watch, it’s going to be on Facebook. We’re going to put, “We’re going to meet in the middle at $14,000 and shut up.”
Jack Butala: “All right, I’ll meet you in the middle at $14,000, but you’re going to smile the whole time,” or something like that.
Jill DeWit: Stop calling me.
Jack Butala: I have a lot of stories.
Jill DeWit: I like those stories.
Jack Butala: I used to have a list. I’ve got to dig that out somewhere. A list of property and how much money I could have made on that property if I had patience and I would have actually-
Jill DeWit: Oh yeah.
Jack Butala: They’re in the database.
Jill DeWit: That’s pretty funny.
Jack Butala: You can go in the database and look at property. There’s a whole section of property that we could have gotten it, but I just don’t have the patience.
Jill DeWit: Right. That’s hilarious. You know it’s funny, I’m thinking about is it just our business or is it every business? I’m thinking about our topic today: the marketable titles. I’m still on this. It’s interesting the topics that you and I talk about, and we bring these up because they are hot topics. I’m like, “Where are these coming from?” It makes me think of the last show that we did, yesterday’s show with J.P. He wouldn’t even think about pausing to check, “Is it called marketable title? Do I need to look this up?” You know what I mean?
Jack Butala: Yeah.
Jill DeWit: He’s just barreling through to getting stuff done and I appreciate that. That’s not my thing. Sorry for this. Is it this business that people are kind of looking for hiccups?
Jack Butala: Problems?
Jill DeWit: Yeah.
Jack Butala: No.
Jill DeWit: Is it every business?
Jack Butala: Yeah.
Jill DeWit: Oh, all right.
Jack Butala: I always use dry cleaner as an example, for some reason, when these things come up. If we were teaching people how to have a dry cleaner, the same stuff would come up. We would have forty to fifty percent of the people that are involved that are just knocking it out of the park. They’re doing what we say. They’re locating the thing properly. They’re picking up, dropping off, doing the extra stuff that makes people incredibly successful. It’s all in our program.
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: We talk about it clearly. People email me all the time saying, “This is how you do stuff.” You’re exactly right. You have to go the extra mile. Jill’s writing stuff down in social media that she’s going to quote later today so we can continue to generate upbound traffic. We don’t need to do that stuff. If you’re going to do something, do it right. This kid, he keeps coming back into our show, he’s got the right attitude. Yeah, I think if it was a dry cleaner, I think there’d be a lot of people like, “No, I couldn’t get the right location.” It would just be a different Eeyore topic, different roadblock instead of a speed bump.
This is a technical, too. Two minutes of property investment advice from our fifteen-year, fifteen-thousand-plus transaction experience. Check to see if your property has marketable title.
Jill DeWit: Gosh, I didn’t know that was coming.
Jack Butala: How the heck do I do that?
Jill DeWit: Yeah, you’re so good. Just out of the thin air.
Jack Butala: “How do I check to see if my property’s got marketable title? What the heck do you mean, Jack?” How do you check for liens and encumbrances? There’s all kinds of ways. If you go through a title insurance company, they’re going to check for you. What are they going to do, though? They’re going to see if there’s a mortgage on it and there’s a ton of websites all over the place. You can check that stuff. You can also, in a product that our members have, there’s a lot of different ways to see if there’s debt on property and liens and all that. With houses, you have to check all the time.
The way that we have it set up, the person that buys it from us does all that work. That’s another reason that we wholesale houses instead of retailing them. For land, the Data to Doorstep product that we have helps you do that. It’s actually the same, exact same product that title agents use to do the same thing for you right in your computer at your house. It’s pretty amazing, actually, when you think of it.
Jill DeWit: Mm-hmm (affirmative). It’s true.
Jack Butala: Check to see if there’s marketable title. With this product type, rule of vacant land, I don’t even check anymore. Ninety-nine-point-nine percent of it, probably more than that, is marketable. Here’s why. Because lenders will not generally lend against unimproved property, so that and we only send mail-out to properties with no loan amount. It’s a lot of details.
Jill DeWit: That’s true. You’re right. We have filtered out some things ahead of time so we know. We’re already taking care of all that.
Jack Butala: That’s what we teach.
Jill DeWit: It’s a good point. Good point.
Jack Butala: You can save yourself a ton of problems by getting the right stuff in the mail in the first place. People who use these tax sale lists, and they have all kinds of problems, and they wonder why.
Jill DeWit: Mm-hmm (affirmative). It brings up a whole other thing.
Jack Butala: It’s like kicking a dog while it’s sleeping.
Jill DeWit: Well, the back-tax property, there’s so many things that can go wrong with that and it could just be such a waste of time. If that’s all that you’re doing, you’re just setting yourself up for problems.
Jack Butala: Right. We have a lot of members who were taught by competitors in other places to just send owners of back-tax property offers and it can’t be further from what I think is the truth. Then they come over and they do it our way and they’re like, “Well, there’s no problems with these properties, but they still want to sell it.” Ding, ding.
Jill DeWit: Hello. That’s exactly right. They’re like, “Oh my gosh.” Like, yeah, duh. It’s so funny.
Jack Butala: We have a sales bell in our Arizona office. We’re in California right now. We need a bell.
Jill DeWit: Right. That’s true.
Jack Butala: Hey, if you have a question or you want to be on the show, call 800-725-8816. Jill is sure to inspire us today.
Jill DeWit: I gave this piece of advice to one of our employees the other day. It is if you want to get ahead, show up. I don’t mean-
Jack Butala: I love that.
Jill DeWit: Physically show up.
Jack Butala: I know what you mean. I love this.
Jill DeWit: I mean mentally show up. Now/however, there should be some physical showing up there, too. This is stuff that I’ve learned. I learned when I was young what a difference it made and how it impacted where I worked and my team and my bosses, just simple things like showing up a few minutes early and staying a few minutes late. It makes a difference. The bigger thing is having the right attitude. I’ll tell you another one. There was a job I got, I don’t know how many years ago.
Jack Butala: This is simple, awesome advice, Jill.
Jill DeWit: Yeah, thank you. There was a job I wanted years ago and it was in Phoenix. I was young and I had to pull some strings to get this job. You had to know somebody to get in kind of thing. I was so darn excited. I got the job. Everything was great. You know what I did the very first day? I showed up with bagels and doughnuts. I didn’t know anybody. This was for my team, anybody in my office. It was so sweet because people I had never met before, they’re all happy and everything to have me to. On my own, on my own dime, on my very first day, showed up with goodies for everybody because I was so happy and excited to be there.
Jack Butala: That’s awesome.
Jill DeWit: Boy, did that make a difference. That’s the thing. I paid it a little bit forward. Then, here’s the result. I’m learning. I’m new. I could go to anyone in that office and ask for help and they were way more than happy to help me and bend over backwards because I did that first. I took that first step and I showed up. I was there and excited and serious about it. Even if it’s a job that you don’t love, you’re not sure about, it’s not going to be your end-all career, so what. Do your best while you’re there. Show up. It doesn’t do you any good, you know?
Jack Butala: I love the advice. It’s simple. Showing Up is the name of one of the books I’m trying to get done.
Jill DeWit: Mm-hmm (affirmative). How’s that coming? Is it a summer project like mine?
Jack Butala: No, it just keeps getting pushed back.
Jill DeWit: I know.
Jack Butala: You know what gets pushed up in front all the time is these new products we’re launching that current customers are asking us for like Deed Perfect. Our members don’t want to do deeds and I don’t blame them. Spent a ton of money and time putting a website together that automates it for them. Just another benefit of being a member here at Land Academy.
On this topic, I had a college professor. It was a business class. I don’t remember the class, but at the end he said, “Look, you’re going to go out into the world and I’m going to give you some real advice.” It’s one of the few times formal education is useful. He said, “Everybody that you work with for your whole job that you’re going to have, life of the job, will remember what you did the first day. Not just the first day, but the first week.” Plan your life around getting there an hour early. The first week only. It doesn’t matter what you do the rest of your career there. You’ll always be known as the person that is exactly what you said, Jill: that showed up early, gave it your all, and left late. You don’t have to be the last guy. I’ve had jobs where it’s a big contest, like a man-chest-beating thing, who can stay the latest, and nothing’s getting done.
Jill DeWit: Right. Exactly, and watching the clock.
Jack Butala: Or maybe they don’t want to go home because their kids are awful.
Jill DeWit: Maybe that’s it. There’s a reason they don’t want to go home. That’s what it is.
Jack Butala: Watch the clock.
Jill DeWit: That’s awesome.
Jack Butala: I remember when we went to work and there were no computers. Isn’t that sad how old I am? My first job out of college, there were no computers in real estate at all. The management part of what we were doing, the managers had computers because they needed them for something like process payment and stuff.
Jill DeWit: That’s funny.
Jack Butala: As a broker, we didn’t-
Jill DeWit: Did you have a Rolodex? Like a round Rolodex?
Jack Butala: I had a Franklin planner.
Jill DeWit: Oh. Franklin-Covey. They still make those.
Jack Butala: Do they? I heard they went out of business.
Jill DeWit: Oh, well shoot.
Jack Butala: That’s what I heard. Like three years ago.
Jill DeWit: Okay. I haven’t looked in awhile.
Jack Butala: If you know what a Franklin planner is, you’re sad like us. Sad people.
Jill DeWit: I saw my dad with one. That’s how I know. Just kidding. I’m just kidding.
Jack Butala: It was a pretty good system. Kept your organized.
Jill DeWit: You know, it was kind of cool. My dad did do that. He kept those organizers by year and he saved them. I’m not kidding.
Jack Butala: Wow, so he could go back and look at what he did that year?
Jill DeWit: Oh yeah. It was a little not cool about all the stuff that he did save, though.
Jack Butala: Not cool at all. Oh, was your dad a pack rat?
Jill DeWit: Well, let’s just say he saved a lot of stuff. He wasn’t really a pack rat. There were a lot of files. One of my jobs one time was filing for him. Seriously. I got paid to file. Some things I was filing, it’s silly. Anyway.
Jack Butala: That opens up a whole thing we’re not going to get into.
Jill DeWit: Where are we going with that? Sorry.
Jack Butala: Hey, join us in another episode where Jack and Jill discuss how to use information, that’s me.
Jill DeWit: And inspiration. That’s me.
Jack Butala: To get just about anything you want.
Jill DeWit: We use it everyday to buy property for half of what it’s worth and sell it immediately.
Jack Butala: You’re not alone in your real estate ambition. We kind of said it all. Wish I got to know your dad, Jill.
Jill DeWit: Thank you.
Jack Butala: My timing was off there.
Jill DeWit: You’re not alone in your real estate world. Real estate hiccup.
Jack Butala: You are alone if you use a Franklin planner still. That’s it. Information and inspiration to buy undervalued property.
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