In the previous two videos, we asked the question, “Did you receive a letter in the mail with an offer to purchase your rural vacant land? We asked, how do you know that it’s not a scam? And how do you protect yourself so that you don’t get scammed by someone who’s sending this letter out?”
In the first video we talked about knowing your contract and understanding it, not signing the contract until you understand exactly what it involves. In the second video, we discussed closing through a title company and why it may be unsafe to close outside of a title company. Before I move forward, I want to say that all the information I’m providing in any of these videos is not a replacement for legal advice. In today’s video I want to discuss understanding how you are going to get paid for the sale of your land. This goes back to the very first video when we first discussed understanding the contract. How exactly are you going to get paid?
Is the land investor or the buyer of your property, are they paying in cash? Are they going to be sending wired funds or a bank check to the title company or do they need to get a loan for this property? Are they planning on trying to apply for a loan through a bank or some other outside lender? What does that involve? Are they going to need an assessor before they can get that loan approved? What is their contingency if their loan is not approved? What are we talking about in terms of closing time? One thing to note is that when you close with cash, there is nothing slowing them down when it comes to closing, other than the Title Company itself. In that scenario, the slowest part of the process is the title company and that’s a good thing.
However, if the buyer has to obtain a loan, now we’re waiting on the lender as well. Oftentimes, especially in today’s environment, we’re looking at greater than 30 days in order to close if a lender is involved. Sometimes it is as long as 60 days, even 90 days. You probably don’t know what the buyer’s credit is. You don’t know how long it’s going to take. On top of the lender’s time to close, the lender may require an appraiser to get out to the property. Now you will need to know what is the lead time for an appraiser to get out there? That may be two to three months alone, and then they need to wait for that appraiser’s report before the lender can make a decision before the title company can close. And now your quick sale of your property is snowballing into 60, 90, maybe even four months before you can sell your property. And the whole point of using a real estate investor was, you thought you were going to get paid fast.
As you can see, these are important questions to ask. How is it that you’re going to get paid? Also make sure that you know who’s paying for closing costs. If you have agreed to pay for some of the closing costs, understand what are those costs that are involved. If you need a quote from the title company, go to the title company and get a quote from them directly. Let them know what’s being conveyed, let them know the cost of that property. And if title insurance is being covered, find out what your cost is going to be. This is something you will want to make sure that you understand that really well.
In any case, these are just a few things to look out for to cover yourself. A long closing date may not necessarily hurt you. It may not be a scam, but if you need that money fast, or if you’re expecting to close quickly, you want to be aware of what that’s going to look like. It is important to note that being paid in cash is always going to get you paid faster. I can’t say always, but it tends to get you paid faster since there are none of the same roadblocks you see with lenders. Cash payment will certainly get you through the title company a lot quicker and it’s guaranteed. Without a cash close, closing the transaction is now contingent on the lender and that affects the ability to close, and the length of time it may take to close – all of which means when you will get paid.
To wrap up, these are a few things to look out for when you are considering selling your rural vacant land to a land investor. Again, know your contract. Always close through a title company and know how you’re going to get paid. These are some really crucial things. If you’ve got questions, please reach out to TB Properties Buys Land. We pay in cash. We close through a title company always, and we have a very simple one page purchase agreement so that you understand what’s taking place so that you can feel secure and in control. Thanks again for listening and we hope to work with you soon.