Beth:
Hi, I am Beth with TB Properties Buys Land. We get a lot of questions from land sellers about scam offer letters and how to protect yourself from real estate investors that may be trying to take advantage of you.
This brings up an example that I wanted to share with you. There was a gentleman, whose property we purchased here in Texas, and he had received an offer letter from another real estate investor. He had worked with the investor, and they had come to an agreement on a price, and he had signed a purchase agreement but nothing had happened, just radio silence. He received an offer letter from us after that and he contacted us and said, “Hey, I want to sell my land, but I’ve already signed an agreement with somebody else, but nothing’s happening. I don’t know what’s going on.”
After some digging, we came to find out that he had signed an agreement, not really to sell his land, but to have it tied up in an agreement until the real estate investor was able to sell his property for him. It came down to the fact that the investor never intended to buy the gentleman’s property from him or pay him in a reasonable period of time. The investor had planned to market the property and once he would find a buyer, then he would buy the property and resell it at the same time. That is not necessarily illegal or a scam but it can be deceptive if not clearly understood by the land seller.
So what’s the difference there? In one case, you make an agreement to buy a property within a month or so and you as the seller have the cash on hand to follow through and purchase the property. In the other case, you’re making an agreement to have the investor market your property, realizing it could take 2, 3, 4, even 6 months or a year before that property gets sold. In that case you’ve got your property tied up and you don’t have other options in which to sell your property. Do you see the difference?
It ended up that we were able to work with the gentleman and get him out of that agreement. We purchased his property outright with cash through a title company and he was paid within about four or five weeks from the time he signed the purchase agreement. He had some title issues that had to be cleared up, but he was able to take care of that and get paid quickly. Whereas with the previous agreement, he was in limbo for a series of months.
While I cannot legally make any recommendations, I can share a few things that you might use to protect yourself when it comes to selling your land to an investor.
Number one, when it comes to the purchase agreement to sell your land, look at that agreement carefully. Read it and understand it. Is there a firm closing date on the agreement? Are you allowing the investor to market your property in the meantime before the sale takes place? This may mean that while title’s working on the paperwork and the closing documents, they are allowed to market your property and try to sell it in the meantime.
Now, is that necessarily a bad thing? It may not be a bad thing. It may be great for the investor and it may not affect you at in the slightest, but if it holds up the sale of your land, that just means there’s a longer period of time before you get paid. What happens if they find a buyer but then it falls through? It’s taking longer.
I would be sure to ask the buyer of your land, is this a firm date? Are you intending to pay for my property before you market, sell it, subdivide it? Whatever you’re going to do with the property, are you going to buy it in a reasonable period of time? Make sure that whatever you understand the agreement to be, that it says that on paper. That’s one way that you can protect yourself when you’re working with a real estate investor.
Here at TB Properties Buys Land, we purchase real estate all over the country. We buy 10 plus acres of vacant land and we pay with cash so that we can close faster and put money in your pocket sooner. We’re not relying on a mortgage lender in order to buy your property. We close through title companies. That way, there’s safety on both sides of the transaction, for you and for us. We buy your property. We buy it in a reasonable period of time, which tends to be about four to five weeks, depending on the title company. But we pay you in cash. We pay you quickly through title for safety, and then you’re done. You can move on. There’s none of this waiting on what the market’s going to do.
I hope that makes sense. If you have questions, please feel free to reach out to us. We look forward to working with you. Thanks again.