Beth:
Hi, I’m Beth with TB Properties Buys Land. In the last video, we talked about receiving scam offer letters in the mail. We discussed how to mitigate your risk and determine whether these offers to purchase your rural vacant land or your home, or whatever property it is, whether they are legit or whether they are indeed scam letters trying to scam you out of your property. Nowadays, there are enough scams going around that you have to protect yourself, and you have to be aware. As such, in the earlier video we talk a lot about title companies, the reasons to use them and how using one can protect you. Today I will discuss the contract. Let’s just say that the investor you are working with wants to use a title company. That’s great; you’ve got protection and you know you will be paid via the Title Company.
But what is in the contract itself? Do you understand it? This is not legal advice but my thoughts are that if the contract is so complex and difficult to understand you should wait to sign it. Keep in mind you always have options: one, you can always walk away, but if you don’t understand what someone wants you to sign, that should be a red flag. If you don’t understand the contract in any way, it may be a good idea to consult a real estate attorney and have them go through the contract to make sure that nothing ill-intentioned is going to take place. Even so, my gut always tells me that if the contract is so complex that you can’t understand it, that is a red flag. Keep in mind that you can always ask for the contract to be revised until you are happy with it or until your real estate attorney says it is a good deal. Understanding the contract is a really key way to make sure that you’re not going to get scammed.
Another question that you might want to ask in addition to the previously addressed question of, “Are we closing through a title company?” Is: “How are you going to pay for the property?” If you’re closing through a title company, you should be paid out through the title company. The title company will either wire you the funds or overnight you a check from their own escrow account. The question I’m mentioning is this: does the real estate investor, who wants to buy your property, do they need to get a loan in order to pay you for your property? In other words, do they have cash where they can wire the money right away to the Title Company at close? What does that mean to you if they have to get a loan instead of having the available funds? Think about this: what if they’re not approved for that loan? What if the lender has them jump through a bunch of hoops in order to lend them the money? If you haven’t noticed, rates are terrible right now. Add to the fact that there have been bank failures, it’s a little bit more difficult to get money so it may take much longer than either party intended for lender approval and closing.
Using a lender to buy your property may require the survey to be updated and they may even require their appraiser to get out there. Depending on your area it may take much longer to schedule the appraiser to visit your property. What this means is that it could tremendously slow down the closing process and delay when you’re to be paid for the sale of your property. Maybe it doesn’t matter to you and you have plenty of time but if you were expecting to be paid in say a month on the designated closing date, then you’re going to be let down if all these things are holding you up. That may be a question to ask: “How do you intend to pay for the property, with cash or via a lender?”
Another thing I would ask is regarding the closing date on the contract. The question is more about what they plan to do while the property is awaiting close. Now this is not necessarily a scam but it is your right to be aware of the buyer’s intentions because it may affect the “when” and “if” the deal will actually close. Some of these real estate investors may not have the money to purchase your property outright but they do not intend to get a loan for the purchase. Some investors will try to market your property in the interim and line up a seller so that instead of them buying your property with their own funds, they can sell it to someone else. Again, this is generally not a scam but what happens if they cannot line up a buyer by the agreed upon closing date? Will your date be pushed back or will they back out?
All they may be doing is trying to minimize their risk, and you can’t blame them, but you need to be aware of how it may impact you. What if they’re trying to sell the property at the same time that they’re buying it from you? If it’s indicated they can do that in your signed paperwork, then they can do it legally but what does that mean if they can’t find a buyer for your property before the closing date? Are they going to push off the closing date? What that could potentially mean to you is that instead of closing in a month as you’re expecting, it could take them much longer, say 2, 3 or even more months to find a buyer for your property. I mean, go look at Zillow and see that some of these properties may be listed for higher but check out just how long they have been sitting on the market. I regularly see properties out there for 6+ months. Just yesterday I saw one from early 2022, which is bad. That’s over a year considering when this video’s being made!
When it comes to protecting yourself from a scam or simply trying to understand how a decision to work with a real estate investor might impact you, to me, an important thing to find out is if they paying you cash right away or are they needing to source another buyer for your property, or are they going to try to sell the deal to somebody else? Keep in mind that these exits I’m mentioning can all be legit. I don’t want you to be worried that those options are ways to scam you, but I did want to alert you to the fact that it could affect your actual closing date and what your expectations are. To me, as a land seller, I would want to make sure that I’m safe and that my expectations are being met, and these are all questions that you can ask when it comes to working with a real estate investor.
There are some great reasons to work with real estate investors, such as TB Properties Buy Land. Right now, with the slowdown in real estate, and bank loans being difficult to get, it can be more difficult to find potential buyers. When you work with TB Properties Buys Land, you have an assurance that your property will indeed sell and you know that you’re going to close as quick as a month. That’s great because you don’t have the play the game of putting it on the market and wondering, “how many times am I going to have to lower the price before it sells?” It’s no fun when you plan on getting a specific price but instead, end up with a lower price AND closing costs that further lower the funds you receive in the end.
We don’t know what’s going to happen with the market so there can be a value to that. Being paid in cash, that’s great too. Whenever you choose to enter into an agreement with someone it is always advisable that you understand what the risks are and a risk could simply be a delay in when you’re going to close, especially if you have a deadline and need the funds quick. This video was a bit long but hopefully it has helped you formulate a few questions to ask when it comes to some of these offer letters that have come in the mail and you’re asking yourself, “are they legit or are they a scam?” I’ve given you a couple questions to ask that you can hopefully help you make that decision for yourself. If you have any questions, please feel free to reach out to TB Properties Buys Land. We purchase 10 plus acre properties all over the country. We pay in cash. We always close through a Title Company for your safety as well as ours, and we’re real people. We look forward to working with you. Thanks again for listening.