Transcript:
Hey there it’s Casey Denman here with TaxSaleAcademy.com. Thanks so much for joining me today on this weeks tax sale question segment. Before we answer this weeks’ question, don’t forget to hit that red subscribe button that way you won’t miss out on future tax sale training videos.
Today’s question comes to us from Tierney. She responded to one of my videos on selling a property without first clearing title. She simply asks, what do you tell the buyer?
SO first off Tierney, thanks so much for your question.
So what’s she’s referring to is selling tax deed property with a clouded title or as-is. So if you don’t understand what I’m talking about, I’ll be superbrief with this. In short, title insurance is an insurance policy that guarantees the buyer of a property there are no defects or clouds in the chain of title. When a property goes through tax foreclosure, the title insurance companies won’t generally issue title insurance without additional effort, meaning a suit to quiet title or a tax foreclosure certification most of the time. These process are pricey and take time, but many invesors think they are required. The deal is that they are only required IF you want to sell with title insurance and IF your buyer requires it.
Here’s the interesting part; You can actually sell without clearning the title, and without title insurance. Basically you let the person you’re selling to deal with the title issues. Of course, when you do this the property is not perfect. This means you’ll be selling it under market value each time. Of course, you will usually only be able to do this with lower priced properties. If a property is selling for $80, 100 or 200,000 then that buyer will probably want title insurance as they likely should.
So back to the question, what do you tell the buyer if you’re selling without title insurance? Typically I’ll include a line or two in whatever ways I’m marketing that says something like “Property sold as-is, where-is using Quit Claim Deed. Any and all title clouds shall be researched by buyer prior to purchase.”
That will generally filter out anyone who would have reservations. It’ll also go into the contract, auction rules or in some other form of writing so it’s very clear to the buyer.
Again, it’s important to understand that when you sell a property without title insurance you will not get market value. You should not get market value. Truthfully, you should even get anywhere close to market value. The entire idea is to sell the property very quickly, at a discounted price, with plenty of margin for you buyer to take care of any title issues.
That way when you do get pushback, when you do get the inevitable, well, why won’t you provide title insurance type questions, then your response is very simple. If you were providing title insurance the property would be selling at market value. This is a tax foreclosed property that I’m selling quickly for a discounted price. If you want title insurance, instead of paying my price you’d be paying 20, 30, 50% more or whatever the number is. If you’re not interested in the property without title insurance, I completely understand.
And then you move on to the next interested party. It’s a very simple process for me. I disclose it while marketing and again in the contractual stage. The buyer should understand that they’ll have room to clear title and then some. Otherwise, you probably don’t want that buyer anyhow.
So, Tierney thanks so much for submitting your question and I truly hope that this video has helped. If you have a followup question or anyone else watching has a question feel free to leave it below this video or any of our other videos here on YouTube.
If you are looking to get started in the Tax Sale business it’s an absolutely incredible business to get into, just make sure you take the time to learn what you’re doing. If we can help with that process, there’s a number of links in today’s video description. Many of these links are free, w also offer my book, Tax Sale Playbook that I’d love to ship to you. The book is free if you just cover the nominal shipping cost. You can get the book at TaxSaleAcademy.com and you can also become a member of the academy if you want access to our most comprehensive step by step training program.
Take care and make it a successful day. See ya!