When Blackwell Sanders Peper Martin started looking for downtown office space in preparation for the 2006 expiration of its lease at the Laclede Gas Building, there weren’t many options.
For a third time, the St. Peters Board of Aldermen extended the closing date for the Lakeside 370 Business Park development.
The St. Louis region, reflecting a national trend, had an all-time high of $1.2 billion in commercial real estate transactions in 2005, and local experts predict more in 2006.
Using delinquent tax lists to locate motivated sellers is one of the easiest ways I know to find good deals for your real estate business.
Each year, just before the tax certificate sale in your county, the county will produce a list of all the people in your county who have not paid their tax bills before the cut-off date. Usually this list will also include the address the tax bill was mailed to and a description of the property including the subdivision if there is one.
There are two easy ways to get this particular list. One is to simply look in the newspaper. Usually a few weeks before the sale, the newspaper will print a section listing all of the properties that have had tax certificates issued against them. The other way is to go to your courthouse and ask for this list and they will usually gladly give it to you.
The way I utilize this list is to carefully go through the list and choose properties in subdivisions I want to buy in and mail each of these property owners a letter. The important thing you need to remember is to keep this letter neutral and personal, don’t mention that you are aware that their taxes are behind. You don’t want to do anything to alienate a potential seller. I mail them a letter letting them know who I am, how I can help them, and that I am interested in purchasing properties in the particular subdivision they own property in. The response rate from this particular mailing always seems to be very high and brings me a number of leads from motivated sellers. You probably don’t want to mail more than 500 letters at a time, or you may not be able to handle the responses from these motivated sellers.
Many of the people who have not paid taxes on their property have not done so for a variety of reasons, such as an inability to afford them, an inherited property, a divorce situation, a probate situation, or a vacation property they no longer intend to visit. All of these are situations that are ripe for good deals to be made and many of these sellers are very motivated. Very often, they know they have a problem they need to solve, they just don’t know how until they are contacted by you.
Generally speaking, there is no competition for these properties since your competitors simply haven’t thought about using this list as a lead source. In the last mailing I did to this list, I sent out 178 pieces of mail and I have received almost a ten percent response rate from that mailing. I currently have two of these properties under contract. This may be an exceptional response, but I would certainly try this mailing and see what kind of response you get.
Any time you are able to reach a group of potential sellers who have a problem they need to solve, you will get good leads from them. Always be willing to do what your competition will not and you have more deals coming at you than you can handle.
One of the things that amazes me in the real estate business is how many investors leave hundreds or thousands of dollars on the table at closing due to errors in the closing documents.It is a mistake to assume that the HUD is correct or that the closing documents are correct. You need to take the time to read all the documents carefully before closing on any deal.
These are some of the areas to check thoroughly. If there is a realtor fee, make sure the percentages are correct and the payment amount to the realtor is right. Make sure you check the per diem interest to see if this figure is calculated correctly. Make sure that the figures on the HUD from the insurance company, a termite inspection, a home inspection or any other fee that should be carried to the HUD is correct. There have been many times when these figures were either incorrect or there were fees on the HUD that I had already paid out of pocket before the closing.
Check to make sure that the pro-rated tax figures or association fees are correct on the HUD. If you are due pro-rated taxes from your seller, make sure they show up as a credit on your side of the HUD. If there is a new loan amount or a payoff figure from a loan company make sure these figures are correct. This is another area where I have frequently found errors.
Make sure you also check loan documents carefully. Check the interest rate, the balloon and the amount of the note. I had a note and mortgage just this week where I was funding the deal for the buyer and the payee of the note and mortgage was the seller instead of me. They also had the balloon date wrong on the note. It showed a ten year balloon instead of a one year balloon because someone added a zero. If there is an interest only payment to be made each month, make sure this is clearly stated in the note and mortgage. Also make sure that terms for late fees are clearly stated if you are the person holding a note for your buyer.
All of these are important points to check before any closing occurs. Don’t assume the title agent will catch it. They do many closings each day and they usually are unable to catch every mistake. In addition, very often the title agent is transferring figures they got from other people such as the realtor or the lender or the insurance agent so they my not be aware that these figure are incorrect. It’s your closing, make sure the documents are correct so you don’t leave thousands at the closing table.
For more information on finding motivated sellers and closings, take a look at my web site at marketingmagiclady.com.