What do you do when you have a contract, but another investor tries to sneak around you to steal your deal? Andy McFarland shares an Expert Tip with us today on how to file a notice of intent to cloud the title…to help you maintain control. Don’t miss this FlipNerd.com Expert Tip!
Mike: Hey, it’s Mike Hambright from FlipNerd.com, and we have a quick expert tip to share with you from Andy McFarland, who’s going to share a tip on how to not lose deals.
This expert tip is sponsored by RealtyMogul.com, B2R Finance, and National Real Estate Insurance Group.
Andy: All right, so here’s the thing. I’ve been doing real estate for a long time now, and I have lost many deals. So this tip comes from the trenches of real estate, all right?
Those of you that are working with private sellers, you go and you sign a contract. Now, sometimes, you know, it’s a win-win situation at the time and they love you because you’re solving their problem. But sometimes an investor comes in behind you and says, “How much are you selling that for?” “Uh, $80,000.” “I’ll pay you $81,000.” Right? They get a little bit of seller’s remorse.
What happens then? It’s what happens, they go dark. They stop returning your phone call. You know you’re trying to line up the closing and everything, and they won’t return your phone call anymore. What do you do when they’re going dark?
Well, here’s what I do. Over the years I’ve learned that we file a Notice of Interest on properties. So basically, the Notice of Interest is something that clouds their title saying, “We have interest in this property by virtue of this contract signed on this date and we’re recorded as property.” If a seller happens to go dark, which doesn’t happen most of the time, but if they do happen to go dark and they go try to sell the property to somebody else, that title company that’s facilitating that transaction is going to pull up title and they’re going to notice, “Oh there’s a little thing on here, a Notice of Interest.” And they’re going to call me up and they’re going to say, “Hey, it looks like your company’s got a Notice of Interest. Tell me about it.” And I’m going to say “Yeah, actually that seller has entered into a contract with us to sell that property. Are they there? Can we talk to them?” Right?
So that brings them back to the negotiating table. Now, let me give you another tip that is a very important part of this. If you file interest against people’s property that you have no interest in or even if you do have an interest in that property, but you don’t have permission to file that, wrongful lien suits are vicious. Do not do it. Don’t enter into them, right?
So I added a little clause into my contracts that gives me permission to do this. So when we’re working with a seller and everything is happy because I’m giving them what they need and they sign this contract, here’s the line it says in there. It says, “Seller authorizes buyer to record a Notice of Interest on the property evidencing this Purchase Agreement.” They’re happy to sign that because it is the agreement. And 99% of the time, it’s going to go through and it’s going to be fine. It’s just that 1% of the time they gave you the rights to file that Notice of Interest, and that’s going to save you your deal when that other investor comes in there and tells them, “Whatever you got tell them ” to try to, you know, get that deal from you. So there it is. That’s the tip.
Mike: Awesome. Hey Andy, really quick question. So does that mean you file them on 100% of your deals?
Andy: Because of what I do, we just made it a part of the system. We file it on 100% of the deals.
Mike: We’d like to thank Crestar Funding, MidAtlantic IRA, and Renters Warehouse.
Please note the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers, or affiliates. Please consult professionals before making any investment or tax decisions as real estate investing can be risky.