The Smaller Real Estate Deals..The Ones With Property Traded For Two Pigs And A Chicken.

By
Real Estate Agent with MOOERS REALTY ME Broker License 106759

    

The small price tagged Maine real estate listings sure make the phone ring, the emails to flow like honey.

"The lower the price, the more the buyers". But the reality of the small house with ten foot pole marks on it, or the acre lot in the middle of nowhere is the lint on the title. Legal issues, surveying concerns that come with this segment of "blue light specials." Why? Someone buying a $100,000 parcel of Maine land searches the title, surveys the lines, checks for easements, liens, etc. But the property buyer who only has a little stack of tens and twenties in his wallet but really really wants to own something, no matter how much real estate drama comes with the property, needs to know about what can come up on radar.

     For starters, with family transactions where grandfather splits off the end of a field for junior, back in maine winter sunsetthe 1940's, the deed is written on a napkin at a local diner. Something gets lost in translation to paper and a barn yard approach causes a home made jerry-rigged deal.

     A deed does not have to be wrapped in a lawyer embossed, frilly outer blue wrapper to be satisfactory for a legal conveyance of title. But the way the deed is drafted, missing elements, no title search, heirs that show up out of the wood work are like the iceberg portion you don't see on the surface.

     The description may not come together and close. The reference to the old elm tree that was there in the 1950's but evaporated thanks to Dutch elm disease make it harder and harder to know what the seller, the grantor had in mind. Confusion, neighbors bickering, calls to the real estate broker, hurt feelings, misunderstandings. A warranty deed could have a swiss cheese full of holes title behind it and having to hire an attorney to fix it, to go to court to make the seller square it away is expensive, a long and drawn out process. The myth that as long as the deed is a warranty one is not the protection you need if you really begin to improve the property, dump a lot of money in to it.

     The seller of the real estate to a cash or owner financed buyer is not interested in running the title, surveying the lines, and it is an "as is where is" situation. The property buyer has lots of hope, expects the best in a naive sort of way. A bank is not so interested in a mr fix it property if there is a building because the secondary mortgage market won't buy the paper, the assignment of the mortgage. Many times there are minimums that banks just refuse to get involved with because the very nature of the low end properties is problems. Its like a car deal who does not sell something that can not be inspected so the days of $800 cars are pretty much over unless it does not have a VIN number. If you can not drive if off the lot, what good is it?

    

The money is so tight on a $5500 dollar purchase for both the owner and the seller so suddenly the idea of spending $600 for a title search seems high.

It is not and the little sales are more work for the attorneys too because all kinds of problems are turned up and have to be explained, dealt with. When the little properties really shine and show a purpose is if a piece of land, run down camp for $3900 comes up. And a group of sportsman all throw $500 in to a hat. The risk is so minimal, spread out and thin. All they want to do is spend a few weeks a year in the old run down house/camp that has been there for a 100 years. One of the buyers is a carpenter so he patches the roof, another is a plumber so he updates some of the fixtures or the out house was good enough for Daniel Boone, works for them too. Welcome to the house that Jack built but it works in a simple way. No more spending $50 and up a night at a motel when they visit for hunting, snowsledding season. It will never be the next presidential retreat for whoever works behind the desk in the oval office. But these kind of sportsman, friends, family members figure life is full of risks. And not much at stake with all their buddies on the title to the property as fellow grantees, buyers. It serves the purpose and they know the pitfalls going in.

Maine REALTOR Andrew Mooers

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"The Lovely Wife" (Broker Bryantnulls Wife) The One And Only TLW.
President-Tutas Towne Realty, Inc. - Kissimmee, FL

Andrew...

This is right up there with Short Sale Flips. Yah. That beast is starting to rear its ugly head :)

TLW...ROAR!

Jan 28, 2010 08:33 AM #1
Rainer
288,231
Leslie Helm
Tennessee Recreational Properties - Jamestown, TN
Real Estate For Trail Riders

Hi, Andy. I just had one of these. The buyers liked one of my listings, went home and were approved for financing, submitting their offer with an approval letter from their lender. The contract went off the rails when the underwriters declined to accept a "cabarn" (which is a cabin/barn combination) as collateral, despite the fact that the appraisal price equaled the purchase price.

A cabarn is usually an efficiency apartment with a couple of stalls, all under a single roofline, perfect for riders who trailer up on weekends from Chattanooga, Knoxville or Nashville. The lender was going to sell that mortgage before the buyers were even out of the parking lot but, with 587 square feet, the cabarn was not an appealing prospect for the secondary market.

The buyer snatched victory from the jaws of defeat by obtaining an equity loan whereby his primary residence secured the loan but the implications for financing cabarns is not good!

Jan 28, 2010 10:41 AM #2
Rainmaker
3,247,813
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Andrew

Sometimes we really have interesting situations.

Good luck and success.

Lou Ludwig

Jan 28, 2010 02:15 PM #3
Rainmaker
1,945,657
Andrew Mooers | 207.532.6573
MOOERS REALTY - Houlton, ME
Northern Maine Real Estate-Aroostook County Broker

That's what makes each day new and different.

Jan 28, 2010 02:48 PM #4
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Rainmaker
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Andrew Mooers | 207.532.6573

Northern Maine Real Estate-Aroostook County Broker
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