Gavin: Hey, guys, welcome to
the REI Network podcast with me, Gavin Timms. Hey, guys, how are you doing?
Welcome back to the REI Network podcast. Today I have a special guest. She’s
actually a business partner of mine. She’s been on the show before. And we’ve
got a real interesting subject that a lot of people talk about. We’re going to
be talking how we negotiate a lien from one hundred six thousand dollars, one
hundred and six thousand dollars to six thousand dollars. So we literally got a
hundred thousand dollars taken off on a lien to make about twenty five thousand
on that deal. All right. And we’re going to be talking kind of the things that
you can be doing to negotiate these liens, what we kind of did and hopefully
give you as much content as possible about. So let me bring over Melissa here.
How are you?
Gavin: Very good. I appreciate you coming on
and again on the podcast and on YouTube. And I was super busy with what we’ve
got going on in business. So we’re trying and keep this show. And to the point.
And it was funny, Melissa, because when I kind of asked you about this doing
this kind of boring. Right, it’s like a boring topic that no one really wants
to talk about, but no one knows how to do. And when people understand the
things that you can do to renegotiate lines down or get them cleared because you
need to have them cleared before you close the property. Right. And it’s not
always equity live ones probably thinking, well, yes, you have thirty thousand
dollars. Equity in the seller’s going to clear a ten dollar lien in close and
then it all works. But when you have one hundred thousand dollars, there is no
equity. To clear that closing, you’ve got to renegotiate the deal down or there
is no deal, right? Exactly. So tell us all on this deal. We will. We want you
to make like twenty five. Thirty thousand dollars and all of a sudden we’re in
closing and we’re getting ready to close and boom, we got from nowhere. There’s
one hundred and six thousand dollar lane on the property. So what type of lien
was this and what did we do to go about clearing it?
Melissa: Well, it was an old judgment. And so
the guy had a business partner several years ago. They went out of business and
it was just it got messy. And so there was not just that one lien that was the
huge one. There were several liens that were attached to that property. And to
be honest with you, I don’t think the guy even knew that they were there
because he had had it for buy and hold pages. So they were just sitting there.
So when I called him and said, hey, you know, of liens on this property, he was
like, what? And so he explained to me what happened with his business partner.
I’m like, all right, how are we going to get this client cleared? Those at that
point had judgment and were in some attorney’s office somewhere. They’ve been
sitting there forever. And so he was like, I don’t I don’t know what to do
because the property itself was not selling for one hundred thousand dollars. I
forgot how much it was. But so the lane was actually more than than what I was
picking up the property for. And I thought, well, we’re upside down out of the
gate, so what are we going to do? So what I did is when I got a copy of the
title, I just called the attorneys office and said, look, here’s Dale, explain
to them what was going on. And they were like, OK, so you’re going to pay the
hundred thousand dollars? I’m like, no, because there’s not that much equity in
that property. And so I ended up talking to one of their collection specialists
and it took many calls and quite a bit of negotiating. But we got it down. I got
it out from one hundred and six to six. And it was just a matter of just really
talking to them and explaining to them the property’s not worth that much. It
needs a complete renovation. I can get it appraised if you want me to, but this
is where it’s sitting. And I knew the area and it was just really a matter of
spending a lot of time and talking to them and explaining to them what was
going on and a lot of being nice to people that weren’t very nice to me because
they’re collections people.
Gavin: So yeah, yeah, yeah. And I think the
other thing is though as well, like size a tiny six thousand for their business
will get nothing right. No one else they were going to when it comes down to
lien’s, like if they don’t sell to you the next person, the contracts, it is
just going to run into the same thing. And when you have a deal like this, how
do you want six with you want nothing?
Melissa: Yeah, that’s kind of where we ended
up. We you know, they dropped it down in increments. So we went from one
hundred and six to eighty six. We kept going down and finally out of. So here’s
here’s how much room I’ve got on this so I can give you six thousand dollars. I
know that’s an incredibly large sum, but that bill is. But he’s never going to
sell the property for what it is right now. It’s deteriorating. It’s not going
to get any better at once. He can sell it. So you can still put the lane
against him. I don’t know what else he owns. I need it all for this property.
And he knew that I was going to do that. By the way, I talked to him. He’s
like, just get it off the property. He wanted rid of it. And so, you know,
after many phone calls and and getting our closing attorney involved where he
would agree to pay that amount. And we. Exchange and paperwork, they agreed to
it and then he still has to known on him personally somewhere, I don’t know
what they attached to, but I took it off of that property once I explained to
them the valuation of the property, I had to show them the tax records, what
the tax assessed value was and all of those things. And it just it just took a
lot of talking and making them understand where they where it is. I showed them
I had the drop box with the pictures in it. Here’s a condition of the property.
Here’s how much rents are collected. And then once I saw the actual value, they
knew they were never going to get that out of it.
Gavin: Yeah, yeah. So I think a lot of people
listen, though, like everyone wants to be in real estate and just not the easy
deals, right? It’s like titles clien, ready to go. You sell it, you make 10, 20
K and you move on to the next. And it couldn’t have been any easier to buy and
walked in once, put his in his money, blah, blah. Right. Well, the reality is
the reality is it’s far from that. Right. And I think sometimes, especially
when you get into lien’s, you’ve got to be willing to be in it for the long
haul. Right. We had a meeting yesterday. We just hired another acquisition as
well. And we kind of were talking about contracts and closing ratios and stuff.
And when we looked at it, we believe that if we want to do six dollars a month,
we need 12 contracts a month. Right. So that’s 50 percent, 50 percent. So
that’s probably going to give you a twenty five percent drop off of pad
location. Numbers don’t work. It’s not a deal because we lock in this without
seeing it. And then you got twenty five percent is really reality of lien’s on
the property. Things taken months. I mean, we’re close, we’ve we’re closing one
right now. There’s been in closing. We’re going to make twenty five thousand on
this one. We’ve had this for four months right on the contract?
Melissa: Just over four months and the same
thing. She’s got IRS lien she’s got a judgment laying there. So many things
attached to that property. And it’s really just a matter of, you know, playing
the game, filling out the forms and getting them to sign things. And then, man,
different people call in the attorneys office and just negotiating that and
saying, OK, what, she owes you thirty thousand dollars. But we’re going to
close this next week. So if we give you five thousand dollars, the property, I
mean, because the properties and we’ll do the same thing, the property is not
worth that where you take five thousand dollars most of the time they will if
Gavin: Yeah, absolutely. It’s just like
anything, any other negotiation. And people don’t understand that as hell.
There’s a thirty thousand dollar lane. Oh so that’s it. It’s done. It’s will
now go and get it down to two thousand dollars and make the deal work. Whatever
number you need to get to, to make that deal work because someone else behind
you isn’t going to do it or they know the collections, they won’t get the money
anyway. That’s really good. What what are the types of lien’s to people come
across. Like what do we come across and what are people going to kind of
typically see when that whole entire wall, some of the most common ones that we
get to, to what we have to kind of clear title on?
Melissa: We’ve had several lately that have
gone into tax sale, which happened in June, and the owners actually didn’t even
know that they were in tax sale. They say they didn’t know it. So you all
you’ve got to do as well for here is just call the county and get the
redemption amount. You’ve got to do a lot of paperwork and get down and fill
out some paperwork and find out who picked it up for tax. They’ll get the forms
to them, get them to sign it. So we we’ve seen a lot of tax liens, but it was
that you get those at that time of year when the tax sale runs, you’re going to
see more of those. Pop, we get title problems where somebody whose parents died
and they didn’t transfer the property. And you have to kind of go through that
process. But that’s probably that’s kind of something different. We got a lot
of IRS leads lanes. We’ve got municipal tax lanes, fire dues, old fire dues and
a lot of times old water bills. We have a huge problem around here with tenants
going and not paying their water bill and they leave with those five thousand
dollar water bill. Water is really expensive here. And so it it adds up really
fast. I always say that. So I have to negotiate those down quite a bit.
Gavin: Yeah. So and that’s a great list. By
the way, guys, if you can get the water shutoff list, people that have been on
the water shut off off. That’s a great list for you to market to if you can get
it in your area. So what liens, Melissa, would you say the hardest to
Melissa: IRS liens.Yeah.
Gavin: Are they do they typically are they
more firmly they want that money or is there still some negotiation to be done,
do you think?
Melissa: No, they will negotiate. The problem
with IRS is getting in touch with somebody and they have forty thousand hoops
you have to jump through. So you have and you have to get all of these
documents from the seller. And typically, if it looks like it’s going to get
real deep in IRS lien, I honestly get a transaction coordinator to take me out
of the middle of it because it’s worth the two hundred dollars, because that
person is getting the seller Social Security numbers and all of that
information that I don’t really want my hands on. So if I if I can clear that
information without social and stuff, I’ll do it all day long if you’ve got. To
get people’s Social Security numbers because of fraud and how bad it is right
now, I’ll usually pay a transaction coordinator or two hundred two hundred
fifty dollars if there’s a big enough spread and if it’s worth it and let them
do that. And that takes me out of that liability. So I will tell everybody, be
careful. Don’t get peoples socials. I don’t. There’s just too much wrong going
Gavin: Yeah, that’s really, really good.
That’s a great point. And we obviously, as we talk about this, we’re not
attorneys. We’re not we can’t give any legal advice either, which we haven’t. I
mean, we’re telling you basically to get on the phone and have conversations,
find out what works and what everyone’s thinking. Well, what paper do we fill
out? Well, you just got to ask, what do I need to do? What what do I need to to
send to this person? And people, when you have conversations, will give you the
paperwork that you need and who you need to send it to. You just need to get on
the phone and ask questions and the answers will obviously come back to you. So
don’t kind of overthink that went when you’re doing it. So how many of all
properties would you say that we close have liens on? No, I have no idea. And I
know. But I’m just curious, what do you think? If you were guessing.
Melissa: I would say at least 50 percent of our
properties have some sort of title issue. Now that might range from bad deeds
that just had errors on them, deceased parents. liens, tax sale, that could go
as far as just liensitself, I would say that was probably the majority of them,
but at least probably 50 percent of everything we pick. I mean, we just
happened to be in a region of the country that has been kind of lax
historically to get things recorded correctly. And covid didn’t help that
because you had one person going into an office maybe one day for a year to try
to get things done. So everything is behind.
Gavin: Yeah. So what I guess what would you
say regarding a lot of people when it comes to marketing talks about the
probate list? Right. So everyone wants to probate, say all the biggest deal,
but then you’ve got to say, what should you do pre probate or it’s in probate?
When can we buy it? And we do a little bit of probate. Right. We were just
talking earlier this morning regarding know we probably need to focus on a few
different lists and build some relationships with people. But in the process,
what’s the best way to approach a deal that’s in probate? We might have to come
up with a scenario, I guess, but like, how would people go about it if it’s in
probate? Can you contract the property while you’re waiting for probate to
clear up? I mean, one of the things that people are going to run into, one of
the biggest, I guess, objections that we see in probate.
Melissa: So the one thing, unless you’re in
Alabama, obviously, I don’t know your probate laws. And so the first thing I
would tell you to do is just do a little bit of research and find out what your
probate laws are. As far as Alabama goes, if a person has passed in the last
two years, it has to go through probate. If it’s beyond two years, you can get
that process done without it going through probate. But there are all kind of
gotchas in there. Did they die with a whill, that died without a will? Are
there you know, did they have children? All those children deceased are their children’s
children deceased? They can go on for quite a while. We just closed one maybe
earlier this year or late last year. Honestly, I don’t remember that was in
probate. And the lady’s husband had passed ten years before. That’s how long it
had been stuck in that they had a lot of assets. And this one property in a
really good location was the last one she had to get rid of. And it’s the one
she was living. And she had since got remarried. And I had to jump through and
work with the court to actually get that one close. They knew what was
happening. They didn’t have a problem with it, but I had to get approval of my
contract. And so she had to actually take the contract to her attorney. They
took it to the probate court and said, is this contract OK? They approved it.
We signed the contract and then I had to wait for it to get through. The
process was as it was getting through that process, had the buyer lined up. I
had the buyer on the hook. No, that I don’t have any control over this. It’s in
the probate court. I’ve been approved. We can close it, but until probate signs
off on it, I can’t guarantee it. So you’re going to have to agree to ride this
wave with me, which they did. And it was really just a process of talking to
the probate attorney who her probate attorney and the clerk at the probate
court and just try to coordinate like where are we and kind of what’s going on
with it. It was a process of just getting approvals. So it really not that
hard. It just takes time. And the first any time anybody says anything to me
about somebody died, especially if it’s a husband or wife, the first thing I
ask is how long as I’ve been how long how long ago was that was a year ago. Two
years ago. Five years ago. If we can get beyond that two years, I’m like, OK, did
he have children, children’s children, all of those things? Because you just
those are the smart things to ask because there are there’s an heirship
affidavit. So let’s say. They died two and a half years ago, then you can go
and get heirship affidavits from people within that different for every state
for here you need friends not directly, not direct family members, but friends
that knew who the children of the deceased were. I mean, you just got to have
some history. So it takes a little bit of digging to do.
Gavin: And the heirship affidavit, what is
that? For the people listening.
Melissa: This is saying who the heirs were. So
was I like in that particular instance, they had he died without a will, so we
actually had to get some of those. So she was his wife and she had a child and
then she had a grown child. And so they had to actually sign off and say, yes,
I’m aware that she’s selling the house and then I’m an heir to the property and
I agree for that to be sold. And then the other part of the heirship affidavit
says, I had to get two people that were not family members to sign an affidavit
which basically says, yes, I’m aware that she was married to him and these are
his only children. That’s just trying to substantiate that there weren’t nobody
is aware of any outlying children or grandchildren. Somewhere that’s getting
cut out of an estate is pretty much all it is.
Gavin: The other big thing as well, when
you’re dealing with probate and things that are going to come up is that there
might be multiple people involved, meaning there could be two brothers and
three sisters and then all four of them are all on ready to sell. And there’s
one that’s just dig in their heels and not having any of it. It will not clear.
So that’s why the negotiation then needs to go. Well, can we get her on the
phone? Can we speak to can we have a conversation? What are we going to do to
get her to actually sign this document and do the thing with probate guys? And
why it takes long is because a lot of family members don’t get on and they will
literally dig their heels just because just to annoy everyone else in the
family and they don’t really care about the money. This lot. Now, what they
were doing the opposite, what everyone else wants to do, because the one family
fall out. So you have to see if you can you become like the peacemaker and
trying to piece everyone back together to get these things done. And there’s a
lot of work that goes into it. And I don’t think there’s anything that we’ve
told you that doesn’t rely a bit of research. Right. No. One, as Melissa said,
research. What it is, how does probate work in your state. In Alabama, it’s two
years, but it could be different in every state. So the first thing is Google
that I don’t understand it and then get on the phone and you just have to be
willing to work it. And you are you prepared to do that? Most people in
Alabama, and I might say in Alabama, actually do a lot of business that are not
willing to go through the hoops to make the money. So when you make twenty five
grand and go oh, how did you do that? I just got on the phone and had
conversations. It’s not rocket science and you don’t need to be an attorney.
Melissa comes from a thirty five year paralegal background, so she has the
lingo when she speaks. Right. But when I do it I act like I’m as dumb as a
broche right. And you just having conversations. I had I got this person. I got
this. What forms do I need? One. I got a file to get it done so you don’t need
to know any anything. You just have to be willing to have do the work and you
will get through it by asking questions and then go, you need this. The latter.
You need to do that. OK, great. You got to do that then. It’s now and you
figure it out as you go. You’ve just got to be willing to do it. And most people
with liens are not willing to do it. But when you negotiate him, that’s one of
your biggest deals, right? Biggest deals we make. Twenty five grand from one
hundred grand. lien, what if we would have got it down and we were making
eighty grand and we got one hundred grand off. Right. I mean had gone either
way there. So just something that people need to think about. You got to be
willing to have conversations, build relationships, and there’s nothing worse
than like. People trying to figure out what a mortgage broker does. Right. If
you’re doing great finance, I’m not a mortgage broker, so let them do that
work. I’m not an attorney. Let them do that work well that you’re paying them
to do. You don’t need to know everything. You just need to know how to communicate
to get it done. That’s how I would say it. What do you think?
Melissa: Yeah, and most attorneys, if you just
ask your closing attorney will tell you if you ask when they know you’re going
to do it and they’re not going to have to. So nine times out of ten, if you
just ask your closing attorney, it’s all right, because if he comes back and
says, we got this probate issue, all right, what do I need what do I need to do
to clear that I’ll do it? Because if you’re relying on somebody else to do it, it’s
probably I don’t get doing so. Just ask them. They’ll tell you. You don’t have
to know. And when you’re negotiating the stuff, to be honest with you, you’re
right. I’ve been in law for thirty plus years, so I understand the process.
I’ve done it and I know how to speak their language. But for those who don’t,
not knowing and being honest and playing stupid and just throwing yourself at
their. So you’re going to get a lot further with him anyway, so I’m really
sorry, I just don’t know. Can you please help me find you know, a lot of people
don’t like to ask, would you please help me out and admit I just because it
makes you feel like you’re stupid and you don’t know what you’re doing. But to
be honest with you, if you’re putting yourself under that person and you’re
elevating what they think they know, they’re going to be more apt to help you.
I mean, that’s just the way it goes with sellers, buyers, negotiating lanes or
anything else. I can get around it because I have that experience. But if you
don’t, you don’t need it.
Gavin: You really don’t. And people, if
you’re likable, are willing to help you. Right. And Melissa is right that no
one wants to know it. All right. Someone who thinks they know what they’re do
when they don’t know what they’re doing, they’re going to be lying to them for
you. Right. Right. So coming in and just being normal, having a conversation,
asking for help, asking that you’re willing to do anything, you’re willing to
fill anything out, you’ll do exactly as they say. You just need some guidance
on what to do. And nine times out of ten, they’re going to help you that they
really, really are. And hopefully listen to this. If one of you get a lien
cleared because of this and make some money, then obviously we’ve done a job by
kind of telling you what to do. So that’s that’s awesome. Just on a on a side
note, just kind of talking about lien’s other thing. I just want to touch on
real quick here before we get done is we made some transitions in the business
as well to start buying a lot more property in this market. And I suggest if
you anyone listen to this experience, you need to be looking for private money
and you need to be taking these deals down, because if you want to stop making
your ten or fifteen thousand dollar spreads on your wholesale deals again,
which is nothing to to which is great. All right. But you already the art of
this business is finding discount properties. If your wholesaler’s and
rehabbers and you make your money when you buy, not when you sell. OK, so if
you’ve already put the asset in, you’ve already got that lien cleared. Right.
You’ve gone through all of that to make fifteen thousand one. If you could
purchase that property on the MLS and make forty one if you could buy that
property and stake forty thousand sixty five thousand dollars on that property.
Right. You remember then moves in our opinion and I will speak for both of us
here I think is the work has already been done. The art of finding the deal is
where you make the money. So once you’ve got the deal, don’t get lazy. We’re
renowned for it so we know better. We got lazy and got stuff going on. Let’s
just do it. But what if we just buy it and just turn around five grand in it it
on the MLS and make forty? Why wouldn’t you do that? And that was kind of like,
what are we do it like we have the ability to find these kind of properties.
Why aren’t we capitalizing on it, especially with the whole talin, especially
in the market and the flips? And our biggest challenge right now is deciding.
And this is just pure honesty is deciding when you just wholesale, when should
you flip? Right. And that is a moving target for us of when you should do what?
Because this market is insane. Like, I’ll give you an example real quick. What
are you talking about? So we buy property and I can put five thousand in a list
it within a week and get make forty thousand dollars. Right. Or am I going to
put forty thousand then it’s going to take me eight weeks, then I’m going to
list it and I’m going to make forty five thousand dollars. Right. So you’re
probably thinking well yeah, just take the fall but sometimes you don’t know is
he going to get beat up. So you have to look at locations and that that’s where
we’re right now in business. I mean you can add on this, that’s all discussions
like when should we flip, when should we wholesale? How much should we put in?
What finishing should we do for the area? Because it’s just a moving target.
Well, what do you think on it?
Melissa: Yeah, so I like the pretty things and
so like that and it’s hard. You know, the one that we have in closing now after
we flipped it, I put too much money in one hundred percent dead and I look back
at it now what did I do that I didn’t have to put that much money in it. But
you just you have to be careful. It’s easy to get carried away. You know, I
wanted the really pretty high end cords because it was going to make the house
look like I would want it to. Look, I did not take into consideration the crazy
market. Right now, people just want countertops. They’re not worried about why
courts. And the funny thing is, is my magic is actually the one that said, what
do you do? And I thought, oh, stop me. So the ones that we’re doing now, I’m
Gavin: Let msay that let me just say one
thing. And this is really important. Yes, we overspend. Yes, we put blew the
budget. We did all of them, things bought. But we still should be around twenty
eight thousand dollars, twenty seven thousand dollars on it. So when we say we
did that, the only reason this deal works is because we bought at the right
price. That’s the only reason most of you live. Listen to this. What if not
born at the right price and now you’re upside down the property that you’re
going to bring 20 grand to the table? Right, right. We’re making twenty eight.
We should have made probably 60. So we overspent by 30 grand, let’s say, but we
still made twenty eight grand. And that’s the only reason because we bought
right, I just wanted to identify that.
Melissa: That was a good lesson because I mean,
we’re making it so we’re not losing money. And, you know, for me it was oh, I
got to correct that because it’s an easy mistake to make you get in there and
you say and it was in a good area, but you just see all of these things and
it’s easy not to pay attention to, oh, I’m spending two hundred dollars on that
picture instead of sixty five dollars on that picture, because it’s the little
things when you get to the end of the budget, you’re like, oh crap. So yeah,
it’s easy to do it, but it was a lesson. We’re still making money and so we’re
OK in that. But I learned going forward because we had that conversation was
like I got to I have to get better hoteling because right now the market
doesn’t demand me to do the high end flips. A couple of years ago it did, but now
it doesn’t. So you just you got to be able to pivot with that and change. And
that’s something that I’m learning. And so instead of foot and five thousand
dollars worth the courts in the house, you’re going to get eighteen hundred
dollars a granat. That’s just as pretty as expensive. Just, you know, just
making some minor changes.
Gavin: Yeah, absolutely. So a few tips there
guys. You should be looking at again bringing money in, which is a whole nother
episode. We could talk about that by and taking down your deals, you know, with
deals and trying to expand on them profits because we’ve already done the work.
You’ve already negotiated a lien. You’ve done all them things OK to work to to
get the deal.
Melissa: So and one other thing, the
negotiation doesn’t end just because you’ve got it locked up with the seller.
Let’s say you got it locked up with the buyer. You’ve negotiated those liens
down. Everybody’s happy. One last negotiation is to happen. Hi, Mr. Sellers. I
got all these liens knocked down, but, you know, I had to put all this work
into. Is there any way you could drop that? Just five thousand dollars. And it
just happened to me as well. I know we’ve got one in closing. And I went back
to the seller and I said, look, and this one had thirty three thousand dollars
worth of wings on it. And I said, well, here’s the deal. I’ll get these liens
and lock down so that I can make it work. They wanted rid of the property, but
I need it for this instead of that, because in order for me to take care of these
liens and to get those liens off for you and so they won’t attach it to any of
your other assets, I really need that lower. And then I went back to the buyer
and said, hey, I’ve had to do all of this stuff. Could you jack that up by a
thousand dollars? And he went up three thousand. So we just built in another
eight thousand dollars. And they’re walking out. The sellers are they’re not
making any money, but they’re getting rid of liens.
Gavin: Really really good. So negotiate, have
conversations, not rocket science. You don’t need to know everything. You just
need to not pick up a phone and talk and ask questions, ask for help and get
through it. Lola, listen, I appreciate it. Thank you for jumping on. I know
it’s crazy right now. I have a good weekend. Happy birthday as well. Thanks,
guys. We’ll talk to you soon. If you’re interested in work, by the way, go to
REInetwork.com/join. These are the conversations that we cover on our calls on
how to actually get through and actually close deals as well. So we can
definitely help you with that script. All right. REInetwork.com/join. I’m going
to appreciate it and I will see you soon. Thank you, bye bye.