Deal or No Deal #1?Posted on April 3, 2012 by
It was 3:30 PM on a Friday afternoon in 1984. I was thinking about the weekend, and my primary goal was to move a new tenant into one of my rental units. The phone rang, and I proceeded to talk to a desperate seller. I went through my property information sheet, and the deal sounded too good to be true. I was excited. Here was an opportunity to purchase a three bedroom, one bath house in Decatur for $15,000. The property was a 1960’s brick ranch in average condition. All three of the mechanical systems were in place, and the roof was 10 years old. The rent on the property was $700.
The total amount of money in the transaction would have been $25,000, all in price. The return on investment cash on cash would have been 33.6%. It would’ve taken three weeks get the property market ready. The retail price of the home would be $65,000, and it would sell in three months with a net profit of $33,500.
The seller needed the cash today, as he was leaving town and wanted to get rid of the property. He was looking for investors that would pay cash, and the deal had to be consummated by Monday morning at nine o’clock. The seller owned lots of property, and this was the last property he wanted to get rid of. He knew the attorneys would charge $800 to close the deal. The seller and I knew that all we needed was a quit claim deed to transfer the property out of his name into mine. We didn’t need all that fancy lawyers stuff. All we needed to close the deal was a notary and a cashier’s check. He said that he did not need to get a title search.
I met him at the property. He had a key and unlocked the front door. I noticed the door jamb had been damaged. The property would need carpet, counter tops, door locks, and light fixtures, which amounted to approximately $10,000 in repairs.
As I walked around I quizzed him on how long he had owned the property. He said that he had been in the neighborhood for 10 years and mentioned the family across the street. His neighbors to the right he even mentioned by name.
He showed me the quit claim deed that we would use. If I went down to the bank before five o’clock, pulled out $15,000, and had the bank notarize the quit claim deed, I could be owner of a brand-new house in less than one hour. He said he had other people coming out to take a look at the house and that if I did not make a decision now, this deal was going to be gone before the weekend was over.
This is No Deal. Never, ever – let me repeat – never ever, buy a house without proper title work. Title insurance is worth its weight in gold. A good attorney is an asset. In 1984, there were no databases in Georgia that you could look up and get the title on a piece of property over the weekend. This was a scam. This individual did this scam in all major Metropolitan areas in 20 states. The key was no title search. The seller was never on title. Next time you meet me ask me if this scam is illegal.