This episode addresses a surprisingly common diligence failure where investors spend extensive time analyzing properties only to discover active mortgages that make deals impossible or require complete renegotiation. The quick check using Land ID’s owner information section can prevent wasted hours on properties where sellers don’t own free and clear, and the analysis provides frameworks for handling the rare situations where mortgaged properties can still work.
Key Takeaways:
- Land ID displays active mortgages in base parcel overview The owner information section shows most recent sale date, associated mortgage amounts, and maturity dates, providing immediate red flags when properties sold recently with long-term financing still likely outstanding.
- Mortgaged properties require proceeds-based payoff negotiations The only viable path forward involves structuring deals where mortgage payoff comes directly from sale proceeds to the seller, with purchase prices exceeding total amounts owed plus enough margin for sellers to accept the transaction.
- Title companies prevent self-closing disasters on mortgaged parcels Using professional title services on deals above $20,000 (and ideally all transactions above $50,000) protects against buying properties with unexpected liens that could result in total loss if discovered after closing.
Listen to the full episode for specific examples of successfully closing mortgaged properties and why verbal seller confirmations should always be verified through official county records or title company research.
(Podcast transcript below)
Chris Duff over at Serious Land Capital Vacant Land Funding Partner. Short episode today, just got off a marathon land daily diligence session reviewing tons of deals. I know I’ve been commenting in a lot of recent days on just various issues that we see routinely come up with properties. So a key one that is a very quick check is just
confirming whether there is an existing mortgage on a property. It’s normally, you think mortgage is mostly associated with homes, which is certainly the case, it’s given average price points and so forth, but plenty of times they can be associated with land. mean, if you’ve been in the land game for any period of time and sold property, especially larger ones.
you know, third party financing, can come into play, more often than not. So there’s tons of lenders who will come in for, for various land deals. you know, whether they’re larger banks or, or more regional lenders, you know, and of course, with that in mind, you’re to get a deed of trust type situation and a mortgage slapped onto that property. So.
I can’t tell you how many times we get properties sent our way that appear to have an active mortgage on it. You know, while it’s not 100 % accurate all the time, a great first check is, you know, assuming you’re using land ID or similar mapping software, but I know line ID is the most common one. When you’re checking on the actual parcel, when you click on it and you scroll down to
Um, I believe it’s the owner information section. Uh, but yeah, it’s in the base overview, like pretty much right in your face on the left-hand side of the page. When you click on a parcel, uh, it will show you, um, the last sale date for many properties, you know, if they got sold ages ago and every part of the country is different. I know I have to reiterate that constantly because, um,
all the record keeping around the different states and counties is not uniform to say the least. But many times you can see most recent sale date and if there is a mortgage associated with the property, it’ll show that as well as the anticipated maturity date to pay off the mortgage and the total amount that was associated.
when the property was first bought. won’t tell you how much it still owed, of course, but you can have a pretty good idea that if it was a more recent sale, say within the last two to five years, and mortgage extended out for five, 10 years or beyond, more than likely there’s still an active mortgage. Entirely possible they paid it off and that data is not accurate, but that is often a big
red flag that we see that we always check in on because you don’t want to do all of this work on a property. You know, think you have a great deal here and then you end up getting into title and all of sudden you realize, these sellers don’t even own the property free and clear. And you might not have negotiated where the mortgage would be paid off via the proceeds from the property.
but plenty of times that might not even be the case. The anticipated buy price is below the total amount owed from the mortgage. And most sellers are gonna want to get at least something, not just like $0 or nominal sums. So usually there has to be some type of difference between the two amounts there, but that is always something to be checking in on.
immediately for any possible parcel before you spend hours and hours of your time or your team’s time looking at a parcel and realizing, hey, that this seller is either ignorant to the situation or they have something else in mind, or maybe they assume that you’re going to pay them that certain purchase price as well as paying off a mortgage, or they’re just trying to see if they can kind of hoodwink you into
getting to title or even more risky is if you’re trying to self close and you don’t go through a title process and realize you buy a property that is not free and clear and all of a sudden you’re beholden to a a lien, a lien holder on the property and you just paid the seller when they, you know, didn’t, didn’t actually own.
the property free and clear so major risks if You go that route most you know virtually all the time with the types of properties we buy we always use title Because of the purchase prices or the sizing that we go after and we prefer like 50k Plus purchase prices nothing below 20,000. So usually at that level using titles gonna make more sense
compared to, you you could self close some of those, you know, quick flip, you know, 2K for 5K type Red Ocean properties. So something to keep in mind there, hopefully that will help some of you not get caught in those situations or potentially get into a really nasty title situation or you end up losing money because you didn’t.
catch that or yeah end up wasting a lot of time with a property that you haven’t figured out so always check on that mortgage ask the seller about it but you know anything the seller tells you always take that with a grain of salt you know do your research either on your own check the official records within the county or if you’re working with title have them check on that as well
that is always going to be the game plan to ensure that you’re able to get a clear title on the property. That being said, we have bought properties with mortgages on them. It’s just, we made sure to negotiate for the mortgage to be paid off via the proceeds that the seller was receiving on the property. That’s really the only way to do it right.
So hopefully that helps. Check out seriousland.capital for any of your funding needs. Land Daily Diligence for zero cost review of your land deals Mondays and Thursdays just past the 800 person mark. This week, feeling good about the continued growth of that group. We have tons of deals review every week here. Happy to be helping in providing as much value as we can and landpricer.ai.
nearly done with the demo videos to get that set up. Can’t wait to finally start testing imminently. Many more updates soon. Take care everybody.
