How to Price Land Offers (JJ 690)
Transcript:
Jack Butala: Jack and Jill here.
Jill DeWit: Hi there.
Jack Butala: Welcome to the Jack Jill show, entertaining real estate investment talk. I'm Jack Butala.
Jill DeWit: And, I'm Jill DeWit, broadcasting from sunny, southern California.
Jack Butala: Today, Jill and I talk about how to price your land offers. Yesterday, we talked about how to price house offers. Today, it's all about land. Before we get into it, let's take a question posted by one of our members on the JackJill.com online community. It's free.
Jill DeWit: Cool. I'm not sure who the member is. It just says, member asks. Mark. Mark asks, land contract or deed of trust in California. What do you prefer using in California and have you ever taken a property back after default? I would really appreciate some insider knowledge.
Jack Butala: Good question. It's a question that we get quite often and Jill, I'll answer it, if it's alright.
Jill DeWit: Please.
Jack Butala: Yes, we have taken back property under a land contract and a trust deed, and both in California, I have. I'm not sure if Jill has or not.
Jill DeWit: No, I prefer to just give it to them. I walk away.
Jack Butala: Jill, do you want to hear ...
Jill DeWit: It involves work. I'm out.
Jack Butala: Before I answer this question, this is a story that Jill told us while we were still in our pajamas that we talked about. I said, "Jill, at times when we go to real estate events and things like that, you really, really, really ... I don't want to steal your thunder or anything, but there's just a lot of horsing around." She said, "Let me tell you a story." Go ahead and tell this story.
Jill DeWit: He's like, "You've got to tone it down. You're just so social. There's a time ..."
Jack Butala: This is, by the way, one of the things I love about Jill, I don't want to stifle any of this, but ...
Jill DeWit: I got a speech. There's a time and a place for it. I said, "Listen, it is not in my nature. I've known that since sixth grade. Why do you think Mr. ... What was his name? Tinman, I think it was, put me in the back of the class and moved a bookcase in front of me, because I could not stop talking to everyone in his stupid sixth grade class." There's more to the story, but that was the result.
So Jack, finally ... Finally, it's like, how long have we been together? Finally, goes ... You're asking me to do something that I'm really not sure I can do.
Jack Butala: That's why I love you, for one of the many reasons.
Jill DeWit: Thank you.
Jack Butala: The basic difference between a land contract and a deed of trust is this. The land contract is an agreement between a buyer, and a seller on a piece of paper that says, "I agree to buy your property for X, and I'm going to pay over $200 a month or whatever it ends up being. At the end of the contract, I'm going to deed it right to you and you're going to own it."
You own it the day you sign the contract and you use it like you own it, but it doesn't actually get recorded until the bitter end. That serves a lot of purposes. You keep everybody out of it. It's just an agreement between two people. If there's some trust, it works out great a lot of the time, most of the time.
A deed of trust is where you bring in an unrelated third party l...