Comparable Sales -

What is the value of a property? This is one of the most common questions we are asked. There is no single answer to valuation. A common solution is to have an appraisal done on the property. Another is to compare the tax values, or look at other properties for sale in the area.
One response often used to determine a value, it the statement, "A property is worth what someone is willing to pay for it." This may be the most accurate determination of the value of a property.
Comparable sales information is closest representation of the value of a subject property. By using recent, proximate, andsimilar sales, an interested party can very closely determine what a property might sell for. Our system uses an advanced program to locate comparable sales of properties that are the most similar to the subject property. It also selects transactions which are the most recent, in the same area of the subject property. In many cases, the comparable sales will be within 1/2 mile, and be within 6 months.
By comparing the attributes of each other sale (square footage, acreage, and year built), you can make adjustments to give you a good idea of what the subject property might sell for.
In fact, this is the same method used by appraisers, to determine their appraised value. For many clients, the comparable sales by themselves are a valuable part of the property report.

Buyers Market -

It appears that there is more volume in the housing inventory. Many of our buyers are reporting that sellers are more receptive to lower offers, as properties stay on the market longer. In addition, the number of houses for sale in a given area is much higher than even just a few months ago.
For example, in one small neighborhood we track, there were normally 5 - 6 houses for sale at any given time. The house generally sold within 3 - 4 weeks. It seemed that the turnover of houses was about 5 per month. Then, at the end of 2005, the number of houses for sale went up to 12, and then 20.
As of today, May 14th, there are 37 houses in the same neighorhood, currently listed for sale. Even if the sales rate is still 5 per month, this is over 7 months worth of inventory. In fact, it is also very likely that the sales rate is only 3 or 4 transactions per month, which means that this is a years worth of inventory.
What does this mean for buyers? Well, over the past few years, buyers have had to buy without inspections, waive financing contingcies, and act very quickly to land good properties. Now, buyers are able to navigate the inventory, and negotiate better deals.
In addition to doing property inspections, buyer are often running title searches before making an offer on a property. Using the information from the search, they can often negotiate better prices for selected properties. For example, knowing the mortgage amount on a property, can help select an offer amount which represents a certain amount of equity to the seller. While this may not always be the case, some sellers are more interested in their settlement chack amount, rather than sales price.
Using information from the title search, such as liens, tax status, and purchase price, can all lead to making a better transaction price for the buyer. The most successful buyers are using title searches, property inspections, and negotiating with sellers to get excellent deals in todays market.

Family Events -

Title searches are most commonly thought of as a part of a real estate transaction. However, a title search is often needed as part of other events. Many of our clients order a title search as a result of a family event. When there is a death in the family, other interested family members use a title search to determine what records exist on a property. This may help in the early stages of understanding what may happen in the future. Another variation of this, is when there was a family member who passed away long past, and there is some question as to the transfer of ownership in a property since then. Other family members may want to confirm that the property ended up in the proper hands. A title search can help confirm that the correct heir now owns the property. Many attorneys order title searches from us, for this purpose. In fact, one of our recent inquiries was from such a situation. Our client, was the executor of an estate. The recently deceased, had inherited the property only recently. In fact, it was unclear whether the property ownership had been recorded into their name, since the prior estate may not have been settled. The purpose of the search was to determine the current in-title party, so that settlement of the current estate could continue. In other situations, a divorce is the reason for initiating a search. One or both spouses are looking for specifics on property ownership. There may be questions on titling of investment property. In many cases, a spouse may be concerned about financing that may have been taken out on a property, by the other party, without their knowledge. Some divorce agreements include a clause that a party is required to remove the other spouse party from financing. A title search can be used after the fact, to indicate if this has taken place. In addition, there are business transactions which may benefit from a title search. Prospective business partners can also use a title search, to confirm that an entity has assets that they are claiming. While a title search should not be used for credit analysis or employment decisions, according to the fair credit reporting act, an understanding of property title, and related liens and mortgages, can help with some risk analysis decisions.

Search basics -

While a title search is a complex process, a basic understanding of the steps involved can be helpful. A title search is the result of research of recorded documents. The documents each represent a transaction, or event, which affects the property status. For example, a deed indicates that an ownership transfer has occurred. A mortgage document, (or deed of trust), does not usually transfer ownership, but instead indicates a voluntary pledge of property interests, in order to secure a financial obligation, or loan. In some cases, the recorded item is not voluntary. A tax lien, for example, is a claim of security on a property. This is commonly known as an involuntary lien, as the owner did not “volunteer” to make this lien become a record. Along the way, other recorded instruments can affect prior items. As an example, there may be a mortgage assignment. The initial mortgagee (bank) that makes a mortgage loan, sometimes sells the mortgage to another bank. This is documented by an assignment, in which the original lender transfers its rights in the mortgage to another bank. In performing a search, a title searcher, often known as an abstractor, first searches for any record which might be recorded against the property. This is normally done by using a county index, by owners name. The initial search results will return all documents, recorded in the name of the owner. This list may include dozens of documents. Not all of these documents will affect the property. In some cases, they will be for another property owned by the same person. In some cases, the documents will be for a different person with the same name. In order to determine which documents are relevant to the subject property, each one is examined to locate the legal description. This is the ultimate identifier of the property. While most properties have a street address, and almost all have a tax parcel number, only the property legal description can identify a property for certain. For this reason, when a property is referenced on a document, the legal description is used. While the address, or parcel number may also appear, the legal description is always a crucial element. To compile the title search, the abstractor must eliminate documents which have a different legal description. This leaves a remaining group of recorded documents, which may become part of the search. Next, some items are further reduced by “abstracting.” For example, there may be a mortgage release, which effectively removes the referenced mortgage. An important aspect of creating the title search, is the concept of “first in time, first in right”.

The Legal Description -

The most basic need of a title search is to identify the specific legal parcel. This is necessary both to ensure that the property searched is the one needed, and also to match up the correct recorded documents to the search. At first, it may seem simple to identify a property. Why not use the street address? For example, if the property is at 123 Main St, couldn’t this be used as the identifier? For the purposes of legally identifying a parcel of real estate, this would not be a good choice for a unique label. First, there are situations where there may be more than one legal parcel at the same street address. An apartment or condominium building is a good example. Even using unit numbers, there would be enough potential confusion to make this a useless method of identification. In addition, there are sometimes large parcels with more than one address on the same parcel. For example, one legal parcel may have 123 Main St, 125 Main St, and 127 Main St. If the identification of the parcel was left to address only, it would be unclear which should be used. A second option would be to use the county/city tax assessor ID number, parcel number or APN. This may at first seem like a good idea, since each parcel has a unique number. However, since these numbers can change, using them to legally identify a property would be troublesome. Therefore, the identification of a real estate parcel is done by legal description. This is a written-out descriptive paragraph, uniquely defining the property. An example of how a legal description appears is below:

To an individual, this may seem like an overly complex way to refer to a property. In fact, the complexity is helpful, to ensure that the description is unique, and specific to the identity of the property. This legal description is used on almost every document pertaining to the property. Every transfer deed, mortgage, lien, release, or assignment will likely have this text as part of the document. With this method, a title searcher has a common element to tie each document to the subject property, and to each other. While the legal description may seem excessive, it is a crucial element of a title search.

Investors – Current Market Indicators -

Real estate has been, and will continue to be a popular vehicle for investment interest. Whether a primary residence, rental property, or commercial venture, property ownership is an important part of many peoples financial planning. When investing in stocks, mutual funds, or other securities, the common advice is to research the investment and do market research. With real estate, a starting point for analyzing the investment is the title search and property report. A title search will help understand the current and prior status of the property. Information such as the previous purchase price, mortgage amounts, zoning, and owners name can help with selecting the best investment property. In addition, knowing about liens, foreclosure action, tax status, and even recent activity can lead a potential buyer to a better negotiating position. A lower purchase price is often the result. The title search from TitleSearch.com often includes comparable sales, to help paint a picture of the actual market prices, not just listing prices. With changes occurring in the real estate market, it is even more important for buyers and investors to have a better understanding of property details. A property purchased 18 months ago, with 100% financing, is probably being sold for different reasons than a house owned for 25 years, with a paid off mortgage. Was there a recent equity loan? Is the owner in divorce? Are there many other properties for sale on the same street? Having the answers to these questions can be critical to making the right investment in real estate.

Protect your property with a title search -

Ownership in real estate has become the most important investment for many individuals financial future. Many individuals check their credit report once a year, to guard against potential problems and errors. If you are a property owner, it is just as important to check the title search on your property regularly, as well. Many types of problems can occur on your property title, without your knowledge. If you have refinanced recently, it is important to make sure that your old loan is released from the title. If not, you may end up with multiple mortgages recorded on your property. If this is caught early on, it is an easy problem to fix. You can simply request a release from the old mortgage company. If too much time goes by, the prior company can go out of business, or be purchased by another bank. When this happens, you can have all the proof of paying off the loan, but find it difficult to get a valid, recordable release for your title. We receive title search inquiries every week from clients looking for ways to get an old mortgage released. Usually it is for a long paid off mortgage, where the lender has merged with another bank. The new bank sometimes cannot retrieve the old records easily, and are often reluctant to issue a release in another banks name. While it usually is resolved, it often takes months, and a great deal of time on the phone with different departments. The mortgage is usually discovered as a result of the property owner trying to sell, or finance the property. This means that any delay, to obtain an old mortgage release, can put a sale or financing at risk. There are also many cases of erroneous liens, and misapplied tax payments. Recorders offices do not pass judgment on the validity of liens being recorded. If the document appears correct, and is the proper format, it gets recorded. An improper lien would not normally be caught by a recording clerk. This may result in a erroneous, or improper lien recorded on your title. Once a lien is recorded, it is very difficult to remove, especially after a long time has passed. There are also cases where tax payments are applied to the wrong property, resulting in a tax lien. In a recent Arkansas case, the property owner did not receive notices of unpaid taxes, even though his license and other records reflected his new address. Due to this, he lost a property with $65,000 in equity, for a few thousand in taxes. The bottom line is that a title search review on a regular basis can help protect a property owner from a small error turning into a threat to the secure ownership.

Investment in Tax Auctions and Foreclosure Sales -

Hundreds of our searches are for clients who invest in tax sales, and foreclosure properties. Every week, we speak with many visitors, about upcoming auctions and foreclosure sales. Over the years, we have seem many changes in the way that investors are approaching these opportunities. In the past, investing was more direct; the investor researched the properties on upcoming auctions, and bid for them at the sale. More recently, we are finding that our clients are contacting the homeowners directly. Once they have identified a distresses property, (foreclosure or tax lien), a title search is obtained. From the title search, they can determine the mortgage status, lien amounts, and other valuation data. From there, they will contact the property owner directly. While there are many variations on the presentation, the basic strategy is as follows. The property owner is offered a buyout. Instead of the property being auctioned off, and being evicted from the house, the residents agree to sell the property for a set amount. The title is quit-claimed to the investor. The investor allows the prior owners to stay in the house, usually rent-free, for some period of time. Once the time is up, the prior owners move out, and usually receive the balance of any agreed upon price in excess of the mortgage and liens. There are advantages for both parties. The homeowners are able to avoid a deadline for moving, and can ‘save face’ with neighbors and friends. Officially, there is no foreclosure. They save money by living rent free for a few months, and can make arrangements for their next residence at their leisure. The investor is able to lock up a property, removing it from availability to other competing investors. They have control of the property without bidding against others at auction. Remember, at auction, it only takes one overpaying bidder to ruin the valuation on a sale. In addition, the investor can have some time to line up financing, and renovation contractors. There is some security in having the final equity payment to the ‘sellers’ occur upon move-out. This usually leaves the property in better condition than after a foreclosure eviction. The exact amount of the ‘equity’ payment to the seller is determined by the investor using the title search as a guide to the amount owed in liens and mortgages on the property. An amount can be negotiated based on the return the investor wishes to receive on the purchase, along with the considerations given to the seller, in terms of how long they are allowed to stay. Each situation is different, and there may be additional legal issues involved as well.