When THE SELLER called me, she was unemployed.  The monthly payments had become difficult to make.  In addition, she had not been able to maintain the home and its value had declined.   She was ready to allow the bank to foreclose on the home and ten acres.   She thought that she would still have 50 acres free and clear.  The only problem with this plan was that she would not have a home or the ability to buy a home.  I suggested a better solution.  She would sell the land, keep the home with the ten acres, pay off the U.S. Bank loan, make needed repairs to her home, and set aside the  remainder of the proceeds for her retirement.  She agreed and we listed the 50 acres.

Within a few weeks, a buyer called.   THE BUYER had seen the property showcased on the www.leonmillerco.com website.  Within a few days THE BUYER  and THE SELLER signed a sale contract.   THE BUYER would have 30 days to obtain financing.   Then the property would be surveyed.  Seldom are sales simple and this one wasn’t either… for THE BUYER OR THE SELLER.
THE BUYER’S lender, Mortgage Solutions LLC, typically did not make land loans but agreed to make this one.  They needed an    appraisal.   Instead of contracting a local appraiser, the lender hired an appraisal consultant from the State of California.  In turn, this  consultant was to hire an appraiser in the area of the property.   When THE BUYER & I asked for the name of the appraiser, Mortgage Solutions LLC stated that their policy did not allow any contact with an appraiser.   The California consultant assured Mortgage   Solutions LLC that the appraisal would be completed in 10 days.

Well, ten days later the appraisal was not completed.  For a week, Mortgage Solutions LLC would not return our telephone calls.  Finally, 10 days after the appraisal was supposed to be completed, Mortgage Solutions LLC called.  The news wasn’t good!
The lender said the appraiser hired by the California appraisal consultant had not done the work.  So the consultant had hired   another appraiser and the appraisal would be completed within a week.  This time, THE BUYER & I demanded and got the name of
the appraiser.   THE BUYER called the appraiser and was assured the appraisal would be done on Friday, three days before the end of the 30 day financing contingency.

On that Friday, Mortgage Solutions LLC called to tell THE BUYER that the property had appraised for the selling price; however, the appraisal had to be sent to and approved by the California consultant firm.  They assured him that the California consultant would respond by Monday, which was the final day THE BUYER had to obtain financing.  THE BUYER went home for the weekend, satisfied that all was going well until Sunday afternoon.

Sunday afternoon, THE BUYER decided to do a search on the internet for the California appraisal consulting firm.  What he found stunned him!  A notice on the website stated that the company had gone out of business on the previous Friday.  THE BUYER called me.

Monday morning we called the appraiser.  By this time the appraiser also knew the California consulting company was no longer in business.  The only solution was to send the appraisal to the lender and hope they would accept it.  They did and by mid afternoon, Mortgage Solutions LLC approved the loan, just a few hours before the deadline.  While THE BUYER & I were dealing with lender issues, the title company was uncovering problems for THE SELLER.  And these problems also involved lenders.
THE SELLER had obtained a $45,000 loan from U.S Bank in 2005 that she understood was to finance the house and ten acres.   It is possible that the U.S. Bank loan officer (who typically makes home loans)did not understand land legal descriptions; thus he included all of her property instead of the 10 acres.  This mistake would have been terrible if THE SELLER had allowed U.S. Bank to foreclose.  Her entire 60 acres would have been auctioned on the court house steps.  This error would not have hindered this sale, but the second issue could have.

The title company found a second recorded deed of trust dated 1991 to the Bank of Old Monroe.  The unpaid balance was $6,600 plus  20 years of accrued interest. This could have totaled to more  $30,000. Since this deed of trust preceded U.S. Bank’s deed of trust, U.S. Bank’s note was not in a first position as they had intended. Instead, their loan was in a secondary position behind the Bank of Old Monroe.  More than likely, they would not have made the loan if they had known that fact.  Either the title company in 2005 had

found it and U.S. Bank officials didn’t read the title commitment.      In any event, THE SELLER had stated in her loan application that no other loans existed.  She had committed fraud if this were not true.  THE SELLER maintained that the loan at the Bank of Old Monroe was not valid.  Here’s why.

In 1995 she received a notice of foreclosure from the Bank of Old Monroe.   She was unaware that a loan was on her property.  When the banker showed her a 1991 note and deed of trust with the signature of she and her husband, she saw that her signature had been forged.   Her husband (who was now her ex) had forged her name on the loan papers.  The documents had been  notarized by the secretary of the husband’s attorney.  The bank brought suit against the husband and notary and THE SELLER agreed to testify for the bank.  Then a day before the court date, a bank officer called.  Her        testimony would not be necessary because the notary’s bonding company made a settlement and the loan had been satisfied.   Now it appeared the bank had failed to record a deed of release in 1995, THE SELLER was sure that once she got in touch with the Bank of Old Monroe, the matter would be solved, but it wasn’t that simple.

When THE SELLER called the bank, she learned all of the 1995 bank officers were gone.  Furthermore, since the matter was settled    outside of court, there were no court records to support her version.  And the bank had not sent any documentation to THE SELLER that showed the matter had been resolved.   A simple solution was beginning to become thorny.   Now, THE SELLER could only trust that a bank official would be willing to search for the documents to support her claim and hope the documents still existed.
At first the young man at Old Monroe Bank who received THE SELLER’S call was skeptical, but he agreed to search the old files.  The next day he called THE SELLER.  He had located the file with the documents that supported her claim and would record the deed of release at the Lincoln County Recorder of deeds immediately. The sale closed.

THE SELLER believed that people would do the right thing, but mistakes happen.  THE SELLER was lucky.  Lucky that U.S. Bank didn’t foreclose and lucky that a young man at the Bank of Old Monroe took her claim serious and acted immediately to correct the matter.   Perhaps a larger bank with a less knowledgeable employee would not been so cooperative.

Hindsight is always 20-20, but if THE SELLER had hired an attorney these issues would never have occurred.  An attorney would have found the legal description error in the U. S. Bank loan documents.  An attorney would have insisted that the Bank of Old Monroe file a deed of release at the time of their out of court settlement.

By the way THE BUYER learned a valuable lesson.  The next time he needs a land loan, he’ll call the local bank or a land lender.

The Problem:  In the real world, any transaction where the real estate commission is paid by the seller, even the buyer’s agent wants to make sure that the seller likes the deal, if he is to get paid.  The buyer agent is mentally representing the seller.  The buyer wants his agent to negotiate the lowest price possible, but to do so means the agent will make less commission.  The buyer agent’s objectives and the buyer’s objectives are conflicted.

So what law, regulations or disclosure is going to persuade the buyer agent to negotiate for a lower purchase price that will result in a small commission check? Unfortunately, no rules can change human nature.

The Solution:  As long as the buyer agent’s income is from the seller and that income is based on a percentage of the purchase price, buyer can never be assured they have the representation that state laws and regulations were intended to give them; therefore, the method by which buyer agents are paid must be changed.  Buyer agents need to be paid by the buyer and that fee should be a flat fee rather than a commission or percentage of the sale.

Buyer agents cannot expect a buyer to pay unless they provide a complete service.  A complete service would include calling expired listings, contacting for sale by owner, and searching out new listings before they are placed on the multiple listing service.    When this occurs, the laws of the State and the laws of human nature will provide buyers with the same representation as presently received by sellers.

Accurate real estate sales information is not available in most Missouri county public records.  So the only reliable sources for a sale price is from the buyer, the seller, or the real estate agent.   And if these people are not available or are not talking, then the rumors and  half truths start mounting. Here’s a few recent examples:

Example #1:  Last week I saw an acquaintance who had “information” on a farm sale that he couldn’t wait to tell: “Have you heard about the 120 acres that sold for $5,000 per acre?  Yep, All farm land in this area is going to be selling for $5,000 per acre from now.”

If his information was correct, then this could indicate that land prices in this area had gone up $1,000 per acre in less than a year.  I called a reliable source and found out his information was only half correct.  The 120 acres had sold but the price was $3,800 per acre and not $5,000 per acre.  So  how did this misinformation get started?

I asked my acquaintance where he got his information. With reassurance he told me that when he said to the buyer that he bet he had to pay $5,000 per acre, he didn’t say a word, so he assumed the price was $5,000 per acre.

Example #2:  Last week a seller told me he wanted $3,500 per acre for his land.  He was basing the price upon a neighboring property that had sold for $3,500 per acre.  His information was only partially correct.  True, the property had sold and yes, the total price was accurate; however, the land had several buildings.  When the price adjusted was made for these improvements, the value of his vacant land was far less than his expectation.

Example #3:  Last spring a gentleman called about selling his Warren County property. His St. Louis business had become a victim of the down turn in the residential market.  The bank was forcing him to sell his rural property to pay his business loan.  His previous listing agent, a residential salesman had listed the property at $6,000 per acre. The agent had arrived at the price by relying on unconfirmed sale information of a nearby property.  His information was     incorrect. The neighboring property had not sold! Furthermore, he ignored two comparable properties in the $4,000 per acre range.  With this information the seller’s  property was re-evaluated.  We listed and sold the property within a few weeks.  The seller paid off the bank loan a month before foreclosure was to begin, put cash in his pocket, and restored his peace of mind.

Example #4:   In July, a landowner from California called about his family’s 293 acres Missouri farm they needed to sell.   He had spoken to a friend of the family who lived in the area.  The friend had told him that no one was buying land and that their farm would only sell at a “give away price.”  I explained to the landowner that to say “no one” is buying land was not true.  I had information of area sales and none of these sales indicated a “give away” price.  He listed the   property and by the end of the year, the farm sold.  The price was higher than he expected and much higher than the family friend had told him he could expect.

Example #5:  This fall a landowner called, desperately needing to sell her land because of family illness.  The sale had to be made quickly.  It sold in less than 6 weeks for $2,350 per acre.  Two years earlier, a buyer offered  $3,500 per acre, which the owner refused to accept..  She heard   rumors that land in her area was selling for $4,500 per acre.  Sadly for her, she chose to believe the misinformation rather that seek the facts.  This decision cost her over $130,000.

Here’s what George Washington had to say about the consequences of using misinformation in a letter to John Jay on May 8, 1796:

“Serious misfortunes, originating in misrepresentation, frequently flow and spread before they can be dissipated by truth.”

Farm buyers purchase any time of the year, but some delay the closing until late fall or winter.  Since farm loan payments are due annually, the farmer may want to coincide the fall harvest with the payment due date.  On the other hand, many successful farmers spread the sale of their grain over the enter year; therefore closing the sale in the fall in not as crucial.  Another reason for a fall or winter closing is to allow the new owner 100% possession of the land.  If the new owner is a farmer, he does not want to buy the land subject to a lease.

Developers buy anytime of the year, but prefer to delay closing until the weather conditions are favorable.  Several years ago a developer from California was buying our clients’ land.  The closing was set for October, but when the developer realized that freezing  weather in the St. Louis area could delay development, he wanted the closing postponed until May.  For tax reasons, the buyers wanted the closing in that year.  The sale nearly fell part until we suggested that the sellers carry back a large loan, interest free until May. Both parties agreed and the sale closed.  That winter was one of the coldest on record.

In reality, land priced right will sell any time. We’ve sold land covered with three feet of snow.  We’ve sold bottom cropland during a flood when there was 10 feet of water covering the ground.  We’ve even sold land on Christmas Eve.  In every case, the seller had priced the land right and the buyer was ready, willing and able.

The Missouri courts have made in clear that a spouse has “ownership” in real property inherited or gifted to their spouse.  There name does not have to appear in the will or on the deed.  There are few exceptions and your lawyer can tell you about them.   Here are a few incidents involving inherited property that turned bad.  
In the mid 1900’s, I met with two sisters and who, with their brother had inherited 120 acres of Franklin County land.  On the day of the meeting, both husbands accompanied me and during the land inspection.  One bragged about his deer hunting experiences.   Afterwards, the sisters and I sat down at the kitchen table while and the two husbands stayed in the living room. 

The sisters and I talked about the property and as I explained that the title company would require at spouses would need to sign the deed, a loud voice came from the living room, “I’m not signing a thing!”  It was the deer hunting spouse!  His wife appeared embarrassed and didn’t say a word.  I repeated my point and again I heard, “if I have to sign the deed, then it ain’t selling.” I thanked them for their time and left.  During the following two weeks the other sister and her brother called me several times.   They desperately wanted to sell.  They had tried to reason with the brother-in-law and even offered to sell their share to him, but he said no.  Time past and a few years later his wife.  Now he owned a full one-third interest in the property  Today, the remaining sister and her brother are joint owners with the brother-in-law in a much damaged relationship.   This was not the intent of their late parents.

Two sisters signed a contract to sell 80 acres in Montgomery County they had inherited from their mother.  A few days before closing, the title company notified me of a problem.  One of the sisters had divorced after she had inherited the property and the ex-husband had not deeded over his spousal interest in the land at time of the divorce.   Since the sister and her former husband were not on good terms, the attorney for the title company agreed to contact him. The next day a lawyer representing the ex-husband notified the title company that her client would not transfer his spousal interest to the land.   Finally after two years and several thousands of dollars of legal expenses, the ex-husband agreed to “give up” his spousal interest for a price.     In order to sell the land, the sister had to meet his demands.  At the time of the divorce, the sister believed that since the 80 acres had been inherited, her husband had no interest; therefore she had not told her lawyer about her ownership in the land.   Big mistake.
Many years ago I represented three married brothers who owned land near Foristell.  Unfortunately, one of the brother’s wives was in an advanced stage of Alzheimer. When we met he showed his brothers and me a copy of the trust agreement that had been prepared and signed by him and his wife.  The agreement gave him sole right to transfer real estate without his wife’s signature.  All seemed in order until a week after we successfully negotiated a sale contract to sell the land.  The title company called.  There was a problem! 

  
Apparently the brother and his wife had failed to follow their attorney’s advice.  They had not transfer the real estate into the trust. This meant the three brothers could not sell the land unless all the wives signed the deed.  And one could not.  Eventually, the problem was solved but not without a great deal of anxiety and legal expenses.   
In the late 1980’s, I sold a Warren County farm that had been inherited by 10 children.  After the contract was signed by 10 children and 9 spouses, I was told that one of the heirs was getting a divorce.  His wife said she was not signing a deed until she was guaranteed 50% of his inheritance. He argued that this was his inheritance and not hers.  The closing was delayed. After weeks of haggling and considerable pressure from his siblings, the husband agreed to her demands.  But the wife wanted the money before she would sign the deed and the title company would not give her a check until the deed was signed. Finally an agreement was reached. 
The title company divided the proceeds into twenty checks, rather than ten.  Each couple would get two checks made payable to both husband and wife.  Both husband and wife would have to endorse both before either check could be cashed. 

  
At the closing, the husband and soon to be ex-wife sat across the table from each other.  The title company gave the deed to the husband, which he signed.  The deed was then handed to the ex-wife along with one of the two checks made payable to her and her husband.  She signed the deed and endorsed her check.  The husband endorsed his check.  Then each slowly slid their endorsed check across the table until their hands were on both checks.  Then they slowly pulled back the exchanged check and verified that the other had actually endorsed the back.  This could not have been what the late parents would have wanted!

All of these problems could have been avoided.  If you are planning to will your real estate to the kids, consult with an attorney. 

• A law enacted in 1820 charged a tax on all single men between the ages of 21 and 50. The tax was $1 per year. At that time, that would have been a lot of money. Maybe the purpose of this law was to encourage the single Missouri men to get married and have families.

• Missouri is one of four states with an official “State Dessert.”  The State Dessert is the ice cream cone, so honored in 2008. Ice cream cones were introduced and became very popular at the 1904 St. Louis World’s Fair.

• One of the nicknames of the state is “The Cave State.” The March 2000 issue of The Missouri Conservationist (published by the Missouri Department of Conservation) says that there were more than 5700 caves listed in the Missouri Speleological Survey files in Rolla. It also states that about 125 caves are discovered each year. Graham Cave State Park shows evidence of human habitation going back 10000 years. McDougal’s (McDowell’s) Cave became famous through the story of Tom Sawyer told by Mark Twain,  Today it is known as Mark Twain Cave and became the first “show cave” (tourist attraction) in Missouri in 1886.

• Another interesting fact about Missouri’s caves is that many of them were turned into fallout shelters in the 1950s, the height of the Cold War, when people feared the real chance of nuclear war
  

A few months ago I got a call from a gentleman telling me of his dilemma. He and his wife’s brother bought 150 acres about ten years ago. Then five years later they decided to sell. His brother-in-law insisted that the land be listed with his wife, a St. Louis residential agent. This gentleman felt obligated and agreed; however, when the wife’s marketing efforts fell short, he suggested that the property be listed with a real estate agent who was more qualified. Unfortunately, his brother-in-law and his wife took the request “personal” rather than “business.” Since then, the families haven’t spoken and this has created tension among other family members. This problem was created because the arrangement was based entirely upon agent’s personal relationship rather than the agent’s qualification to sell land.

I recently met with a potential client who is the executor of an estate which included a125 acre farm. About two years ago, they decided to sell, so he listed it with his next door neighbor. After a few months of no activity, they asked the agent if they should lower the price. The agent’s response was, “You’ll have to tell me what you want because you might be angry if I suggest a price and since we are neighbors I don’t want that to happen.” When the listing agreement expired, the executor would not renew. The agent/neighbor was offended. Now a few of the other heirs are angry with the executor because he listed with the agent only because he was a neighbor. There is even a greater problem here. A good argument could be made to the court that the executor had failed to perform his fiduciary responsibilities.

 To avoid similar pitfalls here are questions to answer before listing with a friend, relative and/or neighbor:

Does the person have the knowledge/experience to sell my property?

Do I feel obligated to list because this person is a friend, relative and/or neighbor?

Do I really want this friend, relative or neighbor to know my business?

Will my information remain confidential with my friend, relative or neighbor?

If this person was not a friend, relative and/or neighbor would I still list my land with them?

What will be the consequences if I am dissatisfied and must terminate this person as my agent?

It’s not always easy to say “no” to a friend, neighbor or relative who wants to list your land. On the other hand, if the answers to any of the questions above make you uneasy, then the word “no” may be the best for all parities. (In the end, you might learn that they didn’t want the listing but only asked because they felt obligated to do so.)

One year later he had received no offers, but he relisted with the same broker at $3,400 per acre. Finally, after two years when the property had not sold, he called and we agreed to a listing price of $2,800 per acre. Within a few weeks, we obtained a buyer and he signed an all cash contract with no contingencies at $2,500 per acre. The sale closed 30 days later.

At the closing, I was surprised when the seller complained that the value of his land had dropped $1,300 per acre in two years! I reminded him of my report of two years earlier and that the selling price was within our reported range. The only decline was his unrealistic expectation of $3,800 per acre. The fact that he found an agent who agreed to list the land at this unrealistic price, did not change the value.

A residential real estate broker told me of a similar incident. The prospective seller told the agent that her home was worth at least $350,000 because the neighbor’s home had sold for that amount. The agent explained that the neighbor had remodeled the kitchen and had a finished basement. The agent agreed to list at $350,000. At the end of 30 days, the seller agreed to lower the asking price and 45 days later the home sold for $310,000.

The residential agent said that at closing, the seller continued to believe her home to be worth as much as the neighbor’s, but she rationalized that the down turn in the housing market had forced her to sell for less.

We listed the property in June.  By early August, a contract had been signed and the closing was set for September 1st.  The Title Company requested a copy of all divorce decrees from the three sellers who had been divorced and remarried.  One of the decrees showed that an ex-wife had not signed the proper documents at the time of the divorce.   Legally, she had an interest in her husband’s inheritance.  After a few tense days for the ex-husband, she signed a quit claim deed that gave up any interest she might have claimed to the property.

Next, the Title Company determined that one of the dead sisters had three children and not two.  The third child, his wife and family were in the Federal Witness Protection Program. Two weeks later with the help of an anonymous source, I found him. He and his wife agreed they would sign the deed, but the time and place would be determined later and I was to be ready to meet on a very short notice. Then a major problem surfaced!

The Title Company discovered that the second sister died without a will. This meant that her husband inherited only one-half of his late wife’s interest in the farm and their two children had inherited the other half.  The intent of the parents had been for the son to receive 100% of the mother’s interest in the farm for taking care of his mentally disabled sister. Now the brother learned that legally he was entitled to only 50% of his mother’s interest in the farm.  Since he was not his sister’s legal guardian, the Court would have to appoint a guardian to represent her in the sale of her share of the farm.   Furthermore, the brother would have to go to Court against his sister’s guardian to establish who was to get the heir’s share of the farm.

An attorney was appointed to act as a guardian for the sister.  The Court ordered that the mother’s interest in the farm be appraised as of the date of her death in 1984.   Because I had been selling the land in the area since 1967, the Court accepted my appraisal of the property.  Then, nothing seemed to happen.  Sixty days had passed since the scheduled closing and no one seemed to know when the Court would make a final decision. 

The sellers were becoming concerned.  Suppose another heir died before the sale was closed?  Or, what if one of them became ill and could not act on their own behalf?   They wanted to close the sale as quickly as possible.  I offered a suggestion to the Title Company and they agreed.

The Title Company would close the sale.   All of the  owners would get their share and the Title Company would hold the disputed 1/12 share in an escrow account. Once the Court made a decision, the Title Company would pay the money to whom the Court designated. The sale closed in December - 90 days after the scheduled closing.

Three months later the Court ruled that 1/2 of the mother’s share of the farm (or 1/12 of the sale proceeds) would go to the brother as the parents had wished. But, by this time it didn’t matter to the brother. Here’s why: the 1/12 disputed share of the sale was $15,580. The Court costs and legal fees amounted to $14,250  

Uncle Charlie was born in 1898 on a farm in southern Illinois.  He farmed with horses from the time he “could follow a plow.”  Years later, those who knew him said he was one of the best ever with a team of horses.    Funny what you remember as a kid.  I recall that Uncle Charlie couldn’t bend the pinkies on each hand.  I was told that his fingers got caught in the reins of a runaway team. Uncle Charlie couldn’t read, but he would look at pictures in the farm magazines. Sometimes he would ask me to read to him if the picture showed new farm equipment.  Then he’d mumble something about how nothing would ever take the place of a good team of horses.
 
Uncle Charlie “was set in his ways.”  Dad tried to teach him to drive a tractor, but it always ended in disaster.  The last time Uncle Charlie  drove a tractor, it went through a woven wire fence. Most of us conclude that Uncle Charlie was too stubborn to enter the farm mechanization age. 

So, Uncle was relegated to doing only manual labor. He was a hard worker and never complained.  He could walk all day cutting weeds out of beans.  But when herbicides were introduced, that job was eliminated.   As farmers reduced their cow herds, less hay was baled which eliminated the manual labor associated with baling hay.  Even cutting weeds along the roadside was eliminated with power mowers. Uncle Charlie’s labor had little value to others as he was being replaced by modern farming methods. 

I hadn’t thought of Uncle Charlie for several years until the other day when I was having coffee with Larry, a real estate broker I hadn’t seen in years.  I mentioned how effective my website had been in selling land.  Unimpressed, Larry countered with: “I don’t have a computer, don’t know how to use one, and don’t plan to learn.  If buyers wanted to buy my listings, they can find me just like they’ve found me for the past 30 years.”    Later, he complained of having fewer listing and fewer buyers than he had ever had.

I thought how Larry and Uncle Charlie were so much alike.  In today’s business, there is a big difference between learning experiences and just experiences.  Uncle Charlie and Larry have experiences but they quit having learning experiences. 

Real estate brokers who have been in business for a number of years use their years of experience as a reason why people should deal with them.  The question is: Do they have 30 years of learning experiences or do they have one year of experience repeated 29 times? None of us would go to a dentist if he was using the same dental equipment today as he did 30 years ago.  Then why should we expect less from a real estate broker if his marketing methods are the same today as they were 30 years ago?