Brokers Have Their Pulse on Market Micro Changes (HA 76)

Brokers Have Their Pulse on Market Micro Changes (HA 76)

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Brokers Have Their Pulse on Market Micro Changes (HA 76)

Brokers Have Their Pulse on Market Micro Changes (HA 76)

Transcript:

Steven Butala:

Steve and Jill here.

Jill DeWit:

Good day.

Steven Butala:

Welcome to the House Academy Show, entertaining real estate investment talk. I’m Steven Jack Butala. I can’t speak today.

Jill DeWit:

Nope. I’m Jill Dewitt, broadcasting from sunny Southern California.

Steven Butala:

Today, Jill and I talk about how brokers have their pulse on all of these little micro housing markets all over the country.

Jill DeWit:

Love it. Love it, love it, love it.

Steven Butala:

Before we get into it, let’s take a question posted by one of our members on the houseacademy.com online community. It’s free.

Jill DeWit:

Julie wrote, and I guess this is a repeat from last week, but-

Steven Butala:

Yeah, it’s so important because it’s very timely. So, I wanted to put the question in there again to see because I think we’re going-

Jill DeWit:

Because, our answers might change.

Steven Butala:

Because it did change because the environment changed.

Jill DeWit:

Okay, got it. Okay, all right. So, this is a question we answered last week but we’re repeating it this week, and you’ll see why. The title of it is, “Price offer adjustments/percentage due to the global crisis of the coronavirus.” “How is everyone adjusting their offers for land and houses due to the situation, global crisis/stock market plummeting, et cetera? I was ready to send out a land and house mailer, but now should I adjust my offers? What percentage are you offering now on land, on houses? Any suggestions? Greatly appreciated.”

Steven Butala:

So, maybe one of the hottest topics we’re getting right now, “How should I change my land business specifically? How do I adjust my mailers based on the environment?”

Jill DeWit:

Right.

Steven Butala:

So yes, I think that, number one, everybody’s got a list of properties that they’ve been working.

Jill DeWit:

Right.

Steven Butala:

If you’re in the business already, you have a list of properties that you’ve been working and maybe some of those transactions that didn’t work because of price. I’m sure that’s our number one reason we pass on property, not because it’s bad.

Jill DeWit:

Yeah, no. Unless there’s something glaringly obvious or price.

Steven Butala:

Right, so I think it now’s the perfect time to take that old list and run through it again and say, “Hey, this property, this house, I sent an offer out on this house for $122,000. A guy came back at $160,000 and he’s happy to do it, and now it’s $122,000.” In fact, now it might be $98,000.

Jill DeWit:

Yeah, and they’re probably reaching out to you, and that’s the other thing. Be ready for it if it hasn’t already happened. They might be calling you back going, “You remember that offer you made for me six months ago? Would you still honor that?” Yeah, or change it as needed. My other thing I was going to say what’s doing a little bit differently is being even more picky. I’m talking about that too.

Jill DeWit:

Again, there’s, so many deals out there and more are coming. If you don’t believe that, watch what happens, because people are going to need cash, these extra properties. A lot of people can afford to buy properties, and there’s a healthy balance of people who need the cash more than the property. Maybe they have several, so watch. I want you just to be real picky about the properties and make sure you only pick up the really, really good ones. That’s what I’m doing personally too.

Steven Butala:

Keep in mind, I think the real question within this question now, this week, not even last week, is, I’ll use my example again. I sent an offer out for, I think I said $130,000. A seller came back at $160,000. We all forgot about it because we couldn’t get together on price. Now in Jill’s scenario, the seller’s coming back saying, “Hey, how about now? $130,000 sounds pretty good.” Now, $98,000 sounds better.

Steven Butala:

Here’s the real question that you have to ask yourself, and it helps me to do it with Jill. So, however you get it done in your life that is fine, but the question is, the nagging question is, “Is $98,000 really good enough?”

Jill DeWit:

Right.

Steven Butala:

Am I really going to be okay at $98,000 or is it $78,000?

Jill DeWit:

Right.

Steven Butala:

Oh, the guy is saying, “Yes, at $78,000. Is that good enough? Is it going to go lower?”

Jill DeWit:

It’s a tough one.

Steven Butala:

No, we’re no longer beating the seller up, and if we ever were.

Jill DeWit:

Yeah, right.

Steven Butala:

We’re just adjusting to reality.

Jill DeWit:

And, making sure what we feel good about.

Steven Butala:

Yeah.

Jill DeWit:

That’s reality, and that’s how you should be looking at every deal on your right. I want you to go into these deals knowing that, “I feel great at this number.” I don’t care what happens to the climate around here, I know that I’m going to be just fine. If that’s in my inventory for six months, not that it would be, but if that’s my inventory for whatever days, am I going to be comfortable with that?

Jill DeWit:

Actually, I have a few transactions right now totally serious, they’re land transactions that I said, “You know what? No,” I was backing off going, “You know, I don’t like it.” I didn’t want to be that guy, so now the seller’s saying, he really is saying, “What would you pay?” I’m like, “Well, you know what?” I’m honestly saying, “You know what, at this price, I don’t care what happens. I will buy it.” So, you can do that.

Steven Butala:

So, and this is now an interview for you, because I know the deals you’re talking about and now you’re doing it right.

Jill DeWit:

Right. Yeah.

Steven Butala:

What are you doing now that you wouldn’t have done in the past? What tools are you using, if any, to get your comfortable?

Jill DeWit:

Brokers.

Steven Butala:

Done. So, that’s what this topic’s about, and we didn’t plan this. Brokers have their pulse and they’re micro markets. So, Jill’s pulling in a broker, maybe more than one, I’m not sure on these transactions to give her a sense. What you want to sense is for people that are real local that have done a bunch of deals and every day their phone’s ringing, or it’s not ringing.

Steven Butala:

So now, you’re getting information from a micro local source to make a good decision. So, you want a broker to say, “You know what? If you can get this at… I know you guys are talking,” again, it’s the same numbers, “if you can get this at $78,000 I can sign it for $92,000 right now. I’ve got a guy who’s got cash.” Those are the kinds of statements, that’s really what this show’s about. So, that-

Jill DeWit:

Let’s do that.

Steven Butala:

Yeah. Today’s topic: brokers have their pulse on micro market changes. This is why you’re listening. So to continue that talk in times like these, your regular due diligence, you have to add some stuff to your regular due diligence.

Jill DeWit:

Add a layer or two.

Steven Butala:

Yeah. Why? Because you want to make sure that the price that you’re reoffering is going to work out for you just as quickly, hopefully, and just as expediently or efficiently as possible during times like these. You’re going to see less buyers out there, especially for houses, although I will say this on houses, I just checked mortgage rates were only a couple of weeks into this, mortgage rates are hovering. They can be hovering around two and a half percent.

Jill DeWit:

I have to add something though that I am seeing reported, and it’s in social media, which I love, we have a lot of Land Academy and House Academy Facebook groups and I’m seeing more than one person saying, because it’s the greatest thing on the planet because the buyers that I’m talking to you right now are real buyers. I have a lot less tire kickers. I’m only talking to real buyers with the cash. I’m like, “This is beautiful.” All those tire kickers are home hoarding what they can and the real buyers are like, “Let’s make it happen.”

Steven Butala:

There’s a ton of retired people out, this is no change for them.

Jill DeWit:

Right.

Steven Butala:

They already have-

Jill DeWit:

They’ve been waiting for it.

Steven Butala:

Well, they’re just retired. They’ve been living their life the way that us people who work for a living. This isn’t they woke up today, and they haven’t gone to work for 10 years and they have resources, whatever resources they have. By the way, they know a ton of other retired people that have all these resources, and a lot of them have owned companies or do own companies, and they were looking around going, “This is the greatest real estate. We used to be buying and selling these houses for 200 grand there. They’re $80,000 now. How can you lose on this?” They’re right.

Steven Butala:

So, those are the things you want to start to get. These local brokers, a lot of them actually in the land business, they know these guys.

Jill DeWit:

Oh, yeah. It’s great.

Steven Butala:

I can’t say this enough. This is a really positive thing for us.

Jill DeWit:

So, one of what we’re talking about with this topic is the layer with the brokers. I don’t think a lot of people know this, brokers especially there’s brokers and agents, will for free have a phone call with you. They would love to do that. That’s their business. Because if you’re a seller, they want to represent you and they want to post your property for sale. If you’re a buyer, obviously they want to represent you and help you get the deal done.

Jill DeWit:

So, that’s one of the layers that I’m adding. This whole topic right now started because this deal I was going to close last week, I thought, “You know, I was ready to do it. I was all ready.” I mean, it was like down to the wire ready to wire the money. That was the only thing left and I waited over the weekend just to see how it went because I wanted to have one more conversation with this broker on Monday morning just to see if his attitude or thoughts about the property had changed over from Friday to Monday.

Jill DeWit:

I called him on Monday. He’s like, “You know what, I’m not feeling it exactly what this area at this price, and here are the reasons why.” He said, “I think we can do this.” I think it went down, it was a buy for 20 sell for 70. He’s like, “Now it’s a buy for 20, sell for 50,” which is still not crazy, but we’re also looking at there were some other flaws on the property that he said, “I want to let you know, I went back a second time and looked at it, and here’s what’s really going on.”

Jill DeWit:

So I’m like, “I really took that to heart,” and I’m sharing with everybody going, “You guys, use these guys to your advantage.” So, the conversation that we had led to, I’m like, “All right, what is selling?” “All right,” he’s like, “well, here’s what you need to know. This county and this county and this county, this is the price range. By the way, the price range is between $150,000 and $250,000 was the sweet spot, not hundreds, thousands.”

Jill DeWit:

He’s like, “And I said I expect my business to triple right now,” and I’m like, “Ding, ding. I heard that.” So, I want you to take advantage of that. Add this layer. If you’re worried about it or not sure about an area, because like the rest of us, you’re doing houses, even though you have boots on the ground or you’re your own boots on the ground here for House Academy and you’re reviewing these deals, they’re there and available and happy to help.

Steven Butala:

Yeah, exactly. We’re all kind of victims of thinking within our own heads, so to speak. Let me give you an example of something that’s very far reaching in the real estate environment, even for me, but it happens every day. Jill and I live on the ocean, on the Pacific Ocean in Los Angeles in the little beach community. Every time she and I walk along the beach and everybody in this whole community, we all talk about it, especially at night, maybe 50% to 80% of the houses are dark. They’re all closed up and dark.

Steven Butala:

So ever since I moved here, I’ve always tried to find out why, like talk to people. As we get more friends, I ask these questions and I’m really finding out now, I found out probably a year ago that people pay cash for these houses and they don’t use them. They don’t do anything to them, actually. They kind of look at it as a bank account because every 10 years or so, 10 or 15 years, the price of the house doubles.

Steven Butala:

So if you spent five million dollars on a beach house, you have no intentions of using it, it’s not even worth it a lot of cases to rent it out, and you double your money in 10, let’s say 10 to 15 years. Let’s say you really buy it, right, like we all do. That property’s worth 10 million dollars in the next 10 years. There’s no way you could put the money in a bank or really, I think, even in the stock market, unless you have a lot of luck and get that kind of return.

Steven Butala:

So, do you think those kinds of people, by the way, you can look up the ownership of these properties through the tools that we have, especially NeighborScape now, get their phone number and call them and talk to them about it. You think those people want more, or do you think those people are going to be interested now, and do you know how much they paid for these houses?

Steven Butala:

If the market dips below that, this is just an example, I’m not saying go do this. Think about this example in your market and your environment because it exists somewhere. Do you think those people’s eyes are a little bit wider this morning because they’re looking for real estate markets and they want to buy more? Heck yes. So, don’t just hang your head and say, “Hey, the way that I’ve been doing this for five years,” that’s not good.

Jill DeWit:

Yes.

Steven Butala:

“I’m done, I’m finished.”

Jill DeWit:

You should never do that, by the way, never.

Steven Butala:

If you think that, you are done and finished.

Jill DeWit:

Yeah.

Steven Butala:

You got to really think outside the box.

Jill DeWit:

Exactly. Happy you could join us today. Every Tuesday and Thursday we are right here on the House Academy Show. Monday, Wednesdays, and Fridays you can find us on the Land Academy Show.

Steven Butala:

Tomorrow, the episode on the Land Academy Show is called Media Consumption. You’re consuming our media now. It’s up 60% during these times. You are not alone in your real estate ambition. Everywhere I look is opportunity.

Jill DeWit:

I agree.

Steven Butala:

It just requires a huge mindset. You can’t stay in bed in the morning.

Jill DeWit:

It’s true.

Steven Butala:

For a couple of mornings that’s fine, but you got to get on a schedule and pound it out.

Jill DeWit:

I agree. The House Academy Show remains commercial-free for you, our loyal listener. So wherever you’re watching, wherever you’re listening, please subscribe and rate us there. We are Steve and Jill.

Steven Butala:

We are Steve and Jill. Information…

Jill DeWit:

And inspiration….

Steven Butala:

…. to buy undervalued property.

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