How to Price Your House Offer Campaign (HA 1127)
How to Price Your House Offer Campaign (HA 1127)
Transcript:
Steven Butala: Steve and Jill here.
Jill Dewitt: Hello.
Steven Butala: Welcome to the House Academy Show, entertaining real estate investment talk. I’m Steven Jack Butala.
Jill Dewitt: And I’m Jill Dewitt, broadcasting from clearly rainy Southern California.
Steven Butala: Today, Jill and I talk about, how to price your house offer campaign. Couldn’t be more simple, I have to say because we’re between Thanksgiving and Christmas, we have never seen more-
Jill Dewitt: Oh God. Obviously, we’re between…
Steven Butala: Baking supplies, cookies, Karo syrup, salt, sugar in my entire life is on our kitchen island right now.
Jill Dewitt: Chocolate chips, nuts, candy-
Steven Butala: When Jill and I first met-
Jill Dewitt: Cheese.
Steven Butala: I was horrified by this whole holiday event and now the kids are a little bit older and I’d have to say I love it-
Jill Dewitt: Thank you.
Steven Butala: And I don’t ever, I don’t know if I’ve ever admitted that, but now I really like it.
Jill Dewitt: Well, now you have a reason to celebrate and that reason is me.
Steven Butala: So what are you going to make?
Jill Dewitt: Well, I’m going to do a lot of coffee cake and a lot of-
Steven Butala: I love coffee cake.
Jill Dewitt: Cookies and… In this kitchen that we have now, has the restaurant quality oven. It’s a shame not to use it, so I’m going to use it. It’s really awesome. You saw our kids face line up the other day when I mentioned coffee cake and he’s like, he went from this age, went from 16 to six, “Like coffee cake.” Yes.
Steven Butala: What is it about these holiday seasons that you just love? Because I’m converted.
Jill Dewitt: That’s a good, very good question. I think because I have such fond memories, of really fun Christmases. And I know it’s silly as it sounds, my mom was big on a lot of presents, so they might not have been big presents, but there were a lot of presents. She liked because I think her childhood growing up wasn’t that way. So she wanted to make it dreamy for us, so we would have like a tree and a sea of presents around it. So I always get all excited. So that’s still what I do. I know you’re like, “You’re more about experiences than presents.” And I like that as well, but it’s still like waking up and having fun stuff to open, even if it’s little.
Steven Butala: We’re going to be in Wyoming this Christmas, so I wonder how that’s going to go. I’m sure that you will find a way-
Jill Dewitt: There will be presents. Not to worry. I have that covered.
Steven Butala: Before we get into it. Let’s take a question posted by one of our members, on the houseacademy.com online community. “I’m confused, but it’s still free.”
Jill Dewitt: That’s right. There are two, Leif says, and so I did a little research I don’t think he’s a member, so we’ll see here. Based on this question, I don’t think he’s member, but it’s a very good question and this… I want to point out too, so this is a thing, you don’t have to be a member to be on the online community, either Land or a House Academy. There’s a free level for everyone, so get in there, ask them questions.
Steven Butala: Something for everyone. Truly.
Jill Dewitt: Exactly. “So I finally caught up on the Land Academy podcast having started around podcast 800 several years ago.” Wow. Wow. “Started at 800, went forward to now and then went back and did one through 799,” That does take a while.
Steven Butala: As hard as those were to listen. It’s even harder to record them.
Jill Dewitt: Yes. Oh, so and actually it sounds like he’s still going back. “We’ll go back earlier in the Land Academy podcast such I’m current in House Academy.” Okay. “But I’m listening to the first five to seven today, made me think, I haven’t gone pro yet. Got to figure out getting the wife on board still. But do you all think that going through the courses would help me sell my car?” This is very interesting.
Jill Dewitt: “It’s a 2015 Hybrid Honda Accord, which KBB says, ‘I should be about even in at a private party sale’ and I owe about $2,500 less than the average dealer price in my area. Also what about selling my own house, to be able to get us get out of it with hopefully have some leftover. I owe 104,000 and the city assessed this year guessing about 145,000. The kitchen is old and rough, but the new roof and windows all around. And hard to find comps on solar systems. Our electric bills, normally 10 to $20 a month before the install, yearly average was about 125 a month. It’s a raised ranch of about,” We’re getting into details here, “1,525 square feet upstairs, 1100 square feet and one car garage downstairs, one third acre lot, large fenced in backyard and a 10 by 12 wood shed in good but not excellent shape outback.” Lot of detail.
Jill Dewitt: But wait, there’s more. “Maybe if I could sell the car, so I need it now as I’m a trucker, or the house below retail is a fixer. Believe the kitchen needing done and still getting sold quickly with some extra crash beyond closing costs, that would catch our attention.” Oh I already have a lot to say. “We’ll be home in several days and trying to figure out exactly how to help her get on the same page with me doing this, even though she doesn’t want help directly on a day to day basis.” Thoughts. Oh boy. The last thing I would want to hear as a woman is, “Hey baby, we’re selling it all.”
Steven Butala: Yeah. To take a chance.
Jill Dewitt: “On a new business, not sure where we’re going, not sure what we’re doing yet, but trust me.”
Steven Butala: Let’s start with the good news here.
Jill Dewitt: Okay.
Steven Butala: This person is Lee. Leif is his name, is or her. Is very bright and very detail oriented.
Jill Dewitt: Correct.
Steven Butala: And cares enough about his family and his wife, to make sure that they’re on board before he does something stupid.
Jill Dewitt: Correct.
Steven Butala: That separates him from about 98% of all the other men on the planet.
Jill Dewitt: That’s exactly right. Thank you Leif for thinking about your wife and not making any decisions without her.
Steven Butala: This is a well thought out question. It’s well typed out, for the vast majority of it’s in full sentences, so all that basic stuff is good.
Jill Dewitt: You put a lot of weight in full sentences, by the way.
Steven Butala: Yes, I do.
Jill Dewitt: Okay.
Steven Butala: Please don’t liquidate your life to start Land Academy, please. And by any stretch, maybe if you have a comic book collection that you’re never going to look at again, because you’ve outgrown it, sell that. But that’s about it.
Jill Dewitt: Clean out the garage. I’m good with that.
Steven Butala: Or use house tank or land tank, to fund your transactions. You don’t need to use your own money. What you need to do is, in my opinion, is make a commitment and get your spouse on board and do a few deals. Maybe you’re a member, maybe you’re not.
Jill Dewitt: I would say if you have nothing, I want you to save up five to $10,000 just to get this rolled in. I want you to be able to get the education, be able to afford data and mail and those things that you have to spend, go on the front end. Even if you’re not funding your own deals, you need to do that. And I would like you to be able to do a couple of deals on your own-
Steven Butala: Me too.
Jill Dewitt: Because if you’re coming in brand new, and looking to bring in an investor to fund your deals, not having experience on your belt, it’s harder than, “Hey, I already know this area. I already did three. Here’s how they went. Now I have these six more lined up ready to go. You want to do them with me because I know how it’s going to go.” That makes so much sense.
Steven Butala: I’m not plugging her own website, but if you’re pressed for time and cash. If go to landstay.com or if you go to a, we auction off properties on eBay every single week on Sunday. They close on Sunday and some of them are great. Some of the properties we have on there are buildable mobile home lots, that you can buy for a couple thousand bucks and sell them on the MLS for five or six. So there’s a lot of ways to buy property without, going through the whole full blown scenario, of sending a mail campaign out and learning how to close your own deals and things like that. That should be your ultimate goal because that is the right way to do it.
Steven Butala: But there’s a lot of other ways. There’s people in our group, if you go on a landinvestors.com ask them, “Do you guys have any properties for sale that are super cheap?” Believe me, you’re going to get 500 responses to that very, very quickly.
Jill Dewitt: Exactly.
Steven Butala: So please don’t sell your house and your car and stuff. And that’s not going to pressure wife, I don’t think.
Jill Dewitt: Well in the best way to get your wife involved is, just kind of what you said, “Here’s the plan. We’re not changing a thing, but we’re going to put away $500 right now, every month. And at the end of next year we’re going to have X amount of thousand dollars and this is what we’re going to do.”
Steven Butala: That’d be good.
Jill Dewitt: And in that time you’ll get through the other 800 episodes and you will be a pro. You will have a lot of information. I didn’t, and that’s why I want it. I love people that take their time, honestly really get to know this business, be involved in the community, talk to people, learn about the deals that they’re doing. So when it’s your time and you have the money to do this, you’re ready. You have it all figured out. You’ve probably got the counties figured out. All you need to now is the access to the data, which you got the day you joined and things like that.
Steven Butala: Yeah. Exactly. Today’s topic, How To Price Your House Offer Campaign. This is why you’re listening. So you have lots of notes or they notes about cooking.
Jill Dewitt: Yeah. I have no notes here that relate to this topic. None. I was going to just kind of coast over here and continue working on my shopping list while you talk. Just kidding. Oh these notes are not those notes.
Steven Butala: There’s a fair like, another show right there.
Jill Dewitt: Yeah. This is-
Steven Butala: Oh actually those are notes on… this is what happens. Jill just wrote, “She brain surged about-
Jill Dewitt: A book.
Steven Butala: A book.
Jill Dewitt: A full book.
Steven Butala: It says book number one and chapters. And she just wrote all the chapters out of the book and I thought she was actually mentally and physically invested in doing this episode. Right?
Jill Dewitt: Oh you wanted some of my chapters because it’s actually kind of funny, so here’s a little side note. This is a-
Steven Butala: What’s the title of the book?
Jill Dewitt: Jack and Jill’s Guide to Relationships. You like this? Okay, here it goes.
Steven Butala: You piss poor people listening are like-
Jill Dewitt: This is so funny.
Steven Butala: I just want to know how to price an offer campaign.
Jill Dewitt: This is my… let me just give you the first three chapters because it’s so flip and funny. Chapter one, patience 101. Chapter two, when to rollover. Chapter three, Picking the right partner. It might take a few tries. I would read that book. Will you read that book?
Steven Butala: I would write it then read it.
Jill Dewitt: There you go. So those are the notes that you’re reading that aren’t the notes of the show.
Steven Butala: That could be a show. One of those could be a subject.
Jill Dewitt: It’s going to be a whole separate thing. We’ll get to that later.
Steven Butala: It’d be fun.
Jill Dewitt: It’s going to be good.
Steven Butala: It’d be fun and sounds like a money hole, but it’d be fun.
Jill Dewitt: Oh yeah. It’s going to be, actually it’s just an expression, it’s stuff I need to get out.
Steven Butala: After doing like 1200 or 1300 shows or whatever this is now.
Jill Dewitt: Right.
Steven Butala: She want us to actually talk about something she’s interested in.
Jill Dewitt: Yeah. Thank you. Is it my turn yet?
Steven Butala: The next decade is for you sweetheart.
Jill Dewitt: Oh, thank you. Yeah, that’s it. That’s perfect. That’s fair. Oh.
Steven Butala: It’s 2020, that’s your decade.
Jill Dewitt: Oh I’m writing this down.
Steven Butala: 2020 and 2030.
Jill Dewitt: This decade’s for Jill. I love it. Okay. That is going to be on the wall everywhere.
Steven Butala: Here’s how you price a house offer campaign. And I’m going to skip along the top here and get into detail where I think it’s needed and Jill’s going to, either keep me on track or just keep me on track. Please.
Jill Dewitt: I’ll do my best.
Steven Butala: In every MSA or every large market or every market, let’s say, where there’s houses, there’s zip codes. And each zip code, you can, let’s say I’ll use Mesa, Arizona as an example, or Bullhead City, Arizona for example. Take any city. There’s going to be anywhere from two or three zip codes to 10 or 12 or 15. Some number like that. And each of those zip codes has statistics, about how many days on market it takes to sell a house, how many properties are actually available for sale on the MLS, how many houses are available for sale, compared to the whole number of properties that are actually there as a percentage. And then finally, how many properties are actually sold every month versus listed. So you always want, theoretically more houses sold last month than were actually listed. You always want a very small percentage of houses that are available in the market as a percentage of the total, so that way less than 1%. The lower, the better.
Steven Butala: And then days on market as low as possible. It takes X, Y, Z. Let’s not X, Y, Z. It takes 30 in each of those zip codes, sometimes it takes 30 days, maybe one takes 45. Usually the more wealthy zip codes take 120 days and on and on. A lot of it depends on the market. The important thing is to pit those zip codes against each other, and one or two are going to be very, very clear. And that’s where you want to send the mail. So that, is how you pick an environment to send an offer campaign audit. So let’s say you choose a zip code, you go to either Data Tree or Real Quest or Title Pro 24/7 as a disclaimer, we’re licensed providers of all three. And you download that data and you scrub it how you see, is appropriate. We personally take out all the mortgages that are there or not entirely. That’s just how I do it. A lot of other people do it differently in our group, with success. It’s all some version of success.
Steven Butala: So great. Now I’m staring at a zip code that I know should probably work, in awe. The 1200 to 1500 let’s say SFRs that are in that environment, don’t have a mortgage. How do I price them? Well, if you go out and Zillow, Trulia and, and a lot of different other places, they have an opinion about what their property is worth today. You input all those values, take an average of them, and then reduce your purchase price accordingly. So if the average of all those values, those algorithm values from Zillow and Trulia and everywhere else, is let’s say $250,000. You might want to, let’s say send out an offer campaign for 190,000 so you know there’s $60,000 of profit for you potentially, when you buy the property and then mark it up 30,000 let’s say, and resell it for some number two. So the person who might renovate it or to a landlord who’s just going to rent it out. Somebody in the business, not retail. That’s how you price offer an offer campaign.
Jill Dewitt: And you can go lower depending on your market. 60 might be too hot. Or you want to get more yield versus less yield. Because you could really hold out for that transaction, and you’re going to send out more mail, and be watching for that one.
Steven Butala: That’s it.
Jill Dewitt: Okay. Versus if you want to come in not so hot, come in at $30,000 because you only want to make 20. Because I know there’s people out there that are about that and they’re very happy making, doing one a week, making $20,000 a pop, that’s not crazy. And still doing it quick and fast and easy and have more deal flow. That’s an option as well.
Steven Butala: Pricing is the number one discussion right now for both land and houses for new people. For some reason pricing is very confusing, and I’m not sure why. And so then tomorrow where the show is actually how to price land on the Land Academy Show. So it’s one of those things that strange. I think it’s simple but I don’t… and it’s okay. There’s always a confusing part to everything for somebody.
Jill Dewitt: I do too. My way is, all you want to do is use Steven’s technique, just to figure out what the real price is and what’s really happening in their market.
Steven Butala: There you go Jill.
Jill Dewitt: That’s the bottom line and then you make the offers. This is why to me it’s not confusing. There’s no magic number. It’s like there’s no secret counties, none of that applies. It’s true. You just need to know the facts and then you’re going to back into it, and offer the price that you want, based on what you want to get out of it. And we all know the facts are, “If I want to try to make $60,000 a deal, I’m going to go through more to get that one. It’s going to take a little longer, I’m going to send a little more mail. I’m coming in hot, I’m going to get a lot more hate.” That’s fine. You can do that. Or you can say, “You know what? I’m only going to try to make $30,000 off every deal. I’m going to come in much higher and I’m going to get a lot more deals.”
Steven Butala: That’s it.
Jill Dewitt: It’s your decision. It’s not hard.
Steven Butala: It’s not.
Jill Dewitt: It’s not confusing. .
Steven Butala: It’s not hard.
Jill Dewitt: There’s no secret.
Steven Butala: Right.
Jill Dewitt: And what I love about it too, is this is why none of us are stepping on each other’s toes because we’re all doing things a little bit different. And there’s how many zip codes in the county? Or excuse me, country, not just the county by the way, every county has how many zip codes? There’s a lot.
Steven Butala: 26,000.
Jill Dewitt: I mean, okay. So 3144 counties in the country.
Steven Butala: It’s 3,144 counties and parishes in the country and there’s over 16,000 usable zip codes. There’s really 26 but some of them are air force bases and things like that. So please don’t send me email on the exact number. There’s all kinds of stats out there. I’ve spent a ton of money determining these are mailable zip codes. It’s about 16,000.
Jill Dewitt: Right. But we’re all… thank you. Information, inspiration. Thank you. Captain Technical.
Steven Butala: That’s a compliment. Captain Technical I’ll take.
Jill Dewitt: Yes it is. I met that as a compliment.
Steven Butala: I’ve been called Captain Poppy Pants and stuff.
Jill Dewitt: Oh you haven’t called that too. We ever brought a Captain Obvious in a while. That was yours for a long time.
Steven Butala: I think this whole show is, “Hey Captain Obvious. Thanks. How do I get the thing in the mail.”
Jill Dewitt: That’s exactly. So my point here is, now you know what goes into it. We can further share with you what goes into it. In our world, that’s all we talk about in great detail and you choose how you want it to go. Thank you. And as while I’m here, I wanted to let you know that, you can join us every Monday, Wednesday, and Friday on the Land Academy Show. And we’re here like where we are now every Tuesday and Thursday on the House Academy Show.
Steven Butala: It’s about the episode on the Land Academy Show, how to price your land offer campaign. You are not alone in your real estate ambition.
Jill Dewitt: That was good.
Steven Butala: From Karo syrup to data…
Jill Dewitt: To Captain Obvious.
Steven Butala: To Captain Obvious.
Jill Dewitt: That’s perfect. The House Academy Show remains commercial free for you, our lovely listener. And 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 Dewitt: And inspiration.
Steven Butala: To buy undervalued property.
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