How to Sell a House Before You Buy It (HA 007)
Transcript:
Steven Butala: Steve and Jill here.
Jill DeWit: Hi.
Steven Butala: Welcome to the House Academy Show, entertaining real estate investment talk. I’m Steven Jack Butala.
Jill DeWit: And I’m Jill DeWit, broadcasting from sunny, southern California.
Steven Butala: Today Jill and I talk about how to sell a house before you actually buy it.
Jill DeWit: Isn’t that the best thing?
Steven Butala: Is it okay to do that? Isn’t that illegal? Don’t you need a license?
Jill DeWit: Well, maybe it’s not exactly before.
Steven Butala: You guys are cheating.
Jill DeWit: But you have a really good idea how it’s going to go.
Steven Butala: Why would you ever, ever, ever cheat at a real estate deal like this?
Jill DeWit: You know.
Steven Butala: None of these things are… What I just said is all satire. There’s a right way and a wrong way to do this. There’s an ethical way and an unethical way. We’re going to talk about all those things right after this question.
Steven Butala: Ellie says, “I heard you guys hold open houses. If so, how and why do you do this?”
Jill DeWit: Good question.
Steven Butala: It’s an excellent question.
Jill DeWit: Yeah.
Steven Butala: You know what? That is counter intuitive for a lot of stuff that we say. A lot of what we say is don’t show up, don’t spend a lot of time on the real estate deal, do what you can do from your desk. It wasn’t my idea the first time we tried this. It was your idea.
Jill DeWit: Mm-hmm (affirmative).
Steven Butala: And, boy, I’ll never look back.
Jill DeWit: Thanks.
Steven Butala: It was a real positive decision.
Jill DeWit: It was. Here’s what you do, Ellie. The minute you take possession of a house, and usually we’re doing this because we’re in a new city, or a new area, and we’re building up our buyers list. It’s really valuable to either use the investor, the owner, or your boots on the ground can do this for you as well, if you’re in an alternate city, at least hold an open house at that first one to get all the investors to come out to get to know them. Because once you have one open house, that’s what we did.
Jill DeWit: Whenever we go into a new city, what we do, go into a new city, the minute we own the property, we’re often… new city, again, remember, I don’t have my buyers built up. I’m putting in the MLS, usually a flat rate MLS, and I’m putting in there I’m having a quick open house that first Saturday from 11:00 to 1:00, investor special, and get them to come out. Let them know it’s priced accordingly. I took a little for sale by owner, not kidding, sign in the front yard. Maybe put some balloons on it. I don’t know. Put your phone number on it. Be there for the open house.
Jill DeWit: What will end up happening is you will get 10, 15, 20 investors and their partners showing up, because they want to see this house. This is new to them, by the way, too. Because they’re trawling the MLS. That’s usually how they find deals up until now. They’ve been trawling the MLS. That’s where you’re finding them there first. Then you get to know them and build a relationship with them. That’s what it’s all about.
Jill DeWit: Literally, I had a note pad, and I’m getting their cards, I’m giving them my cards, getting all their information. So if this house didn’t work out, or they weren’t fast enough on it, I will have more. I’m finding out, too, the reason is not only to sell this house and build my buyers list, I’m trying to find out what they want. All right, you’re obviously in this neighborhood. What kind… Oh, you know what? I hate two stories. I really like one stories, those are easier for us to work on. Or, I hate pools, every time I had a pool it was a disaster. Or I love pools. Or, I only want houses that are three bedroom and up. Because anything I’ve done less than that…” Whatever it is, you’re getting their buying criteria. That’s the other reason.
Steven Butala: Do you hold an open house on every single deal? Or just the first one in the market?
Jill DeWit: You know what? That’s phase two or three of the process. Because sometimes I will sell it before I need to hold an open house, so it’s not an issue. For example, at the first open house now I have a healthy buyers list, in a perfect world the day I’m closing… Actually, we’re kind of going into the topic now, but I’m marketing it to those guys that day, and I may not need to hold an open house. It may already sell.
Steven Butala: Let’s jump into the topic. Today’s topic: how to sell a house before you buy it. This is why you’re listening. Go ahead, Jill.
Jill DeWit: Okay. In a perfect world, how to sell a house before you buy it. You know what they want. That’s step one. You have a buyers list, and you have a relationship. You already know they three more each month between now and the end of the year to kill it. That’s what they’re looking for from you. You know they want single story, they want three to four bedrooms. You know what condition they like them in. You know whether or not they care about the garage, or if it has to be a garage versus a car port, whatever it is.
Jill DeWit: You’re already laser focusing your mailer to get that type of property for your buyer. Do you want to interject here? You want me to keep-
Steven Butala: No, I want you to… You’re nailing this. I wrote this topic for you, honestly.
Jill DeWit: Oh, thank you.
Steven Butala: Yeah.
Jill DeWit: When I say mailer, that would be Steven. Steven’s already picked the area, by the way. He’s already picked the area. He’s already picked the ZIP code. He’s already picked the subdivision. We’ve already been doing deals. Now it’s… This is just…
Steven Butala: For instance, I will pit all the ZIP code, the adjacent ZIP Codes in a town, or in an urban area, against each other to check the statistics to see which one wins. Which days on market are the shortest. The velocity of houses in that market are selling the quickest. By the time Jill gets involved in this, she’s so statistically at an advantage to, let’s say, even the ZIP Code next to the one that she’s about to sell this house in that it’s silly. There’s like 28 thousand ZIP Codes, I think? 26 thousands ZIP Codes in the country. They’re never going to get an offer from us unless it’s all set up to succeed.
Jill DeWit: Exactly.
Steven Butala: And she knows this going in.
Jill DeWit: Right.
Steven Butala: She knows that we statistically are going to win. Plus the house, the prices that we are willing to pay are, what I would say, close to scraping the bottom. All that means this, by the time it gets to her it’s going to pretty much sell. She’s just got to dazzle everybody, and go through the motions.
Jill DeWit: And get them to want to do it with us.
Steven Butala: Yeah.
Jill DeWit: On the buy side and the sell side.
Steven Butala: And really what this show is about, this episode is about, building a relationship with the seller. I mean, this buyer list that she’s creating with these open houses and stuff.
Jill DeWit: That’s how we do it.
Steven Butala: So that we can really sell it before we even buy it on the next one.
Jill DeWit: Right. I want to make sure, too, that there’s no confusion. I’m not posting the property for sale before I own it. I’m not even really telling my buyers exactly where it is before I own it. I want to maintain control of the property. But I will talk to them throughout the process, and let them know here’s what… I get them, and I’m telling the truth, I’m not just making it up to get them all excited. I will tell them, “Hey guys, give me two weeks, I know you told me what you want. I got three that are going to meet your criteria. Here’s the area, be ready.”
Jill DeWit: And I want them to, and they are putting money aside now. That’s how you do this. And they are ready to go. When I do have one, two, three, however many houses that I just close on, and I mean, it’s like the recording is happening that day kind of thing. When I find out at 10:00 AM in the morning that it’s going to record by 3:00 that afternoon, then I hit the button. I know it’s happening, and there’s no way anybody can mess it up.
Steven Butala: A lot of people ask us why do you close on it? Why don’t you just sign an option, mark it up, and find a buyer? You’ve got this buyers list. Have them close and then get paid out of escrow? And the answer is this: we set up these deals to make more than 10 thousand dollars. The word wholesale is getting a negative reputation in the country right now at this time because people are doing exactly what I described, and the exact opposite of what Jill described, marking it up 50 thousand dollars, really gouging their customer. Their real customer here is the buyer, is their buyer. Not the seller. Gouging that guy, and expecting to come smile about it, and come back again.
Steven Butala: 10 thousand dollars in any market is enough. That’s the max you should be optioning properties out, and get paid out of escrow, in my opinion. I don’t care.
Jill DeWit: As an option. Not the way we’re buying it. We take [crosstalk 00:08:26].
Steven Butala: Our way, when we take possession, and at the prices that we buy it, we can very easily justify 25 thousand to 50 thousand dollars or more, as long as it’s still below the retail price of the houses that are for sale in the market.
Jill DeWit: In its current condition.
Steven Butala: The short of it is, the reason that we purchase these houses and resell them is because we have so much more control.
Jill DeWit: That’s it for me.
Steven Butala: We could wait 30 more days and maybe it’s quadruple what we would have made if we optioned it out.
Jill DeWit: Right.
Steven Butala: We’re serious real estate investors.
Jill DeWit: Exactly.
Steven Butala: We’ve been here forever and we will be; as long as I’m breathing we’ll be doing this. I don’t want to upset my buyers, my customers.
Jill DeWit: Mm-hmm (affirmative), exactly.
Steven Butala: You want to respect them so they come back.
Jill DeWit: Exactly. Yeah, we don’t shop it. I don’t shop it until I know it’s going to close. But have it all ready. That’s the things you do to have it sell before you buy it. You reach out to your people, you know it’s coming, you already know what they want, you already have the buyers list, and you are ready to hit the send button, or pick up the phone, or reach them by text. Whatever is perfect for that person, preferably you’re going to do all three with this kind of buyer, because they’re usually investors, too. Hit them all the different ways, and then you will sell it really fast.
Steven Butala: About the fourth, or fifth, or sixth time you do this in a market, you’re going to find one person. This has been my experience, and when I talk to all the other House Academy members who are successful at this, one person as a buyer is going to truly understand the value of what you do. Maybe they own 150 apartment units in that area. Maybe they flip eight, at least eight, homes a month. Renovate them and flip them. Or they’re heavily involved and money’s no object kind of thing. They will beg you to say what is it going to take for you to send me every single deal that comes in, you don’t even need to review it anymore, I just need the APN, or the address, and I’ll tell you very, very quickly. That is when you’ve won. If you can find one person like that in eight or ten markets around the country. Or hopefully in one state, or one metropolitan area, I’m telling you, you’re going to print money for yourself.
Jill DeWit: Exactly.
Steven Butala: That’s what we strive for, anyway.
Jill DeWit: Yep.
Steven Butala: Hey, we know your time’s valuable, and thanks for spending it, some of it, with us today anyway. Join us in the next episode where we talk about wholesaling houses 101 explained.
Jill DeWit: And we answer your questions posted on our online community houseacademy.com, it is free.
Steven Butala: You are not alone in your real estate ambition.
Steven Butala: You know the fact is Jill, we’re a darn good team.
Jill DeWit: Yeah.
Steven Butala: I couldn’t have designed it better, quite honestly.
Jill DeWit: Thank you. Thank you. Yeah, we are. It’s interesting, people who are getting to know us here don’t know that when we mean information inspiration it’s really data, relationships.
Steven Butala: Yeah.
Jill DeWit: That kind of a thing. Excel, word.
Steven Butala: People.
Jill DeWit: People. Talking. This is a good game. Let’s see. Drive fast, drive fast. We got that, that one we both do. What else? Let’s see.
Steven Butala: Boats, air.
Jill DeWit: True.
Steven Butala: Boats, planes.
Jill DeWit: This is good, this is another good game. Strategic strike, shop. That’s good. I don’t care what I eat, foodie. Dog food, foodie. Oh my god.
Steven Butala: Acceptable, beautiful.
Jill DeWit: Thank you. Let’s leave it on that.
Steven Butala: Yeah.
Jill DeWit: Wherever you’re watching, or wherever you’re listening, please subscribe and rate us there.
Jill DeWit: 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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