How to set Offer Prices in House Mailers (HA 013)
How to set Offer Prices in House Mailers (HA 013)
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 set offer prices in house mailers. This is one of my favorite topics of all the episodes that we can do, because it’s like cheating.
Jill DeWit: I gotta ask you: how the heck are you going to cover this in a podcast? This is pretty in-depth, detailed stuff. So I can’t wait to see what you’re going to share with us.
Steven Butala: I make it this part of this so easy it’s silly.
Jill DeWit: Ah.
Steven Butala: I think it’s easy, and we’re getting a huge positive responses about how easy it is.
Jill DeWit: Yes. We are.
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: John asks, “What’s a difference between DataTree and RealQuest?”
Jill DeWit: This is great. Will you first define …
Steven Butala: Sure.
Jill DeWit: Okay, thank you. Define the two companies-
Steven Butala: There’s three major data sources for real estate investors like us like for any real estate investor. And they all come from … the source of the information comes from the county assessors. There’s 3,144 county assessors that keep data on properties so that they can properly send tax bills out.
Steven Butala: These three companies, DataTree, RealQuest, and TitlePro247 all are data aggregators. What’s different about them is that they all include assessor data, but some of them pull in data from other places. Which makes it viable-
Jill DeWit: More valuable.
Steven Butala: Makes it viable. In DataTree’s … to answer your question, in DataTree’s case, they pull in a tremendous amount of financial information that’s very current in the format that we need it to send out a mailer. So that’s great for houses. For land, there’s more spatial … there’s a larger spatial data set which allows us to send offers to land owners, because almost all land owners don’t have any debt. There’s not a financial component.
Steven Butala: And then TitlePro is built for title agents. So those data sets include a lot of title information to research properties. So when we send out land mailers, we use RealQuest. When we send out house mailers, we send use DataTree. And when that stuff comes back-
Jill DeWit: We do our due diligence.
Steven Butala: We do our due diligence with TitlePro247. We’re licensed providers for all three.
Jill DeWit: Right. I want to add in there … when you mentioned the DataTree, which is First American Title’s company, the financial component that he’s talking about is all about mortgage lending, where they stand on it, how much the lender is-
Steven Butala: How much they owe.
Jill DeWit: … how much they owe, how long they’ve had it.
Steven Butala: Yeah.
Jill DeWit: That’s the tweak and why we use DataTree for house offers and why it’s special.
Steven Butala: They’re both very … we have a long history of [inaudible 00:02:58] success with all three, and now our members do. Land Academy members, House Academy members are proving our theory correct.
Jill DeWit: Yeah.
Steven Butala: So, you know …
Jill DeWit: That’s what I love. I didn’t mean to interrupt you, but-
Steven Butala: No, no. I was done.
Jill DeWit: One of the reasons that we’re here is that … for someone starting out on the industry … God, we haven’t said this in a while. But boy, I wish we had us.
Jill DeWit: You know? When you’re new in this industry, even if you know exactly what to do it’s like, “Gosh, I need to get my hands on this stuff.” And some of the stuff … it’s not readily available. You can’t just go order it off the street. Some of these tools you cannot get. You have to be in the business … like especially like the Black Knight Financial Services, TitlePro …
Steven Butala: Which is TitlePro.
Jill DeWit: You know, that level … everybody can get AgentPro247. Everybody can use a little scaled down mini version of what they think your top choices should be. Everybody can get ahold of that. But to have access to the back-end of everything that a title agent has, which we have and we share with our people, is huge. And that’s one of the reasons I say, “I wish we had me. I wish we had us.”
Steven Butala: All three of these companies have cute little applications.
Jill DeWit: Yes.
Steven Butala: For your iPhone, for you. RealQuest that aren’t … you know, they’re sending out 10 offers a day.
Jill DeWit: Right.
Steven Butala: You might be able to get away with having some limited success, but the people that are in our groups or have companies … they’re own investment companies.
Jill DeWit: Yeah.
Steven Butala: For RealQuest, it’s ListSource. I get this question all the time. What’s the difference between RealQuest and ListSource? Well, ListSource is at the back end [crosstalk 00:04:28] of ListSource …
Steven Butala: The back end of List Source is RealQuest Pro. If you’re a real investor, you want RealQuest Pro. If you want to horse around it and see what happens, use ListSource. DataTree is as real as it gets. The back end of that is all of First American Title. And you can use that in many, many, many different ways. And TitlePro is actually for title agents.
Steven Butala: So I guess what I’m saying is we’re not horsing around. This is a good question. Actually, I don’t remember ever getting this question before.
Jill DeWit: Yeah?
Steven Butala: Today’s topic: how to set offer prices in house mailers. This is why you’re listening.
Steven Butala: So you got a big list of houses that you’ve gone through all the motions on. Let’s say your list is 3,000 houses in a single zip code that you’ve chosen because the days on market are real low, and a bunch of other stats pass all your tests. And you’re sitting staring at a thousand houses in your data set, in your DataTree dataset. How do you price them? You know who owns them. You know that they don’t have any liens, you know that they don’t have any mortgages, you know all this other stuff that’s very, very … well, it’s imperative to getting the mailer yield that you want. You need to set a price that’s going to A, not turn off the seller because it’s so low. But B, not be over the retail value of the house. Because then what the heck is the use of that?
Steven Butala: You want to buy a property under valued so it’s enough to spark their interest, and catch them in a life situation where they’re like, “You know, I know my house is worth 300 grand, but I’m happy to sell it to these guys for 250 because it’s painless convenience fee.”
Steven Butala: So this is what we do. And this is to answer your question, Jill. How I can do this on the radio instead of doing it on the screen.
Steven Butala: We’ve all gone to Zillow, Trulia, Redfin, RealtyTrac, all those sites to see the value of some piece of real estate. Whether it’s your own house, your grandma’s house, or something. And they all have algorithms that are assigned to their houses. So if you go to Redfin and look up an address, it might say $236,000 and 14 cents or some number like that. Redfin, same thing. Realtor.com, RealtyTrac, DataTree … they all have an algorithm that generates, in their opinion, what that house is worth today. And it moves every day. All the time.
Steven Butala: What we do is we line them all up in all 3000 lines. We put columns in for each one of those algorithms, and we input those, and then we divide by six. So all this power from these algorithms is in your hands now for you to decide what these assets are … what their value is, and how much money you want to make. So now we have a number from all six of these algorithms. We divide by that number, and we apply … we subtract $30,000, let’s say. Because that’s the profit margin we want to make. Or some number like that.
Steven Butala: And it varies very much in different markets. In southern California here, the average house price is $800,000. We tend to make a little bit more than 30 grand. In an area like Phoenix, where the average price is 250,000 to 300,000 it tends to be a little bit less. In the center part of the country, I know people that regularly make $10,000 in, let’s say, Kansas City on a deal very quickly. That is how you price mailers. House mailers.
Jill DeWit: Thank you. What? You did a great job of explaining that. And then I was just thinking this is nothing that you should be doing one by one line by line yourself. This will take you a month probably, or longer-
Steven Butala: Yeah. It’s like doing your own offers.
Jill DeWit: … If you have a day job, could you imagine? So just to kind of give you a little insight as to how we do it, and how we can help you do it is that you can submit to us a data sheet to one of our companies … 3000 of these, and wait about 24, 48 hours.
Steven Butala: Yeah.
Jill DeWit: And they’ll send it back to you done. So just so you know … I know what you just explained … I love that you explained perfectly. Thank you very much … exactly what goes into it. If I’m listening I’d be like, “Oh, this is great Steve, but how do I do it?” You know?
Steven Butala: Oh, that’s great Steve.
Jill DeWit: That’s great, Steve.
Steven Butala: I don’t have a month to do this.
Jill DeWit: Thanks a lot. You know? I guess I’ll get my kids on that. No, don’t do that. Don’t get your kids. Okay, Joey, you’re on this one. Amanda, you’re over here. Could you imagine if someone was doing that? I have six kids. I have them all … that’d be like a sweatshop. Don’t do that.
Jill DeWit: But we can help you with that.
Steven Butala: They’d run out of patience fast.
Jill DeWit: Could you imagine?
Steven Butala: No. Plus you don’t know if it’s right.
Jill DeWit: That’s true. Exactly. And one of them … that’s how you learn they’re dyslexic because they keep moving the numbers around. Just kidding. That’s what we do. We do a mass at a time. And you know, that’s why we’re here. We’re going to get you there. We’re sharing with you all the little tidbits, all the little nuggets of what goes into this for you to decide if this is what you want to do. And if it is, we’ll help you get to our level.
Steven Butala: There’s a lot … and you know, we have another land company. And there’s a lot of art and feeling that goes into pricing land, but not with houses. It’s really like our version of the easy button. I love doing land mailers, because I can tell you with a tremendous degree of accuracy how many things are going to get signed back-
Jill DeWit: Land or houses?
Steven Butala: With houses.
Jill DeWit: Oh, with houses. You like doing houses for that.
Steven Butala: Yeah.
Jill DeWit: Yeah.
Steven Butala: I mean, I love doing both. But house mailers it’s like, “Yep, this is what’s going to happen.”
Jill DeWit: Yup.
Steven Butala: Hey, we know your time’s valuable. Thanks for spending some of it with us today. Join us next time for the episode called: How to Choose a Good House Zip Code to Send Mail.
Jill DeWit: And we answer your questions posted on our online community at houseacademy.com. It is free.
Steven Butala: You are not alone in your real estate ambition.
Steven Butala: You know, House Academy itself and its show is so new that I’m getting this core stuff out of the way.
Jill DeWit: Oh, I like this.
Steven Butala: Yeah.
Jill DeWit: This is good.
Steven Butala: Like, this is how you do it. Or how we do it.
Jill DeWit: I love it.
Steven Butala: So I know it might not be-
Jill DeWit: Exciting?
Steven Butala: The most exciting type of episodes for you to do, but thanks for your patience.
Jill DeWit: You know what? If you’re sitting in this, it is exciting. Seriously. It is for me.
Steven Butala: Good.
Jill DeWit: Wherever you’re watching or wherever you are listening, I hope it’s exciting. So 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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