Pricing 101 Take No Prisoners (HA 89)

Pricing 101 Take No Prisoners (HA 89)

Transcript:

Steven Butala:
Steve and Jill here.

Jill DeWit:
Hello.

Steven Butala:
Welcome to the [Land/House 00:00:03] Academy show today. 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 pricing 101: Taking No Prisoners. As I alluded to at the end of the last show, we don’t run a charity organization here and while Jill and I donate to many charities …

Jill DeWit:
We do.

Steven Butala:
… donating money to a seller, a real estate seller is not on my charity list.

Jill DeWit:
Could you imagine?

Steven Butala:
Steve, why do you say this? Well, you’re so heartless. How can you have no compassion? How can you possibly sit there and say and feel okay? I get this spot once or twice a year, I have this conversation.

Steven Butala:
I can’t believe you send people an offer for their house, for their land, for their car, for less than it’s actually worth, less than the value that it’s worth.

Jill DeWit:
You know what it makes you mad about that? It’s the same people you want to go, “So, tell me again about that motorcycle you bought from the guy that was retired.” Oh, I got it for a steal.

Jill DeWit:
Well, wait a minute, wait a minute, wait a minute. You should have paid full price for that then, right? And he put all that love and attention into it, and shouldn’t you have paid extra for that? Sorry. They don’t see it like that.

Steven Butala:
I agree.

Jill DeWit:
It’s hilarious, like a yard sale. Then you obviously never go to a yard sale.

Steven Butala:
That’s right. There’s this … It’s 2020 and we’re … It’s April, the end of April. It’s almost a May. Well, by the time this will air-

Jill DeWit:
It’s May.

Steven Butala:
… it’s May. And we’re in the worst healthcare scenario I’ve ever seen and probably hopefully we’ll ever see in our lives. And many of you young people, the same thing. And part of our reaction to this terrible, terrible, tragedy, this [inaudible 00:01:54] healthcare thing is the level of altruism and compassion.

Steven Butala:
And especially in America, it has gotten to a point, and it’s probably lack of, it’s just, I don’t know what, I don’t know what the root of it is, but everybody is just so rewarded for …

Steven Butala:
I don’t want this to become a rant, but it really is too bad. It’s the result of just everybody’s got a cause in this generation. Everyone’s got a cause. I have a cause. My cause is being in a good relationship with Jill and making sure that my team, meaning our children, are doing well and are educated and well fed. That’s my cause.

Jill DeWit:
I like that, and they’re providing-

Steven Butala:
And I spend a lot of time and money on it.

Jill DeWit:
They provide it for themselves. They provide … We want to set them up to provide for their families. And then it spills into our community.

Steven Butala:
That’s it.

Jill DeWit:
That’s what Land Academy is too. We’re helping other people and teaching them to provide and help their people.

Steven Butala:
I was helping somebody with a mailer, recently. That’s what this whole show is about.

Jill DeWit:
Okay.

Steven Butala:
And they had this altruistic type, I’m providing a service, and it’s probably because I heard it on a show one time where I said, “Yeah, we are providing a service.

Steven Butala:
We provide a liquidation service for people who no longer want their houses, their land or their cars, and we charged for it.” So, I’m happy to give you retail for whatever value you think any of those assets are, but I’m going to charge you about a $25,000 fee.

Jill DeWit:
There we go. We can do it that way too.

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 asks what percentage are you offering on land and on houses in today’s market? I just want to get an update on how everyone is adjusting their offers for land and houses due to the global crisis slash stock markets plummeting, et cetera. Also, what kind of deals are the deal funders looking for now? Any suggestions are greatly appreciated.

Steven Butala:
Excellent question and I will directly answer it in a second. But in the middle of this, she says, global crisis, stock market plummeting, et cetera. This is a global healthcare crisis and that’s all it is.

Steven Butala:
Stock markets plummeting happens about every 15 years, might because of a housing thing might because of a war. But in in this economic cycles of, of capitalism, there’s ups and downs. So, this is not new, and it’s going to happen again about every 10 or 15 years.

Steven Butala:
And I learned a long time ago, and I really want everyone to really understand this, especially if you’re young and this is your first recession, it’s going to happen again. And this is how you make money.

Jill DeWit:
Right.

Steven Butala:
Are you making money off the backs of other people or poor people or something? No, you have a dip. Sellers have a choice whether or not they’re going to sell you their property. So this parlays right into this whole topic.

Jill DeWit:
Perfect.

Steven Butala:
Perfect, Steve, then parley it will you?

Jill DeWit:
You got that. You got that. Look at one word. Look how much power, one word, the right intonation carries. Yep. That was exactly right. You do know me.

Steven Butala:
You know when you’re in a relationship with somebody for a long time and you can just tell by one word and how they say it. Jill’s word is, yep, when she’s done.

Jill DeWit:
Yeah.

Steven Butala:
Yep.

Jill DeWit:
Yep, that’s right.

Steven Butala:
That’s it right there.

Jill DeWit:
Uh-huh (affirmative).

Steven Butala:
You said it again? 20%.

Jill DeWit:
I say yep, and I leave the room.

Steven Butala:
20% for land.

Jill DeWit:
Are we into the power thing?

Steven Butala:
[crosstalk 00:05:45]-

Jill DeWit:
Oh, [crosstalk 00:05:45]. Oh, I’m sorry.

Steven Butala:
What percentage, it says what percentage are you offering. See, you just want to move this along.

Jill DeWit:
I kind of do.

Steven Butala:
What percentage are you offering land and houses in today’s market, meaning this virus thing? Usually we’re in 25 to 30% on land. It’s closer to 20% right now, although all the older mailers that we’ve sent out recently, Jill makes sure even, if we sent them out at 35%, it ends up being 20 by the time Jill gets done with it.

Steven Butala:
And houses not as severe from a percentage standpoint, it’s we’re usually going at around 75%. It’s closer to 60, but I’ll tell you this, and this is a final point in answering the question, at the end of every mailer, I really go in and test it for a reason and always make an adjustment.

Steven Butala:
So, it’s very difficult to just apply 20% on land when it’s way different in the upper peninsula of Michigan or in rural Florida or rural California. It’s all very different. So, I get this question constantly, what percentage?

Steven Butala:
If you do a mailer and you apply 20% percentage to what you think is retail, either in houses or in land, 75 … Let’s say it’s 70% on the houses, 20% on land you’re not going to do as well as you should. There’s other stuff that goes into.

Steven Butala:
It might end up being 22%. It might be 22% for five to 10 acres and 13% for 40 to 160 acres. That’s what Land Academy is all about is this. So, I think people might get in trouble just applying 20% and sending it to offers to owners.

Jill DeWit:
True, across the board.

Steven Butala:
Yeah.

Jill DeWit:
You’re right. Yeah.

Steven Butala:
Today’s topic: Pricing, 101, Take No Prisoners. This is why you’re listening. This is Jill’s parlay.

Jill DeWit:
Yep.

Steven Butala:
Nope, that wasn’t it. No, it was totally different.

Jill DeWit:
Oh.

Steven Butala:
I think only I know. I, only I can detect it. [crosstalk 00:07:35]-

Jill DeWit:
All right, it’ll come, just hang in there. Give it a minute.

Steven Butala:
We already really discussed this. We’re not in the charitable … We’re not in a charitable organization here.

Jill DeWit:
Well, hold on a moment. We are not a not for profit. That’s true. Slash, however, because I just … I was just did a thing a week or so ago. I did a Facebook live thing and I was talking about repricing things in Corona times, right?

Jill DeWit:
And one of the things that I said, and we do this today, that one of the responses a seller might come back with is like, “You know, what? Can you just make it this much money? And that’s all I need and we’re good.”

Jill DeWit:
You know what? If it’s a little something, so we do have hearts and we have done this in the past. I’m not here to really gouge someone. I’m here to make a good financial decision for me, and I want it to be a good financial decision for them. Period. I’m not trying to steal.

Jill DeWit:
And well actually it makes me mad, because there are people, other educators in our space, that they do kind of do sneaky stuff and that makes me mad. That’s not what we’re here for. We’re here to …

Jill DeWit:
You’ve heard Steven mentioned it many times about where you can buy milk. We all know milk at the liquor store is priced four times much as if I drove to Walmart three or four miles away. I could get at a much cheaper. And I buy it in bigger quantities.

Jill DeWit:
We have Costco. I pick the thing that has two gallons together. Now I got even cheaper price. I purposely went to the liquor store. That’s the point, so we’re kind of like that.

Jill DeWit:
We’re the people that this is a house show. We’re the people that were buying it so well that you’re going to get a good price. You didn’t have to remodel. You didn’t have no one going to your house. There’s no open house.

Jill DeWit:
You don’t have to clean out the garage or stage it or even care about the smell kind of thing. And there’s a price for that. They’re getting that value from us, like thank God, because you know what?

Jill DeWit:
The time it would’ve taken me to do all these things, it’s worth 10 to $20,000, hands down, by the time I get a storage place and clean it out and whatever and remodel the kitchen. So, there you go.

Jill DeWit:
But, so what I was going to say though … I didn’t just took your show is that okay?

Steven Butala:
Oh, yeah, please.

Jill DeWit:
Okay, yeah.

Steven Butala:
You’re balancing this out how it should be.

Jill DeWit:
Okay. So, we’re pricing what’s fair for the asset and fair for how it’s done, fair for no nonsense quality people. We’ve been in this business forever, and we’re not going to talk you into something. That’s another thing too.

Jill DeWit:
You will never ever have, find us going to someone’s home and sitting on their couch and making them an offer and just like … because you know once you’re in, and hey, just sign here, and we just kind of talk them into something.

Jill DeWit:
We don’t do that. We are stand-up people. We give you solid offers. You like it, great. If you don’t, that’s okay. I move on. And then like I said too, it was like, and if you came back to me, I was … That’s kind of why started this and said, I just need a little bit extra.

Jill DeWit:
I’m trying to be able to make this move and pay off my last kid’s tuition, and $3,000 is going to make the difference in this whole thing. And you know what? If I see I can … the way it’s all going to work out, I can afford the extra $3,000, done. I feel good about that. We have done that, and we will continue to do that. But so, back to you.

Steven Butala:
I mean, I said it out a couple shows ago, every deal that comes back out of a mailer campaign, there’s a certain magical price where you say, you know what? There’s no really no way I can lose on this on this deal. Barring some crazy weird thing, there’s no way I can lose on this deal.

Steven Butala:
That’s the price that works for you. If that price works for the seller, you do the deal. If it doesn’t, you’re not a crook, you’re not … It’s just that’s what it’s worth to you. And it’s Jill’s right about the motorcycle thing or the garage sale thing, there’s bargaining and negotiation and haggling has been around since we were crawling out of the ocean. That’s just, that’s how … It’s in our human nature.

Steven Butala:
And so for some people, we have a higher expectation about how cheap real estate should be, I include myself there and some people don’t. My point to this whole show is when you’re sitting there staring at that spreadsheet, and you’re just about ready to send it to 020, there’s no place to have a thought like, “Ah, if I just price it a little bit higher, then they might like me, or then they might call me back and have some compassion about it.”

Steven Butala:
Or, and this is what I … and this is really what I want you to take away from this show, if I price it a little bit higher, I’m going to get a better response. That’s just not the case. People call you back, with houses especially, and they say this sentence, I’m so glad you sent me this offer. Your timing’s perfect. My daughter … fill in the blank.

Steven Butala:
My mother … fill in the blank. I have to go back to Boston. My job, I just got a new job and I needed to be back there on Monday. Can you handle this for me, please? Yes. Your price, the word price only comes up once in these conversations.

Steven Butala:
It’s all a personal story in a situation that you’re in, and then you know what happens at the end of that conscious conversation. Thank you, Jill. Thank you so much. It’s such a pleasure to do this with you. I had real estate agents calling me.

Steven Butala:
They were telling me all this stuff. I don’t care about any of that. I just really want … Can you handle it from here? Just I’m happy to sign some stuff. Let me know. That’s how this goes.

Steven Butala:
So, you’re not going to altruistically change anybody’s attitude by higher prices. Think about check cashing. One of the … when someone works for two weeks or a week, they get a paycheck, and they walk into a check cashing place and give them 20% of that paycheck to get green cash out. There’s a lot of reasons people do that.

Jill DeWit:
Convenience.

Steven Butala:
Convenience is the biggest. They’re all convenience related, but nobody nails those guys-

Jill DeWit:
Could you imagine?

Steven Butala:
… for 20%, nobody says-

Jill DeWit:
Picketing outside of a-

Steven Butala:
… why are you taking care of this or taking advantage of this-

Jill DeWit:
You charge too much.

Steven Butala:
Yeah. Why are you taking advantage of this poor person on this?

Jill DeWit:
Yeah.

Steven Butala:
You should be given-

Jill DeWit:
You just don’t walk in there.

Steven Butala:
We have a $2,000 paycheck, you should be giving him $1,999.

Jill DeWit:
I’m sorry.

Steven Butala:
That’s what it’s worth.

Jill DeWit:
Mm-hmm (affirmative).

Steven Butala:
That’s what the paycheck’s worth. That’s like real money. That’s not even real estate where there is some kind of opinion about maybe that one’s worth more [crosstalk 00:14:30]-

Jill DeWit:
True. Yeah, I agree.

Steven Butala:
I’ve have about, in case you can’t tell, I’ve about had it with this. I’ve been doing this since the early nineties, and I’ve about had it with this altruism in real estate.

Jill DeWit:
You know what’s funny, and if you put these …? Let’s just say if someone’s back is against the wall and you say, “Look, the house next door to yours is available, because the sweet old man passed on. You could buy it for half price, would you?” They’ll all go, “Of course.” I’m like, “Well, how is this different?”

Steven Butala:
It’s not.

Jill DeWit:
How is that different ?

Steven Butala:
It’s the same thing.

Jill DeWit:
If every single person at Steven’s kegger dinner parties, at Steven’s keg chips dinner parties-

Steven Butala:
Why is this such a thing with you?

Jill DeWit:
Because like …

Steven Butala:
Jill has a thing about food at parties.

Jill DeWit:
Did you like my platter last night? I had a whole beautiful cheese platter the other day.

Steven Butala:
I just think it’s totally unnecessary.

Jill DeWit:
You know what? We deserve a cheese … You know what? It’s for me. Let me back up here. I do it for me. Not, no offense.

Steven Butala:
Okay.

Jill DeWit:
I feel good about …

Steven Butala:
I didn’t know that.

Jill DeWit:
I feel …

Steven Butala:
So, you do all that presentation and all that is for you?

Jill DeWit:
Oh, it’s for me, totally.

Steven Butala:
Do you feel better about eating cheese when it’s all pretty and everything?

Jill DeWit:
Yeah. Well, and no and if it makes me feel like I’m a good host and it’s important to me. I know I don’t need to prove anything to anybody else, but I like to feel like I did a really nice thing and I think it’s really cool. That’s it.

Steven Butala:
All right.

Jill DeWit:
That’s all, so anyway,

Steven Butala:
So, opening up a bag of chip is kind of like, “Yeah, she didn’t care.”

Jill DeWit:
Some, yeah, yeah, kind of.

Steven Butala:
Do you think someone has that thought at the parties that we have?

Jill DeWit:
No, because they’re all guys, so they don’t care. They don’t know. But again, again the platter was there were like mostly guys. It was 80 guys, 80% to 20% so yeah, if you’re a girl come to one of our parties lately. There’s a lot of guys.

Jill DeWit:
So, I want to say too real quick, you’ve mentioned 020, for those of you who don’t know, just tuned in, 020 is offers and the number two owners, Offers2owners.com which is our direct mail company.

Jill DeWit:
So, if you said you’re going to send it to 020, I’d be like, “Well, what’s 020?” They’re the ones that will do the mail merge for you and get these out there like same day, even very cheap.

Steven Butala:
I’m having a … and I’ll make my final point on this. This is not new. This business model is not new. It’s been around since real estate’s been around. What’s new are computers. So, I’m having a book called the Stevenson method scanned in right now, because it’s a checked that’s in copyright.

Steven Butala:
The copyright expired it, so it’s in public domain. So, we’re not like stepping on anyone’s toes. I even checked with the publisher who’s gone and that.

Jill DeWit:
Wow. They’re all dark.

Steven Butala:
It’s all gone. Yeah. So, otherwise I would buy it but there’s just … Tell me where to send the money situation. Anyway, it’s a story in a book about somebody who did this.

Steven Butala:
Jim Stevenson and his wife did this. And at the end of the book, it’s him and his jet in like 1978 just saying, “Hey, it turns out sending offers to people with rural vacant land, it works.”

Jill DeWit:
Happy you could join us today. Every Monday, Wednesday, and Friday you can find us on the Land Academy Show. Tuesdays and Thursdays we’re right here on the House Academy Show.

Steven Butala:
Tomorrow the episode on the Land Academy Show is called, When Will This Recession End? You are not alone in your real estate ambition. Maybe we should have called it, Do You Want This Recession to End?

Jill DeWit:
Oh.

Steven Butala:
That was the first title then I softened it.

Jill DeWit:
Yeah. Yeah. I think that was a good call. I understand, because you don’t want to be that guy, but they’re-

Steven Butala:
Oh, Jill, you’re crack up.

Jill DeWit:
Okay, well I’m not going to say it now. Well, we’ll leave it at that. Okay. 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.

Steve/Jill together:
We are Steve and Jill.

Steven Butala:
Information …

Jill DeWit:
… and inclination …

Steven Butala:
… to buy undervalued property.