Screwed up Mailer Now What (HA 88)

Screwed up Mailer Now What (HA 88)

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, “Screwed up mailer. Now what?” You know what the original title was?

Jill DeWit:
That’s okay. Hang up the phone. Oh well. You tried. Wouldn’t that be funny?

Steven Butala:
The original title was, “So you screwed that mailer up. Now what do you do?” But I thought it was just a little too harsh.

Jill DeWit:
How is that different? Okay. Go ahead.

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:
Molly says, “A friend of mine who is a very successful land flipper from a different education group told me that he lists his properties without buying them or notifying the seller to see who would buy them. Then he would double close on the property.” That’s a little scary. Yikes. “My first question is, is this even legal? And second, is this a recommended way to market the properties?”

Steven Butala:
So this is a land… The word land is in here. But this is a very common thing to do. I see people doing this a lot with houses, which is why I included it in this show.

Jill DeWit:
Okay.

Steven Butala:
What’s the answer, Jill? Is it legal?

Jill DeWit:
I don’t think it’s legal. You have to have some vested interest in it. You need to have a sign. If he has a sign, but he doesn’t even list his properties without buying them or notifying the seller to see who would buy them. You need to have a conversation. I would not want to find my house listed on the MLS without me knowing it because you’re a wholesaler and you came along and sent me an offer.

Steven Butala:
So what’s happening here quite simply is that this person is acting, is representing someone else in the purchase or sale of their asset, which is the very definition by law of a real estate agent. And so there’s deep, steep issues. And there’s lot of case law of people being… It’s like practicing medicine without a license.

Jill DeWit:
I was going to say safe sex.

Steven Butala:
Practicing safe sex? You need to have contract. You need to have a written agreement that says, “Great, you want to sell your property? Good. I want to buy it. I want to buy it for a hundred thousand bucks. By the way, I’m going to go market it for more. And I’m not going to actually buy it. What’s going to happen is I’m going to go market it because I have this beautiful marketing machine all set up in place that you don’t have, that no real real estate agent even has. I am not representing you in the purchase or sale of your property. I’m actually going to buy your property. I’m just going to market it before I dom and here’s the numbers. Is that okay with you? Sign here. And here’s the length of the agreement. It doesn’t go on forever. Let’s say it’s six months or some number, so everybody knows exactly what’s happening.”

Steven Butala:
And you should say in there, “I’m probably going to list it on the MLS. I’m going to do all kinds of crazy stuff. I’m going to present myself like I own this property. Is that okay with you, seller? Sign here.” Then you have what’s called equitable interest in the property. You have a contract to purchase and you’re outlining all the details of how it’s going to go. That’s the first question. Is it legal? That’s how you make it legal. The way that it’s described here? No, it’s not. I don’t know if it’s legal or not, but I know that the department of real estate that you’re in, I think this is all 50 States, you have to have a license to represent somebody. The second question is, is it recommended? To which I say, and Jill may say something else, hell no.

Jill DeWit:
I don’t like it either. It’s, like with lamb, we call them options, an option kind of thing. I don’t think you’re all that interested. If you have 10 of these floating around, are you really going to go all in? I don’t know. And I just like owning the property and being able to make the decisions. It’s just better. And I can have an open house whenever I want. I can leave a key under the mat. I don’t have to think about this stuff. I don’t worry about the guy in there. I don’t worry about him changing his mind, by the way, because that could happen. This has certainly happened on house steals, especially right now, I bet this is happening. We have it in our contract, I’m spending $10,000, I’m going like Gang Busters.

Jill DeWit:
I’m out there marketing this property and I find a buyer and I come back and the guy says, “Oh, I forgot to tell you I lost my job. We can’t sell.” That could happen. And now you’re going, “Great. I just wasted all that money.” And are you really going to go through and try to sue them or something like that? Come on. That’s not the right thing to do and you don’t want to be that guy. Stuff happens. I’d rather own it, buy it. But I would do though is, I’m buying it. We’re closing on Friday. My pictures are done, everything’s ready to go. I’ve got it all lined up. So maybe even Thursday night at 10 o’clock, I push the button. It’s out there. Because the wire is happening and the recording is happening on Friday. It’s done. The guys moved out. There’s no chance of anything. Are you okay with that?

Steven Butala:
Keep going.

Jill DeWit:
Okay. Then I would be going nuts at that point. I’m comfortable with that. What?

Steven Butala:
Here’s some philosophical advice.

Jill DeWit:
You know, I asked you questions you don’t want to answer. Like, “No, I’m not going to answer that question.”

Steven Butala:
No, I don’t have anything to add. I agree with you completely. There’s a million what if scenarios that can happen. If you control the asset, you just… If the deal’s worth doing economically, then do it. So here’s some philosophical advice, not just about real estate. When something seems sketchy or weird, and you ask yourself, “Well, if it’s sketchy and weird, then why do they do it?” Here’s the answer, always. It’s ridiculously profitable, or it’s free. Those are the two things that will get everybody in trouble with permanent consequences. The whole drug industry is built on, “Well, it’s ridiculously profitable.” So if you’re questioning something, like this person’s asking a great question, is this even legal? It’s free. That’s why.

Steven Butala:
This whole concocted scheme here of writing an agreement, an option agreement or whatever they’re calling it to do a double close, there’s a lot of words for it, is because they don’t want to buy the property. They want to get 10 of these things going. You can picture what this person looks like, too, that does this a lot. They have a day trader type mentality. They love risk. They probably go to Las Vegas a lot. They want to get 10 of these things going. They don’t really care about the seller, or the real estate, or the buyer. And they want the title agent to do all the work. And they’re kind of sweaty.

Jill DeWit:
That’s really weird. Do they wear gold chains?

Steven Butala:
Yeah, baby. I don’t have anything against gold chains. I just think they probably sweat too much because they’re all jacked up.

Jill DeWit:
Do you know what’s funny about this? I want to end it on this, for me. Let’s end it. But I’m all for bending the rules. But there’s parts of this that are even over my line. I won’t do this. You can’t not tell the seller what’s going on.

Steven Butala:
If you have a $250,000 house, and the seller’s calling you, really wants to sell you the property for 128 grand because of some life circumstance, that’s a good enough deal to just buy it. And if you don’t have the money, that’s okay. A million people in our group do, including Jill and I. So then just buy it, and maybe you go list it correctly, and you are the owner of record, and you sell it for 200 and everybody’s good.

Jill DeWit:
Exactly.

Steven Butala:
Today’s topic, “Screwed up mailer. Now what?” This is the meat of the show.

Jill DeWit:
Okay, so let’s talk about how this happens. You want to lay the foundation and then I’ll tell you-

Steven Butala:
Sure.

Jill DeWit:
Okay.

Steven Butala:
First of all, I’ve done bajillions of mailers, and there’s only maybe one or two that didn’t work. And it’s all because of a couple of things. Number one, I dramatically chose the wrong place to send the mail. It doesn’t happen too often. It doesn’t happen to me ever anymore. Or number two, I price it wrong. I still price stuff wrong. That’s the truth. Do I ever get a goose egg on a mailer? No. And Jill will explain why. So those are the origins of a messed up mailer. So if you’re new at this, and you haven’t done a lot of mailers, I don’t want you to obsess about it and give yourself a reason not to send a mailer out because you might fail. That’s silly. There’s always a chance that you’re going to fail at whatever you’re doing, but it’s very, very, very unlikely, extremely unlikely if you follow the steps that we provide.

Jill DeWit:
You know what’s funny about this? I would argue that it’s impossible. It’s impossible to not get the juice out of a mailer. Because here’s the reality. It goes out. You did all your research, you priced it, you did your best, and you came in way too high. And people would call this a messed up mailer, like, “Uh-oh. Every single darn person that I mailed signed it and sent it back. I messed up. I priced them too high. Now what do I do?” Okay, that’s not a problem. You’ve identified again that these guys all want to sell. Okay, sure. Now we have to undo what we did because we priced it too high, it’s not what we really want to spend. And you can do that. But now you sit down, you got however many. You’re really not going to get all 100% of them back.

Jill DeWit:
Because there’s a lot of people, even if you come in hot, you’re probably not going in over retail. Nobody would do that. But you came in at maybe, because this is the House Show, maybe you came in at 95% of retail instead of when you really meant to come in at like 75 or 70% of retail. That’s where you were targeting kind of thing. You can back up. So you’re going to get, again, there’s some people that don’t want to sell regardless of the price. They’re going to retire there, or they’ve got kids in school, or they have nowhere to go, whatever it is. So you’ve got a lot of mailers to sift through. Well, you take all those responses, wind them up, figure out the ones that you do want to buy, and then you’re going to call them back and have a conversation with them.

Jill DeWit:
And what’s interesting is this is happening right now, a version of this, today, for all of us, because of the virus. Every single person in our community that sent out a mailer before January is now looking at these houses differently. And I bet there’s a lot of you right now in House Academy or just people in our world that have done houses, are doing houses… Think about it. What’s the contract you would have negotiated in January, and the price you’re going to pay now in May? Oh, it’s different. And you know what? You’re looking at it going, “I need to really plan ahead because I’m not sure the price I want to pay right now in May is a price I would do in June. Okay, so hold on a moment. I’m going under contract in May, I’m closing in June. I need to hurry up and flip this thing. What’s going to happen June-July. I need to really plan for that.”

Jill DeWit:
So the point of this is, and why I’m spelling this out is, this is a conversation that you’re going to have with the person. And there are no surprises. Everybody kind of knows it. They’re watching the news, they’re watching their neighbors, they’re seeing what’s going on. They know people are even hesitant to put things on the market because they don’t know what they’re going to get, what kind of offers they’re going to get. So how you recover from this is have this conversation. And I just did a whole thing on it last week. I did a Facebook live that you can go check out, it was on Friday, talking about my steps and how to recover and have these hard conversations like, “You know what? That was pre virus pricing. Here’s what I’m willing to spend and that’s it.” So you have to candidly tell them just that, “Hey, and this is my business too. This is the best I can do.” I go into it in great detail there on the show. And I’m trying to hear. How much do you want me to…

Steven Butala:
I’m learning stuff.

Jill DeWit:
Okay. I love it when I look at you and you have that look. You’re like, “Hell, I don’t know.” All right, so here’s what you do. I’m going to give you kind of a recap of what I did last Friday. Number one is get into their heads a little bit. Be a little understanding. Number one, there’s a group of people that may not know that you came in hot. They may think that their asset is worth more for some reason, that you and they all see, “Well, look at this guy. This is the first guy I’ve ever got an offer that’s way more in line than what I want.” Now, that’s because you goofed up. So you’ve got to be ready for it when you call them back and tell them, “Hey, here’s the deal.”

Jill DeWit:
Two, explain the situation. If they don’t know what’s going on, say, “Hey, I’m watching this market, this is my business. I am micro-watching these markets. They are going down, and I’ve got to plan for it. So if you do want to sell, I do want to buy. So this is the good news. Yay. I am interested in your property but,” and this is step three, rip the bandaid off, which is, “This is the best that I’m going to be able to offer you. And if it works for you…” And then I go into my thing. I go into the responses that they’re going to give you. Which one is, “Hell no. What are you smoking?” Number two is, “Oh man, shucks. I got to sleep on this.” And number three is, “I expected it. What’s the next step?” So that’s it. So my thing about recovering here though, this is what this is about, is now what?

Jill DeWit:
You needed to explain it to them, be kind to them. I would give them some information about the market. They may not know. That kind of helps some of the people. Don’t overwhelm them, though. Don’t give them stats and send them reports and things like that. They’re don’t need that. They don’t need to see 16 comps in their neighborhood, where it was listed for this and it sold for that. They can look it up themselves. But just kind of explain it, and then come in with, “This is the best that I can do, and I am going to do it.” And then let them make the decision. They’re either in or they’re out. I don’t want you to negotiate. This is not what we’re doing here. Just, “My price was this. Now it’s this.” And let them sleep on it.

Jill DeWit:
And give them a short one. Here’s one of the things that I’ve changed with what’s going on right now with the, we kind of joke about it, virus pricing right now, is I give them a shorter time span because I am reviewing a lot of offers. I do very politely and honestly say you came in hot. You really do have a lot of people right now that you’re talking to. Okay, I need to know by Friday. And I understand you want to sleep on it, talk to your wife, make a decision, that’s great. But I’m reviewing six offers today that came back. I need to know by Friday because if you don’t want to sell, I’m going to pull the trigger on something else. And that’s fair. Do you want to switch lessons?

Steven Butala:
Here’s a couple of common misconceptions that happen, generally with new people, and sometimes even seasoned people when markets dramatically change like they are now. Every single piece of property that you send out an offer is accomplishable, is a logical acquisition candidate for you. What’s the variable? Price. So when mailers go out very infrequently and they’re not priced right, then you have to do a lot more work on the backend to get the deals. That’s what Jill just talked about. You have to get into explanation mode. You need to change your pricing and talk about why. But what you don’t want to do in all these cases is obsess on pricing. You are not looking for a seller who knows all about the market and knows about pricing.

Steven Butala:
The people you’re going to do deals with on every mailer are in a situation. I’m going to tell a very brief story here in a second to try to really drive the example home. My mom passed away about 15 years ago, 15 or 20 years ago, long time ago. And my sister and I are full blown, full time in the real estate business. We are real estate people, and this is a small house in the town that we grew up in. So both of us, there’s just my sister and I, we inherited all this stuff in these houses. So somebody knocked on the door, realized she passed away because we were there and all the commotion is going on, and said, “My mother actually just got divorced and she needs a house to live in. I know it’s a terrible time.” And they did everything right. “Would you consider selling the house? And this is the amount of money she has to pay for it, for cash.”

Steven Butala:
We both said immediately, yes. And we’re in the real estate business. I know how much that house was worth. I didn’t care. I just wanted to be done with it. It was a long list. So if it works on me, imagine. Price wasn’t even the issue with me. It was like, “All right, the house is…” It was already done. It was more of an emotional thing than it was a money thing. And my sister and I didn’t disagree on it. So that’s what you’re looking for. If someone calls back and says, “Oh no, that’s not the right price. Price, price, price, price, price.” That’s not going to be your seller.

Jill DeWit:
Exactly.

Steven Butala:
So even a really screwed up price mailer, and I’ve screwed up the best of them, Jill can get me out of it. That’s really what we’re saying here.

Jill DeWit:
Yeah, that’s true. That whole thing that I said, my long-winded explanation was meant to be, it’s the backend of a short phone call. It really is. And that’s how you’re going to do. “Here it is. Here’s the situation. Yeah, I know I sent that. Here’s the situation now. Here’s the best I can do. Are you in or are you out?” That’s really what’s happening. And if they’re out, that’s fine. And give them a deadline. Say, “If you change your mind, I’m just going to be here. Let me know by Friday. Otherwise, I wish you all the best and thank you.” And move on, because you do have other deals to look at.

Steven Butala:
And my final point is, and I’m just going to reiterate what Jill said, what she started out with, is what’s the definition of a screwed up mailer? Is it one where you have to actually answer the phone and call and do some deals? Because that’s what we’re seeing. We’re seeing people that, for whatever reason, I think it’s coming from other groups, other learning groups, that how easy this is. And while the mail does a tremendous amount of work for you, you could never make 10,000 phone calls. You can send out 10,000 offers very, very quickly.

Steven Butala:
And it’ll weed people out that need to be weeded out very, very efficiently, financially, and often time wise and everything, but it’s not… The five or eight deals that you’re going to do, or whatever your numbers ended up being, you got to talk to the people. And in some cases, you’ve got to talk to them a lot. So I’m fortunate to have a business partner that actually enjoys doing that. It’s not my first choice. My first choice is a data. So if your mailer is not going the way that you think it should be going, it’s probably because you’re not putting the time in that you need to, even if it was priced wrong.

Jill DeWit:
Good. Good. Thank you.

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

Steven Butala:
Tomorrow, the episode on the Land Academy Show is called Seeing Something in a Real Estate Deal That’s Not Really There. You are not alone in your real estate ambition. Seeing something on a first date that’s not really there.

Jill DeWit:
Girls are famous for that.

Steven Butala:
I know.

Jill DeWit:
Oh, that’s a good one. Girls. Oh man, I want to shake all my friends. They have one good first date. Men, you need to know this. I don’t want to say screw up the first date, but I just want to tell you this is how girls think. If the first date, there’s a connection, a love connection they think or they see, or just you accidentally did something charming, they see wedding bells sometimes. And then, what happens is-

Steven Butala:
This isn’t the show yet. I don’t want to hear this girl. This is worth going over on the time.

Jill DeWit:
They ignore the five red flags that come on date number two, like he still lives with his mom. They can see past that. He doesn’t have a car. They can see past that one.

Steven Butala:
No job is my favorite.

Jill DeWit:
Yeah. He just got laid off and you’re paying for everything. They see past that. I’m like…

Steven Butala:
He asks for money.

Jill DeWit:
Yeah. He asks for money. He asks for money. He asks to move in. Oh man. Oh my gosh.

Steven Butala:
Save it.

Jill DeWit:
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. We are Steve and Jill.

Steven Butala:
We are Steve and Jill. Information..

Jill DeWit:
And inspiration…

Steven Butala:
To buy undervalued property.