Irony Of Assessed Value (CFFL 526)

Irony Of Assessed Value (CFFL 526)

Transcript:

Jack Butala:                       Jack Butala with Jill Dewitt.

Jill Dewitt:                           Hi.

Jack Butala:                       Welcome to the show today. In this episode, Jill and I talk about the irony of assessed value. Before we get in to it, let’s take a question posted by one of our members on the landinvestors.com online community. It’s free.

Jill Dewitt:                           Okay. Luke asks, “I have used Google Voice for the last year and it’s worked great, until they randomly shut down my account. I requested that they reactivate it, and they did it within about 24 hours, but I’m at the point where I can’t be dealing with setbacks like that.” I agree.

Jack Butala:                       Yeah, good for you, Luke Harris.

Jill Dewitt:                           “I’m using PATlive as well, but I need a service to text and make outbound calls with. What sponsors did you all use for your business?”

Jack Butala:                       We use Jill Live, which we are still in a test phase with. Does it have a texting piece? I’m looking in to that, but we don’t currently do that, and we, you know … Jill Live is a fantastic product, it’s just down the chain of products that we’re releasing, so, I wish I could help more. Most people are using PATlive in our group, you know, because I talk to the sales rep there once in a while, and he tells me how many new people are signing up all the time, so … I don’t know if there’s an all-in-one, CRM based … I have a meeting about this actually today. CRM based sales scenario out there, but we’re in the process of developing it, just like everything else.

Jill Dewitt:                           I keep hoping we’re gonna find, like, you know we have our VOIP service? I’m waiting for you, or somebody … We’re gonna trip on the VOIP/texting enabled, all within, like, Microsoft or something, and that’s gonna be perfect.

Jack Butala:                        I have a meeting this morning on that.

Jill Dewitt:                           Okay.

Jack Butala:                       And so I’m very aware of the demand, Luke.

Jill Dewitt:                           This is a big deal.

Jack Butala:                       And very aware of the technological challenge. We made the mistake, Jill and I …

Jill Dewitt:                           Hang in there.

Jack Butala:                       We were releasing products too soon that don’t work.

Jill Dewitt:                           Yeah.

Jack Butala:                       We never want to be in that situation again.

Jill Dewitt:                           That was a long time ago.

Jack Butala:                       Yeah, it was. Like we said in the last show, we want to make sure that … So, obviously this is one of Luke Harris’s bottlenecks right now. We’re trying to, one by one, eliminate those. ParcelFact eliminated …

Jill Dewitt:                           Right. [crosstalk 00:02:14] That took precedent over answering the phones, and things like that.

Jack Butala:                       If you haven’t …

Jill Dewitt:                           And [inaudible 00:02:19] has taken precedent.

Jack Butala:                      Yeah. If you haven’t used ParcelFact, the free version, for a while, you should go check it out, because it solves due diligence entirely.

Jill Dewitt:                           Right, and that’s the point. We’re focusing on products that … There is no other solution, and let’s get those tackled, because those are huge bottlenecks. But answering a phone, all right, we can figure it out. Are we spending more money sometimes? Yeah, okay, but at least we have some options.

Jack Butala:                       You’re right. ParcelFact was a solution that was not out there.

Jill Dewitt:                           Right. We had to get to that first and offer it to owners right now. There’s a lot of people, they’re in our world or not in our world, and they want to send out mailers, and they need help. They don’t even know how to do it. They don’t have the time, or the energy to learn, and that’s okay. So, we’re gonna solve that one.

Jack Butala:                      Why let that stop you, right?

Jill Dewitt:                           Right. Yeah. Worst case scenario, you can hire your mom to answer your phone and take messages for you. I am not kidding. I’ve told people to do that.

Jack Butala:                      Did they do it? Does it work?

Jill Dewitt:                           Yeah.

Jack Butala:                       Their mom?

Jill Dewitt:                           Totally. Or somebody. Seriously, you could seriously buy a burner phone, and I’m not kidding, have a phone number forward to it. This is not rocket science here. And you could pay your sister-in-law who is a stay at home mom to …

Jack Butala:                       All right, sister-in-law I understand.

Jill Dewitt:                           Okay, or something, or not your mom. But your sister-in-law, who is a stay at home mom, to just answer the phone and take messages. And that’s all they do, and they would say, “You know, Luke’s not available until after, you know … This is a time so he can give you a call back. What’s convenient for you, and I’ll let him know.” That’s it. Take some property information down, and that’s all.

Jack Butala:                       Here’s what my mom would say if she answered the phone.

Jill Dewitt:                           Oh no.

Jack Butala:                       “I’m gonna wash your mouth out with soap if you talk like that any longer.”

Jill Dewitt:                           Oh no. I’m talking good calls.

Jack Butala:                       Ever get your mouth washed out with soap?

Jill Dewitt:                           No.

Jack Butala:                        I did.

Jill Dewitt:                           I never had a reason to.

Jack Butala:                        It was awful.

Jill Dewitt:                           No.

Jack Butala:                       Did you ever taste soap like that?

Jill Dewitt:                           No. Well, maybe on accident. Like, you’re washing your hair and it gets in your mouth. That’s about it.

Jack Butala:                       It had the opposite effect. I probably curse more now.

Jill Dewitt:                           Yeah, that’s for sure.

Jack Butala:                       If you have a question, or you want to be on the show, reach out to either one of us on landinvestors.com. Today’s topic: The irony of assessed value. This is the meat of the show. I had somebody on a call say … We were talking and stuff and he said, “This is the meat of the show.”

Jill Dewitt:                           Oh, they said that?

Jack Butala:                       Yeah, get on with it. Yeah, yesterday.

Jill Dewitt:                           Oh, wait.

Jack Butala:                       Both of us were just broke out in hysteria.

Jill Dewitt:                           Who said this is the meat of the show?

Jack Butala:                       The person I was speaking with on the phone.

Jill Dewitt:                           Oh, they said it. That’s cute. “This is the meat of the call.”

Jack Butala:                       What he was saying is, “Please get on with it.”

Jill Dewitt:                           Oh, yeah.

Jack Butala:                       Like right now.

Jill Dewitt:                           Exactly. Knock it off. Get to the point.

Jack Butala:                       What the hell is this guy talking about, “Irony of assessed value.” Here’s the thing. So, property … Here’s the deal with assessed value. In every county there’s a guy, usually with a mustache and little glasses, sitting around in a dimly lit room, looking at …

Jill Dewitt:                           Eating Cheetos. I want to add. Can I get in on this?

Jack Butala:                       Sure. In the …

Jill Dewitt:                           With regular Dr. Pepper and Cheetos on his desk. Not diet.

Jack Butala:                       And the light that he’s got … It’s a lightbulb hanging down off of a string, you know.

Jill Dewitt:                           Right, right.

Jack Butala:                       It’s not a regular fluorescent.

Jill Dewitt:                           Where you pull the thing, yeah.

Jack Butala:                       And his office is in the basement of the County Building.

Jill Dewitt:                           Yeah.

Jack Butala:                       And the County Building is an incredibly inconvenient location.

Jill Dewitt:                           And he’s stacks of paper on his desk.

Jack Butala:                       And the building itself looks like it should be in Washington D.C., not in like, some small town in New Mexico.

Jill Dewitt:                           Right.

Jack Butala:                       Okay, you get the picture. So, there’s the assessor.

Jill Dewitt:                           What’s his name?

Jack Butala:                       His name is Daryl.

Jill Dewitt:                           Oh, okay. That’s pretty cool. I was gonna go with Earl, so that’s good.

Jack Butala:                       Okay, pretty close. That’s his brother’s name.

Jill Dewitt:                           Oh, excuse me. He fills in when Daryl’s sick.

Jack Butala:                        There’s Earl, Daryl, and the other brother Daryl.

Jill Dewitt:                           Oh, and they all do the same job. [inaudible 00:05:59] Daryl one, Earl, and Daryl two.

Jack Butala:                       Earl and Daryl are paternal twins.

Jill Dewitt:                           Oh, and is their dad the mayor?

Jack Butala:                       Yeah, and the third brother Daryl, the other brother Daryl …

Jill Dewitt:                           Yeah, what’s he do?

Jack Butala:                       If [inaudible 00:06:17] he’s just a total accident.

Jill Dewitt:                           Oh.

Jack Butala:                      He’s the guy who sits drunk in the trailer.

Jill Dewitt:                           All right. That’s nice. Oh no. Okay, got it.

Jack Butala:                       And no one’s sure who they’re married to.

Jill Dewitt:                           That’s right. Okay. I see a wife beater shirt, and I see …

Jack Butala:                       What kind of cars do they drive?

Jill Dewitt:                           They drive old Ford … old Dodge.

Jack Butala:                       Old Ford F150s. That’s [inaudible 00:06:42]

Jill Dewitt:                           Oh, that’s not bad. No, F150’s kind of nice.

Jack Butala:                       Not if it’s 1958.

Jill Dewitt:                           Okay.

Jack Butala:                      Oh my gosh. So, anyway, now that you have that picture in your head …

Jill Dewitt:                           This is the assessor.

Jack Butala:                       That’s the guy who’s setting your tax rate on your property.

Jill Dewitt:                           Yeah.

Jack Butala:                       So you have a lot of faith, right?

Jill Dewitt:                           Yeah, I’m sure he’s doing it all right.

Jack Butala:                       They’re applying a … This is truly what the show’s about.

Jill Dewitt:                           That’s right. He knows data like the back of his hand. Actually, he writes it on the back of his hand.

Jack Butala:                       Hey Daryl, why did you assess my property that way? Oh, no, no, that’s my other brother Daryl.

Jill Dewitt:                           Because the other guy sold it for this, and it … I don’t know, I divided by two and it looked good.

Jack Butala:                       Divide by two?

Jill Dewitt:                           I don’t know.

Jack Butala:                      This year, we’re gonna divide by two.

Jill Dewitt:                           Yes. Yeah, why not. Oh, I’m sorry, that was a fly on my screen. I missed that one.

Jack Butala:                      Just move the decimal over.

Jill Dewitt:                           I have to bump it up somehow. I do what I’m told.

Jack Butala:                       Anyway, this, strangely enough … All this ridiculous malarkey between the two of us applies to this topic, because, the irony of assessed value.

Jill Dewitt:                           It’s not the irony of the staff.

Jack Butala:                       When you look at the … I’m trying to communicate the topic.

Jill Dewitt:                           Sorry, sorry, not helping.

Jack Butala:                           Oh, so, if you could look at a county all at once in a snapshot of all the assessed property in a county, and you’ve sorted it by highest priced assessed value to lowest. You would always, in general, if you’re sending a mailer out in the whole county, you would want to focus on, theoretically, the cheapest assessed value per property, because that’s where the lowest value property is, because that’s what we go for in this asset category. Unless you’re sending out mailer for houses … I’m talking about just land now. So, the irony of that is, what you do is you miss the higher value, theoretically, the higher value property. Because that’s what we want. We all want to buy. We want to pay less for more valuable property. So the irony of assessed value is, if you focus on only the lower value property, you’re not gonna get that higher value property in your mailer, so, what’s the answer? The answer is to send it all out …

Jill Dewitt:                           Call Daryl.

Jack Butala:                       No. The answer is to really break down sections of the county, however you do it, whether it’s geography, subdivisions, or whatever … And this is advanced. If your brand new, don’t do this. If you’re brand new, just, you know, shack on the whole thing. Don’t rifle it.

Jill Dewitt:                           Don’t worry about the assessed value.

Jack Butala:                        Right.

Jill Dewitt:                           I mean, above a certain point, yeah, like the million dollars, come on. But don’t get that detailed about if you’re really, really, really new. [crosstalk 00:09:47]

Jack Butala:                       You really want to capture the higher value property, assuming that it’s assessed correctly, and it’s not in Daryl’s county.

Jill Dewitt:                           Right.

Jack Butala:                       All kidding aside, mail it all out, but mail it out with different values.

Jill Dewitt:                           Right.

Jack Butala:                       Don’t just say it’s $450 an acre in county X in Texas. When you’re advanced at this … So what you’re gonna find … Well, why the hell would we do that? It sounds like a lot of work. Here’s why. We’re all about yield here. All right, if you’re independently wealthy, and you want to just send out … You have no mailer budget, that’s the best situation you can be in. You just send all kinds of letters out at different values. But, that’s not the case, right? We all kind of have a budget. You want to spend $1000 or $2000 on a mailer, then you need to really pay attention to pricing. So, that’s the irony of assessed value. Don’t just mail out … Don’t just look at assessed value, and mail out once specific thing. It’s an indicator, but it’s usually not right. Go ahead.

Jill Dewitt:                           Right. Well, I was gonna even just kind of bring it in, like, think about our homes, and think about those postcards we get every year telling us the assessed value. Do you hope it’s a high number? Heck no, because then your taxes go up. You’re hoping it’s a low number, and if there are some changes in your area, look how behind it is. It’s gonna be a year or two behind, going up and going down. So, just based on your own home, when you get these postcards, that should be a little indicator for you that “Hey, this is not always that accurate.” Because it’s really not. In a perfect world, we’re hoping our assessed value all stays really low.

Jack Butala:                      That’s right.

Jill Dewitt:                           Nobody knows that I did that. Oh, look, we put that addition on and they haven’t assessed it yet. Awesome. I don’t have to pay for that. This is good.

Jack Butala:                       Well said, Jill.

Jill Dewitt:                           That’s what we’re all hoping, fingers crossed. So, I want to point that out, because some people get hung up on, “Oh, the assessed value is X.” I really don’t care what the assessed value is. That doesn’t maybe anybody’s gonna pay that.

Jack Butala:                      That’s right.

Jill Dewitt:                           You know, or I’m gonna go … And it’s like I can come in and tell somebody, “You know, Mr. Smith, it’s only assessed at this.” He’s gonna go, “Oh, yeah, that’s not right. You should see it now.” And he’s right.

Jack Butala:                       That’s right. Assessed value, for the record … This is a good time to bring this up Jill, your exactly right. Assessed value has nothing to do with the real market value of a property.

Jill Dewitt:                           Bingo.

Jack Butala:                       Nothing. Not even … Theoretically it does, but again, the guy in the basement’s doing all this math, so.

Jill Dewitt:                           He’s not driving every area every day.

Jack Butala:                      That’s right.

Jill Dewitt:                           And making sure that …

Jack Butala:                      He’s never leaving the office.

Jill Dewitt:                           Yeah, this is true. He’s not rocking around with a clipboard going “Yeah, that’s right.” He’s really not going and, you know, checking the square footage every day. There’s usually [crosstalk 00:12:20]

Jack Butala:                      That’s right.

Jill Dewitt:                           There’s either a major market trigger, like Southern California, maybe, I don’t know, may all of a sudden … You’re gonna explain that?

Jack Butala:                      Well, here’s what triggers the assessed value. In 99.9% of the time, there’s two things that trigger assessed value changes. The sale of a property, number one, or the recorded and the licensed improvement on a property, which means you pull a permit. Who here pulls a permit when they paint their house? No one.

Jill Dewitt:                           Oh, I did.

Jack Butala:                       How about a pool.

Jill Dewitt:                           Just kidding. [crosstalk 00:12:53]

Jack Butala:                       How many times have you done renovations, Jill, whether it’s personally, or houses and stuff? Have we ever pulled a permit?

Jill Dewitt:                           No.

Jack Butala:                       Not one time

Jill Dewitt:                           Yeah.

Jack Butala:                       Not once.

Jill Dewitt:                           Like, remodeling your kitchen, and I’m not moving walls, I’m putting in higher end appliances.

Jack Butala:                       So now you have a brand new house. You bought a house for whatever. You have a brand new house. You never pulled a permit. The assessor’s not gonna … It will not change. My point is, the assessed value is almost always very inaccurate. So, there’s irony in that. You want to make sure that you’re sending out offers to all assessed value property, but you want to price it correctly. I know this is a nebulous … This is a philosophical show.

Jill Dewitt:                           It is.

Jack Butala:                       It’s not a math show.

Jill Dewitt:                           I mean, there’s a lot of examples that we can all give of things that we’ve done, improvements that do change the market value, but they don’t change the assessed value. This is good stuff.

Jack Butala:                       I broke a sweat laughing.

Jill Dewitt:                           Good.

Jack Butala:                       We should write a short story based on that imagery.

Jill Dewitt:                           Daryl and Earl and Daryl.

Jack Butala:                        No, it’s Earl, Daryl, Daryl.

Jill Dewitt:                           Oh. Well, I said Daryl and Earl and Daryl, sorry, it’s Daryl, Daryl, Earl? Earl, Daryl, Daryl.

Jack Butala:                       What are their wives’ names?

Jill Dewitt:                           Oh no. Betty. Gotta have Betty in there. There’s always a Betty. That’s what I fall back on. All right.

Jack Butala:                        Join us in another episode where Jack and Jill make idiots out of themselves trying to explain stuff.

Jill Dewitt:                           Oh, and that’s information for Jack. And I try to keep it fun, and that’s inspiration we all do anyway. I don’t know. That’s my half.

Jack Butala:                       You are not alone in your real estate ambition. Jill, you’re a crack up.

Jill Dewitt:                           That was good.

Jack Butala:                       You know what’s funny today? You have a wife beater on.

Jill Dewitt:                           I do. That’s hilarious.

Jack Butala:                       As she looks down at herself. Oh my God.

Jill Dewitt:                           And it’s white. This is like the worst thing a guy could wear, is a white wife beater. For a woman, it’s a white tank top.

Jack Butala:                       Yeah, it looks pretty good on you though.

Jill Dewitt:                           Thank you. It’s little different for a chick. Yeah, a man should never, ever, ever, even under a dress shirt, wear this. FYI.

Jack Butala:                       Women always should.

Jill Dewitt:                           Oh.

Jack Butala:                        For a lot of reasons.

Jill Dewitt:                           Oh, it’s okay. You’re funny.

Jack Butala:                        Information and inspiration to buy undervalued property.

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