Being A Real Estate Agent Is Not A Career (CFFL 537)
Being A Real Estate Agent Is Not A Career (CFFL 537)
Transcript:
Jack Butala: Jack Butala with Jill DeWit.
Jill DeWit: Hi.
Jack Butala: Welcome to the show today. In this episode, Jill and I talk about being a real estate agent and how it’s not really a career.
Jill DeWit: We’re gonna tick off a lot of people.
Jack Butala: It wouldn’t be the first time or the last time. Before we get into it, let’s take a question posted by one of our members on the landinvestors.com online community. It’s free.
Jill DeWit: Okay. Chris asked, “I’m looking at a county surplus auction inventory list.” That’s a mouthful. “And researching land I want to bid on. One of the property’s descriptions from the county auction book reads, ‘Vacant lot. Subject to apparent encroachment by structure. Half of a house.'” Seriously. You can’t make this stuff up. I didn’t say that. He wrote that, and they’re right. So, Chris goes on to add, “I looked up the parcel number and the lot for auction or the pin number in this auction and the lot. Is a garage half of the house?”
Jack Butala: Good for you doing your research.
Jill DeWit: Is the garage half of the house? Got it.
Jack Butala: I see this kind of stuff all the time.
Jill DeWit: “The other half of the house taxes are owned by the county.” Oh my gosh. At what point do we … I would’ve run a long time ago, but anyway.
Jack Butala: Yeah, but no. This is good. I’m really glad that he asked this question, and I’m glad our producer chose it for us.
Jill DeWit: Right. “The other half of the house’s taxes are owned by the county, but that portion is not up for surplus auction this year. It’s a tax lien state. I dug even a bit deeper on the other half, and the taxes have been sold and taken back to the county twice over the past seven years. The caveat? This is a beautiful infill lot right on a golf course. I did drive by the lot.”
Jack Butala: Wow.
Jill DeWit: “Do you have any experience with this type of question? My specific questions are …” It keeps going. I was gonna say, “One, do I run?” No. “One, if I purchase the land with half a house encroaching and the county owns the other half, will I be able to sell my half?”
Jack Butala: Yes.
Jill DeWit: “Two, will I essentially own half a house?”
Jack Butala: Yes.
Jill DeWit: “Three, the property is a prime lot and there will be other more seasoned bidders at the auction. Should I run screaming and cross this one off my bidding list?”
Jack Butala: Yes.
Jill DeWit: “Retail is around $22,000 for the comps and the bidding starts at $600. Four, or just go for it and ask questions later?”
Jack Butala: No.
Jill DeWit: “I.e., hire a lawyer after I purchase.” It’s hilarious. “I suspect the answer is a combination of the above. But I welcome any direction. Thanks in advance.”
Jack Butala: First of all, Chris-
Jill DeWit: It’s hilarious Chris.
Jack Butala: … you are exactly who we want in our group. You have done every single thing right. When you go to an auction, I mean it, and you’ve asked all the right questions, you’ve done your research, you even went and looked at the property; which I have to say most of the time, I’ve never done. So, kudos to you. This deal is too complicated no matter how profitable.
Jill DeWit: Right.
Jack Butala: And I know you’ve heard us talk about it 17,000 times on the show and everywhere else.
Jill DeWit: Exactly.
Jack Butala: There’s no replacement for sending out a lot of mail.
Jill DeWit: Right.
Jack Butala: If this wasn’t an auction scenario and you got the property back or the purchase agreement to buy this property back and you did all this research, you would have run, right? But, for some reason it’s an auction and there’s this perception that you can get it cheaper. And that’s fine. I went through exactly what you’re going through, in fact, for several years, actually before Jill. For several years-
Jill DeWit: What all happened before Jill? Let’s talk about that later.
Jack Butala: … I ran a whole company. Yeah, wasn’t as successful, I’ll tell you that. Ran the whole company on auctions like this. And then I started sending out letters. And it’s just much easier to get the stuff back in the mail and have people call you and it’s more mechanical and more automated. So, to answer all your questions, I would run from this deal.
Jill DeWit: I have two things to add. Well one is, there is a thing about auctions. Number one, you’re going out looking for deals instead of letting them come to you. And number two is, there’s a reason why this one’s sitting around.
Jack Butala: Yeah.
Jill DeWit: It’s obviously a problem.
Jack Butala: Yep.
Jill DeWit: It’s still a problem. So, somebody’s going to purchase a problem. And I’d rather not be that person. And I don’t think you want to also, Chris. But I do have to say, I love when Jack said you are exactly the right person for the group, I thought it had to do with number four as, “Hey, just go for it and ask questions later?” Which is really … as funny as that is, it’s really not the way we want to run our businesses.
Jack Butala: Right. Let’s say just for the sake of argument, and we’ll wrap up the question on this, you get everything you want. You get the starting bid 600 bucks and it retails for 22. So you buy it for $600, then you resell it for 22,000. Now you have half of a house on half of a golf course lot. Is that what you want? By the time you are all done you are going to make $20,000 on this. And how much stuff are you going to have to go through? How many times are you going to resell it?
Jill DeWit: Good point.
Jack Butala: Jill and I have … there’s one property specifically I think we’ve sold 10 times before we stopped. You know we had to refund the money, and there’s problems, eventually we just let it go back. Don’t make that mistake. So, I really think that if you just sent out a couple of mailers, you’re gonna make way more than 20 grand.
Jill DeWit: I know.
Jack Butala: Probably on several deals on their own, not combined. So-
Jill DeWit: You know Jack?
Jack Butala: … why put yourself through it?
Jill DeWit: I know. I mean that’s the whole thing, $20,000 initially sounds like a lot of money. But when you realize, I could have done four deals and made 5,000 on those four deals. Okay, now it doesn’t sound like so much money.
Jack Butala: Or I could’ve wholesaled six houses and made 600,000.
Jill DeWit: Right.
Jack Butala: So, it’s all relative. By the way, I have to reiterate. You totally approached this perfectly.
Jill DeWit: Yeah.
Jack Butala: I mean it. A lot of times we get questions like should I? Is it a good idea? Hey Jill-
Jill DeWit: Is it north facing?
Jack Butala: … is it a good idea to buy and sell land?
Jill DeWit: Or I was … go really another direction, but that’s good.
Jack Butala: What direction?
Jill DeWit: No, no, no. Just being really picky about the property, you know.
Jack Butala: Oh, yeah.
Jill DeWit: And stuff like that, yeah. All good.
Jack Butala: Auction property, you can make money, mostly in tax liens, not so much tax deeds. But, there’s no replacement for sending out mail.
Jill DeWit: Exactly.
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, being a real estate agent is not a career. This is the meat of the show. I could see Jill lit up in the studio when she saw this topic.
Jill DeWit: But I did not write this topic-
Jack Butala: I did.
Jill DeWit: … Let me go back and say that.
Jack Butala: I wrote it.
Jill DeWit: My goal in life is not to piss off real estate agents. Now-
Jack Butala: Really?
Jill DeWit: … if that really happens, I’m okay with that. But I’m not setting out to piss off anybody. So I just want to start with that. I’m done. That was my public service announcement.
Jack Butala: Every time we talk to a … every time I’ve ever brought this up, right, sitting with the real estate agent in any environment, and I’ve said, “Real estate. That whole concept of a real estate agent is really obsolete.”
Jill DeWit: I know.
Jack Butala: I don’t care if they’re a brand new real estate agent, or they’re 30 years old, or they make $16 million a year like my little sister does in Michigan, they all say they have the exact same reaction. They look at me and say, “Oh yeah, it is, you’re right.” They don’t ever defend themselves, they don’t ever say, “Well wait a second, you really do need a real estate agent and we earn our money and darn it, I’m going to give you 16 examples, and here’s several names of people that love working with me and they were happy to write the check at the end of the deal.”
Jill DeWit: Yeah, you’re right, no.
Jack Butala: Not one of them has ever said, “Wow. You’re a kook. You’re the only one on the planet who thinks that being a real estate agent is not a career. The world needs us.”
Jill DeWit: Some people say, “Oh but they walked me through all the step.” No they don’t. The title company does that. Let’s really think about that. Who’s putting all the paperwork together and doing all that? You could remove the agent and do the deals directly with the title company-
Jack Butala: Which is what we do all the time.
Jill DeWit: … and they’re going to handle the transaction and take care of the money. The agent doesn’t take care of the money. Know what that agent does? You write the check and they hand it to the title company. They don’t deposit the money, you don’t, they’re not allowed to.
Jack Butala: It’s the 21st century and there’s the internet and computers and stuff. Before, the original concept of a real estate agent, this is before you even had to get a license, was a social butterfly or the person who is the most social person in the town or city where you live, and you knew it was for sale before the MLS. “Oh John, three seats over, I talked to him a couple days ago. He’s thinking about selling his house. Let me put you guys together.” And now you want to buy a house-
Jill DeWit: And then I get a piece of it.
Jack Butala: … Right. So that, back then, was needed. It was-
Jill DeWit: Was it really needed though?
Jack Butala: Well there was no real informational way to share who wanted to sell their house or who didn’t. Right? And there’s no database scenario where you could send them all a letter or anything like that. So it was needed. But now, you don’t need a real estate agent.
Jill DeWit: I know.
Jack Butala: We are all our own, in our group, we’re all our own real estate agents and escrow agents and everything else.
Jill DeWit: You know, I hate to … I really feel bad-
Jack Butala: And how much money do you save?
Jill DeWit: … bashing on them, but I have something to say-
Jack Butala: Six percent. Sheesh.
Jill DeWit: … about this too. Okay, well hold on a moment here too. I’m sorry, but I’m going to really get in trouble here.
Jack Butala: No, let it out.
Jill DeWit: All right. On what planet is it okay to say, “I want you to sign this contract that, I’m so insecure that, no matter what, even if you close the deal, I still get my money.” Why is that-
Jack Butala: An exclusive agreement, you mean?
Jill DeWit: … Yeah. Really.
Jack Butala: I understand where they’re coming from. They want to put their time in and all that. But I agree.
Jill DeWit: Yeah, but what if … come on. How many agents don’t put the time in, but you just … you’re stuck because you signed that paper that said even though I put this whole deal together now, I still have to pay you because not six months had passed or 90 days, whatever it is.
Jack Butala: Here’s a couple of examples. Before the show I wrote down a few examples of what I think some things that a real estate agent could do that actually would add some tremendous value to a deal.
Jill DeWit: Ready.
Jack Butala: Developer A goes and builds a four-unit condo complex that’s right on the ocean somewhere, very exclusive, only a certain number of class of people can afford it. So they hire a real estate agent, and the real estate agent, rather than hiring a photographer and putting together a silly little flyer and waiting, which is 99.8% of what they do, they actively go out, let’s say maybe to a hospital … meet with a hospital administrator, maybe two of them if it’s in an urban market … and offer some type of discount for doctors who are young doctors who need a place to stay that’s close to that hospital. Or need a place … want to buy a house for an investment. That’s some real added value. In fact, that’s what an intelligent developer would do. Then why do you need a real estate agent?
Jill DeWit: Exactly.
Jack Butala: Here’s what else a real estate agent might do. Stage the house. Real estate agents never think, for some reason-
Jill DeWit: I know.
Jack Butala: … to stage the house and make it look as good as it possibly can. And take responsibility for making the site clean, and the house clean, and arranging and helping the people move in and out, and helping with the mover and all that. That’s value.
Jill DeWit: Do you know what’s funny? I agree. I remember one time on the … a long time ago, my brother was selling a house, and this agent was doing the open house. We’re all trying to help and this agent … I’m the one that made the cookies … didn’t even think about that-
Jack Butala: I know.
Jill DeWit: … Are we serious? My mom was really the one running around cleaning up, but I’m baking cookies. And the agent’s just kind of standing there with flyers in hand. Really? Seriously? And I didn’t get a commission.
Jack Butala: Take responsibility for the deal. Not just get in the way. That’s really what it comes down to and that’s really the takeaway from this show. Most real estate agents, even commercial ones now, they’re getting in the way of the transaction. They’re actually not helping.
Jill DeWit: Hey Jack, what else is not a career? Is what you do a career?
Jack Butala: Probably not.
Jill DeWit: That’s where I was going. Jack, is podcaster a career?
Jack Butala: No, not at all. On its own, no. I could scream into a microphone about all kinds of stuff. There’s a lot of … most popular shows on the radio and on podcasting are people just venting.
Jill DeWit: Is radio … what do you call it … broadcaster a career?
Jack Butala: Yeah, probably. I mean, delivering the news and, I don’t know. I’m not sure.
Jill DeWit: Okay. Is lifeguard a career?
Jack Butala: I think we went through this a week ago. Yeah, heck yes, a lifeguard’s a career. If you’re helping anyone, in any way, which I’d like to think we’re doing, at least maybe the three or four listeners that listen to this show, they might feel helped. I don’t know.
Jill DeWit: Is supermodel a career?
Jack Butala: Yeah, heck yes.
Jill DeWit: Really?
Jack Butala: Oh, sure.
Jill DeWit: Okay.
Jack Butala: Is that helping me? It makes people happy.
Jill DeWit: Now I’m really confused. A supermodel makes me happy. What the heck? What is that? She’s making … What do you do? I’m a supermodel. I make people happy.
Jack Butala: It could be. Do male supermodels … remember that soccer game we were watching a couple days ago?
Jill DeWit: Yeah. The guy without the shirt did make me happy.
Jack Butala: That’s what I’m saying.
Jill DeWit: All right.
Jack Butala: Teachers are incredibly necessary.
Jill DeWit: Are fire fighters a career?
Jack Butala: Yeah, that’s … yes, it is. Fire fighters are necessary.
Jill DeWit: I had to bring that up ’cause you have … there’s a special love in your heart for fire fighters.
Jack Butala: After 9/11, it seems to have the … there’s an attitude. But it could be for a lot of different reasons, but continue to put out fires. Thank you.
Jill DeWit: Are politicians a career?
Jack Butala: They could be. The good ones are. And that is something we will never talk about on this show.
Jill DeWit: Are-
Jack Butala: Look. If you’re … there’s some real estate agents that are fantastic. It’s probably less than 1% that actually add some value and they’re humping it hard. They’re hustling. They’re actually selling a property. If they’re going to create … let me put it this way, if a real estate … if you … Let me do some math real quick. What’s 6% of 3,000? It’s $18,000. I mean 300,000. Are they … on a $300,000 house, the gross fee before all the splits is $18,000. Did they earn that? Well, if they sold the house for $318,000-
Jill DeWit: … That’s a car.
Jack Butala: … instead of 300, then yeah.
Jill DeWit: Yeah.
Jack Butala: Or 330,000 so that the owner actually receives some value for what they were doing, or did they hem and haw and say, “Oh, now you got to do this, now you got to do this, now you got to …” That’s been my experience. And every time again, I bring this up with the real estate agent, they don’t defend themselves. They say, “Oh yeah, that’s pretty much how it goes.”
Jill DeWit: Yeah, you’re right.
Jack Butala: So, if they are adding value and really maybe selling the property faster or exposing it to more people, but if they’re taking pictures on their iPhone, and submitting it to the multiple listing service and waiting-
Jill DeWit: I’ve even had people have to do their own photos and stuff, too.
Jack Butala: … Yeah. Or if they hire some young kid in the office to sit and hold the open house for them, and all they’re doing is just going out and getting new listings, which is really what they’re doing, the formal education for a real estate agent is to get more listings.
Jill DeWit: I know.
Jack Butala: The more listings you get, the more money you’re going to make-
Jill DeWit: ‘Cause you’re about your numbers.
Jack Butala: … Forget about managing the listings that you have. Just get more listings.
Jill DeWit: Just up your numbers.
Jack Butala: And that’s a pile of malarkey.
Jill DeWit: Exactly. The other point that I want to make here at the end is, just to make sure everybody knows you don’t have to have an agent. That’s the part that really bums me out, too. It’s like half the agents are walking around because people assume you have to have one, and this is the only one I know. He’s a family friend so … We’re selling a house and I have to use an agent, so here you go. You don’t have to.
Jack Butala: That’s right Jill. Some people don’t have time, and I understand that. Super, super busy and they need to hire an agent. Just hopefully they sell the house for a little bit more or they sell it faster.
Jill DeWit: Right.
Jack Butala: I get … there’s some value in that. Somebody asked me, I was talking to a buddy of mine recently, and he said, “My daughter just bought a car.” And his daughter is, I don’t know, in her mid-20s and she’s single and has a professional job. So she walked into the dealership and said, “My payment’s x, whatever, let’s just call it 400 bucks, I need a new car.” She got a new car and her payment was $400 for the new car. She needs to be safe, she needs to get to work on time, she needs to not deal with that. Is that the best, absolute way financially to do that thing? No way. But, for a single young woman who’s on a career path and serious about other stuff, she needs to save the time. She can’t … what, she’s going to put her car on Craigslist and then entertain all the ding-dongs that show up and try to negotiate? No. That’s not for her. So it is appropriate … these convenience scenarios are appropriate in certain situations. But for the rest of us who can do stuff, no.
Jill DeWit: Exactly.
Jack Butala: That’s … I’m trying to equalize this now. I’m trying to offset the rant.
Jill DeWit: Is that what you’re doing? Now you’re saying that it doesn’t apply to everyone?
Jack Butala: Yes.
Jill DeWit: Would you make up your mind Jack?
Jack Butala: Join us in the next episode where we explain the whole flirt to convert concept. Jill loves this topic.
Jill DeWit: Going to be awesome. And we’re going to answer Noah’s question about where we get our templates for terms documents. Templates that work, we can help with that.
Jack Butala: Join us tomorrow, same time. You are not alone in your real estate ambition. I think we kept it under control.
Jill DeWit: That was good. Thank you. Hey, if you like our show, please be sure and rate us on iTunes or wherever you are listening. We appreciate that.
Jack Butala: Nice plug.
Jill DeWit: Thank you. So I … do you think we handled that okay? We didn’t tick off too many people.
Jack Butala: No. I don’t care. We have real estate agents-
Jill DeWit: When you really think about … come on.
Jack Butala: … Go ahead.
Jill DeWit: We all know people that have had horror stories. That’s a fact. And we all know people … there’s always a real estate person in the family and the reason they always to enter into real estate is because they had a bad experience too, right. My mom did it, my mom became a real estate agent to buy our house and get the inside track. Then she ended up doing it for a little bit, but she … her heart was in it. That’s the thing too, my mom-
Jack Butala: She took responsibility for the deal.
Jill DeWit: … She did. I remember she was working 80 hours a week, we never saw her, and she’d be writing-
Jack Butala: Well that’s why she did it.
Jill DeWit: … up offers on Christmas Eve. Seriously. Some people really work hard at it and I appreciate that.
Jack Butala: Oh now you’re trying to level it out.
Jill DeWit: Yeah, I am. All good.
Jack Butala: I know. I talked to my sister, I said, “What’s the market like?” She said, “Oh, every property that we get in, it’s an auction situation and it sells five days later. And it’s always for the higher than listing price.” Well then why do you need a real estate agent?
Jill DeWit: A good point.
Jack Butala: And she didn’t say, “Oh, it’s because we’re great real estate agents.” She said, “Because the market’s great.”
Jill DeWit: Whatever.
Jack Butala: Jill and I, next year, are going to launch some products that solve this for the normal person.
Jill DeWit: Oh it’s coming, just wait.
Jack Butala: It is coming. Information and inspiration to buy undervalued property.
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