We Live by Days on Market (JJ 609)
We Live by Days on Market
Transcript:
Jack Butala: Jack and Jill here.
Jill DeWit: Hi!
Jack Butala: Welcome to the Jack Jill Show. It’s here where we provide entertaining real estate investment advice, or try to anyway. I’m Jack Butala.
Jill DeWit: I’m Jill DeWit, broadcasting to you live from sunny southern California.
Jack Butala: Today, Jill and I talk about how we live by days on market. If we can get past these forest fires …
Jill DeWit: Oh my gosh! You know what I was just actually thinking, I’m actually sounding much better today. Remember, I was fighting that cold. I swear, that drug on for days-and-days-and-days-and-days-and-days …
Jack Butala: You sound better.
Jill DeWit: … And days-and-days. Thank you. I know.
Jack Butala: Before we get into today’s topic, let’s take a question posted by one of our members. On the jackjill.com online community. It’s free.
Jill DeWit: Josh asks, “Hi, everyone. I’ve heard on the podcast that pricing mailers specifically down to the subdivision is a great way to accurately price a mailer. Has there been a specific podcast or thread on how to actually go about doing this? What is the best way to identify a specific subdivision in a county? I know the information can be found in the real quest data that we pull, but I’m not exactly sure what I should be looking for, to group like properties together using a subdivision filter. APN schemes look out for, legal description, etc. Any insight would be appreciated.”
Jack Butala: Super good question, Josh. In fact, that’s how I actually price mailers for houses. Not so much for land, but for houses. There’s a few ways you can do this. The first thing, you already mentioned, I would go to the jackjill.com community, where you posted this, because there are … Then, keyword search, subdivision, or drill down from there. I just recently looked. There’s like 14,000 entries.
Jill DeWit: Oh my gosh!
Jack Butala: Can you believe that?
Jill DeWit: Yes, I do. I do believe that. Yes.
Jack Butala: There’s a ton of real advice from real people that have done this that are in our group as well as for me. I’ll give you my two cents here. First of all, it’s a fantastic idea, like I said. The best way to do it, I find, is through finding an APN range out of the whole mess of APNs in that county.
What I mean by that, is that when a developer goes into the county and says, “Hey, you know that big piece of vacant property out there? I bought it and I want to make a subdivision.” One of the things that the assessor and the county does, is they assign a series of APNs starting with the number, let’s say for sake of argument, 112.
Between 112 and 4,002, those are properties that are in that subdivision. If it’s like normal subdivisions, they’re like-kind properties, so they’re pretty easy to price. They’re all similar. You’re definitely on the right track.
This venue’s beyond the scope of really drilling down into it, which is why Jill and I are prepping for teaching online classes and live classes to drill down to some of this real specific information, which, let’s just face it, the better you are this technical stuff, the more dough you’re going to make. It’s as simple as that.
Jill DeWit: Exactly. You can find it in the legal description too. It’s a little more time consuming, because it’ll show Anthem, lot 25, things like that. They’ll be in there too.
Jack Butala: In the more urban counties actually have, I mean, there is a whole column for a subdivision name. Urban counties that take the data seriously, take their assessor database seriously, it’ll say right in there. Anthem. Anthem’s a huge Dell-web community in Arizona. A master plan community. In fact, that would be a perfect subdivision to practice on.
Jill DeWit: True.
Jack Butala: I’m not saying send a mailer there. I’m saying, just to look at the data. Pull the data.
Jill DeWit: I thought you went for purchase price, because I was thinking about something that you and I were looking at because we always are looking at numbers. We were looking at these markets where it’s $200 or less a foot compared to where we are, where it’s $3,000 a … I’m not kidding.
Jack Butala: Jill’s fun house for $3,000 a square foot.
Jill DeWit: It’s like $3,361 per square foot.
Jack Butala: It’s like an office building.
Jill DeWit: It was just hilarious. It’s a SFR. Just a single home.
Jack Butala: Some classic stuff.
Jill DeWit: It was really funny. I was looking at this number going, this is true. Some people, in parts of the country, I’m sure, don’t think that it’s real. No, no, it’s real. That is accurate.
Jack Butala: This is a good time to bring this up pretty quickly. In general, it costs about $100 to $125 a foot replacement cost to build a house, to build a one or a two story house, in general.
There’s lots of different places in the market or in the country where it’s more expensive and some places that are less, but construction costs don’t vary that much. Well, why the heck is one property $3,000 a foot and why is one brand new property in Arizona, $125 a foot?
Jill DeWit: Let’s think.
Jack Butala: L-A-N-D.
Jill DeWit: Thank you.
Jack Butala: That’s what we’re here to talk about.
Jill DeWit: Look at that. It’s kind of funny. It all comes back to land.
Jack Butala: A piece of land on the ocean is a little bit different than a piece of land in the desert.
Jill DeWit: They look the same. It could be the same. They do the same thing/however. They’re priced a lot differently.
Jack Butala: That’s our job.
Jill DeWit: There we go.
Jack Butala: Hey, if they’re all priced the same, we would be out of business tomorrow.
Jill DeWit: Good point.
Jack Butala: Our job is to find out what those variances are through data and buy some property and then sell it. Own it for maybe a week.
Jill DeWit: That was awesome. Thank you, Jack.
Jack Butala: Today’s topic. Live by days on market. This is the meat of the show.
Jill DeWit: Sounds a lot like days on market. Why is this important? Maybe we’re researching our next thing that we’re doing in January. This is a huge component.
Jack Butala: How would you define days on market, just for fun, Jill?
Jill DeWit: Days on market is the list price, when a property’s listed for sale, to when it’s done and closed. You know what? Let’s be honest. Under contract, is not done.
Jack Butala: That’s a great point. The reason I ask this is because people define it differently. The people who are reporting these things, define it differently.
Jill DeWit: Good question.
Jack Butala: In certain markets, for Seattle, I did a lot of research on this. We’re going to do a whole show on it at the end of the week. It’s called big city. We’re going to look at each big city and look at their days on market and how they define it and why. You really have to be aware of that. It’s not an apples-to-apples comparison, but that’s not that bad.
Jill DeWit: Sometimes, when they take an offer now, they call it, now it’s closed, technically.
Jack Butala: Or, pending.
Jill DeWit: Pending.
Jack Butala: Seattle, for example, when you list it, starts the clock. When it goes to pending, ends the clock.
Jill DeWit: That’s now the way I look at it.
Jack Butala: Literally, Seattle’s days on market are like seven. I’m sitting there, going a lender, there’s no way a lender …
Jill DeWit: It’s really 37 by the time it closes.
Jack Butala: Yeah or some number like that. Cutting to the chase, if wherever you get your numbers from, there’s a tremendous … We live in the information age now, which is awesome. There are more-and-more places where you can get reliable good data to make decisions about sending mailers out.
In general, cutting to the chase, if you are working in an environment where the days on market, no matter how it’s defined, are around 30 days. That’s where Los Angeles and Phoenix are. Phoenix is a little higher, by the way.
Jill DeWit: Higher days on market?
Jack Butala: Yeah.
Jill DeWit: I believe that.
Jack Butala: 45.
Jill DeWit: That’s my mom.
Jack Butala: Jill’s poor mom.
Jill DeWit: She’s going on 180. I don’t know what it is.
Jack Butala: What do you think? It’s overpriced?
Jill DeWit: You know what? You know those people that are in your world and they’re very close to you and you’re trying to help them and they still don’t believe you.
Jack Butala: The ones with the same last name as you?
Jill DeWit: Yeah, isn’t that the funniest thing? You’re like, the last time I checked, this was what I do, but don’t listen to me. Heaven forbid.
Jack Butala: Do as I do, not as I say. I mean, do as I say, not as I do.
Jill DeWit: Okay. Oh, Jill. That’s so nice. Whatever. I’m like, “Mom, you might be overpriced.” She has two things going on. I’ll tell you exactly why her house is not moving.
Jack Butala: Good.
Jill DeWit: The price and reach.
Jack Butala: The two things that make properties not sell.
Jill DeWit: The two things that should be happening are not happening. That’s effecting her days on market. That’s a bummer. There you go.
Jack Butala: Is the house grossly overpriced? Give us the real numbers.
Jill DeWit: It’s in the, I want to say …
Jack Butala: It’s north Phoenix.
Jill DeWit: It’s north Phoenix. It’s Arrowhead Lakes area. I don’t know.
Jack Butala: Does it have any attributes? Is it on a lake? On a golf course?
Jill DeWit: On a golf course.
Jack Butala: That’s good.
Jill DeWit: Golf course, two story, but it’s in the sixes. $600,000. You know what the biggest thing is, honestly? I think she’s got the price where it needs to be. It’s more about the reach.
Jack Butala: She’s got a bad real estate agent.
Jill DeWit: Yeah, she does. She’s got a new one now and hopefully that’s going to help her.
Jack Butala: How hard is it?
Jill DeWit: We would have done this all differently, but you know, it’s just like I said. I can’t … They want to do it their way and that’s okay.
Jack Butala: You know, she could buy a cup of coffee and ask you how to sell her house.
Jill DeWit: I know.
Jack Butala: She really could.
Jill DeWit: Yes, she could. I could do it for her.
Jack Butala: You know how to sell property.
Jill DeWit: I could just post it and get it out there and get it moving, but it’s okay. It’s all good.
Jack Butala: Anyways, days on market are imperative. That’s really what this show is about. We live and die by days on market. I know this because I’ve done it the right way and the wrong way. What are you talking about, Jack? You guys buy rural, vacant land, that has days on market that are like a year, 300 days on market. We absolutely do.
We live and die by days on market for houses. For property that’s rural, investor-unwanted market, we live and die by price. Here’s what I mean. If you are in a rural market, let’s say in Oklahoma, or something like that, where you just look at land, and the days on market, from list to sale, are something like, I don’t know, 180, like Jill just said, maybe 200. They’re approaching a year, right?
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: That’s market price. If you have a property that’s priced at 80% less than everything else that’s like/kind around there, because you purchased it from somebody for 90% less than it’s worth because they just didn’t want it anymore, it’s going to sell. For land, it’s price. For houses, it’s days on market. You can get away with a lot on a days on market environment.
Here’s a good example. A few years ago, just to make my point, I purchased a house for cash in a real hot market. It was before the downturn for $120,000 and I sold it for $140,000 this next week. I didn’t do anything to it. Nothing. I didn’t change the locks. In fact, we didn’t even actually close on it. I just had the escrow company leave it open. That’s what you can do. That’s the kind of stuff you can pull in a hot market.
Jill DeWit: Day trading with property.
Jack Butala: That’s what it is.
Jill DeWit: That’s all it is.
Jack Butala: That’s exactly what it is. Am I saying, go nuts, and take your kids’ college fund out and do that? No. I’m just saying, when days on market are that low and demand is that high and supply is low, I just saved you $150,000 going to business school.
Jill DeWit: Thank you. I appreciate that.
Jack Butala: It’s pretty simple stuff when you drill down into it and you get the right education.
Jill DeWit: Thank you, Jack.
Jack Butala: You’ve done it again. You’ve wasted about 15 minutes, I guess, listening to the Jack and Jill show.
Jill DeWit: You just can’t get it back.
Jack Butala: Join us tomorrow where we discuss how we deal with the death threat ratio.
Jill DeWit: Yikes!
Jack Butala: To the deal. Deal of the death threat. I didn’t come up with it. Somebody in our group did.
Jill DeWit: Deal of the death threat ratio.
Jack Butala: This is what he calls it. He calls it the hate. He said, the more death threats he gets, the more money he makes.
Jill DeWit: I love it.
Jack Butala: I do too.
Jill DeWit: I love it.
Jack Butala: Turn a negative into a positive.
Jill DeWit: I love it. We answer your questions, should you have one, post it on jackjill.com, our online community.
Jack Butala: You are not alone in your real estate ambition. Jill, you sound so much better.
Jill DeWit: Thank you. I am so glad.
Jack Butala: Are you feeling better?
Jill DeWit: I am feeling so much better. Days on market. I think we all know we want short days on market, but I don’t know if people really are out there studying it like you are.
Jack Butala: Well, they should. That’s what this show’s about.
Jill DeWit: I know.
Jack Butala: Well, where do you get the information then? Good question, Jill. There’s so many places.
Jill DeWit: Do it in my voice. Do it like …
Jack Butala: I’m not sure.
Jill DeWit: If you’re going to imitate me, do it right, babe. Come on.
Jack Butala: This is how Jill approaches stuff. Right out of Dale Carnegie. I’m not sure that people are looking at days on market the way that you are, sweetheart, which really here is the translation. Can you please tell everybody how to get the information?
Jill DeWit: Wait, imitate me. I want to imitate me and I want to imitate you because this is a fun game. Do one of me. Like a totally different one.
Jack Butala: I’m thinking that it might be lunch time.
Jill DeWit: All right.
Jack Butala: How would I say it?
Jill DeWit: This is you being. Lunch. Next topic.
Jack Butala: You know it’s interesting that we’re imitating each other because …
Jill DeWit: I don’t care what I eat, it’s just food.
Jack Butala: We have a show coming up, called Jack or Jill. You choice. It’s like two, three days from now.
Jill DeWit: This is going to be good. I’m going to start prepping for this. I’m going to start paying attention. Just some things to prepping for this. This ought to be really, really good. Hey, share the fun by subscribing to us on iTunes or wherever you’re listening. Hey, and why you’re at it, please rate us there.
Jack Butala: We are Jack and Jill. Information.
Jill DeWit: We are Jack and Jill. And inspiration.
Jack Butala: To buy undervalued property.
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