How to use Real Estate Agents as an Investor (JJ 618)

How to use Real Estate Agents as an Investor

Transcript: 

Jack Butala:                       Jack and Jill here.

Jill DeWit:                           How you doing? Sorry.

Jack Butala:                       What kind of crazy thing is that?

Jill DeWit:                           I don’t know.

Jack Butala:                       I’m always surprised by what happens.

Jill DeWit:                           Thank you.

Jack Butala:                       Welcome to the Jack/Jill show. It’s here and we try to provide entraining … We’ll see …

Jill DeWit:                           Try.

Jack Butala:                       … investment advice. I’m Jack Butala.

Jill DeWit:                           And I’m Jill DeWit, broadcasting right now still in sunny southern California.

Jack Butala:                       Today Jill and I talk about how to use your real estate agent. How to pump him for information as an investor that you are.

Jill DeWit:                           There’s so many things that I want to say about that. How to use and abuse a real estate agent.

Jack Butala:                       No.

Jill DeWit:                           No, I’m just kidding. I was joking about that. No, but wait a minute, Jack. Wait a minute. Wait a minute everyone. Haven’t you said all along that that may not be a real … I’m trying not to be …

Jack Butala:                       Career.

Jill DeWit:                           Yes.

Jack Butala:                       I have but we’re not gonna get into that in a minute.

Jill DeWit:                           Okay. Just checking.

Jack Butala:                       Before we get into Jill’s banter because that’s what it seems like it’s gonna be today.

Jill DeWit:                           Uh-oh.

Jack Butala:                       Let’s take a question, posted by one of our members on the JackJill.com online community. It’s free.

Jill DeWit:                           I know some days I’m just really kinda punchy, and I’m gonna apologize right now.

Jack Butala:                       We’re recording late today and I think Jill’s all hoped up on sugar or something.

Jill DeWit:                           Something. You know I did just have some sugar. That’s probably it.

Jack Butala:                       That’s what’s going on.

Jill DeWit:                           Oh, my gosh. Look out everyone. This is what happens.

Alright, Allen B. asks: I have a seller who has requested to keep her deeded mineral rights as per the terms on the purchase agreement. She asked me if I would pay more if she did include the mineral rights. I told her, “Sorry, but my business is land and I’m not interested in the mineral rights or the legal fees that would probably arise out of anyone finding out anything of value under the ground.” She seemed surprised that I didn’t want the mineral rights but she agreed to sell the land per my offer price. The vesting deed reads like this: Together with the tenements, et cetera, et cetera, et cetera, belonging or pertaining and the revisions remainders [inaudible 00:02:22] of RMC&D conveys 50% of any and all mineral rights owned by blank, blank, and blank.

So, my question is what kind of verbiage … so, the mineral rights are all … basically, they’re all in the vesting deed all garbled up in there. What kind of verbiage do I need to include on the new deed to make sure that the mineral rights stay with the seller or do I just created the new deed as if there were no mention of the mineral rights on the vesting deed?

Jack Butala:                       That. You create the new deed and you say nothing of it. Here’s why. Here’s how mineral rights work. You answered your own question. And you know what? Actually, Justin did answer it too.

Jill DeWit:                           Do you want me to reread that?

Jack Butala:                       Yes, go ahead. Justin, another member, answered it in the forum for him.

Jill DeWit:                           He put it in there, which is so good. This is what the value of this community, by the way.

Justin said, “You can put in the easement area or after the legal description that it is less all minerals and mineral rights, which have been reserved by prior owner.” Beautiful. I mean that’s it. And then when a landman goes through the deeds to determine mineral rights they start way back, and they start working to the present to see who may have kept them.

Jack Butala:                       So, how mineral rights … Mineral rights and surface rights or actual owning of the property are separate in most places in the country. I can’t think of one where it’s not like this. What ends up happening is when the property got homesteaded in the 1800s. That started the chain of title. Whoever the government deeded it to, usually a rancher or farmer. So, that’s deed number one. Then deed number two is whoever they sell it to. Deed number three is whoever they sold it to, and on and on, and on.

Let’s say your number ten and the person … You’re going to be number 11 and the person who you’re buying it from is number 10. Well, somewhere in the legal description, through the chain of title on all those deeds that got conveyed they talked about mineral rights. Chances are somebody owns mineral rights from way back when, and they’re dead. It’s very, very complicated, and very intricate, and extremely legally expensive to find out who really owns legal rights. People only really care about it if there is oil and stuff down there anyway. This only comes up when people are making money.

Jill DeWit:                           To concur with Jack, which is say you wanted them for whatever reason, Allen, I would still not assume that any of this is right.

Jack Butala:                       Yeah, me too.

Jill DeWit:                           You would be going way back starting in the beginning …

Jack Butala:                       That’s my whole point. She thinks she owns some version of some mineral rights, but I’m confident she doesn’t.

Jill DeWit:                           I’m not positive, exactly that she still does. You have to go back and confirm all that. Just because, Aunt Sally or whoever willed this to her said that doesn’t mean it’s true.

Jack Butala:                       So, what I would do is I would give her everything she wants because chances are there’s no deal there anyway. Plus, you just said that you don’t care anyway.

Jill DeWit:                           Right.

Jack Butala:                       So, I would say …

Jill DeWit:                           Do exactly what Justin said.

Jack Butala:                       Exactly what Justin said. Said duke out what you want. Thank you.

Jill DeWit:                           Yep.

Jack Butala:                       I’m gonna double my money on the surface rights.

Jill DeWit:                           Exactly because that’s all we want it for.

Jack Butala:                       Today’s topic: How to use real estate agents to your advantage as an investor. Real estate agents are one of Jill’s favorite topics.

Every single time I say to somebody, “Give me a story about a real estate agent” they stop what they are doing, put everything down where they are, stop the car, and they say, “Have I got a good one for you. I listed my house …. and I paid over $80,000. They didn’t do anything”

Jill DeWit:                           I know.

Jack Butala:                       Or worse, they killed the deal.

Jill DeWit:                           That’s what I was gonna say.

Jack Butala:                       What is it?

Jill DeWit:                           Killing the deal.

Jack Butala:                       What is it with real estate agents-

Jill DeWit:                           That’s the one that really makes me angry.

Jack Butala:                       They have the sense of entitlement where they can just list a property, throw it in the MLS, take a couple of pictures with their phone-

Jill DeWit:                           With the toilet seat up.

Jack Butala:                       So great, Jack.

Jill DeWit:                           Hate that.

Jack Butala:                       If they’re so bad why do you talk to them at all? Well, they do know some stuff.

Jill DeWit:                           Some do.

Jack Butala:                       They do know a few things. Here’s a couple examples.

Jill DeWit:                           The good ones who’ve been there for a while. Yes.

Jack Butala:                       Really, really long time ago I was desperate for a job. This is right out of college. I went and interviewed to be a residential real estate, and the first thing they asked me … The very first question … It obviously stuck with me forever … is did you grow up here? Well, yeah, I grew up here but why does that matter? They were right. Turns out they are right. Because the local customs, stuff that goes on, the people you know, that all is really valuable information that for whatever reason real estate agents never talk about, which I don’t know why. Like you know that property seems really cheap and you look at it and walk through it, it’s awesome, but every night at 12:30, 1:00 in the morning there’s a valve that blows out in a little sewer chain that you can’t see down there and it stinks for a half hour.

There’s no way you’re going to know that stuff and there’s no real way that they are honestly required to disclose. The seller isn’t going to disclose that, so if you’re gonna live there … This is pretty much with houses and not with land … you want to know this kind of stuff. So, why real estate agents don’t start a consult … I’m happy to pay for that information. I don’t want to pay 6% of the purchase price, but I’m happy to pay for some of that information that I honestly can’t get anywhere else.

Jill DeWit:                           When would you recommend that I seek them out for assistance?

Jack Butala:                       The most valuable stuff that they can offer they for whatever reason readily give it away, you can call them and say … You’ve done it. I’ve heard you do it. I’m in Scottsdale. I’m gonna buy a property in Washington State, and I would love to know what’s going on there, and they’ll sit and talk to you for a half hour, for an hour.

Jill DeWit:                           I know.

Jack Butala:                       There’s even no chance they are gonna get the listing.

Jill DeWit:                           Here’s the good news and the bad news about a real estate agent. Traditionally, they’re nosey people, man. They’ve got their whatever in everybody’s business.

Jack Butala:                       Social butterflies.

Jill DeWit:                           My goodness. They want to know everything about everybody, who makes what, when this is happening, and all that good stuff. So, yeah that’s a pain in the rear depending on … but on the flip side, that can be like Jack’s saying right now. That can be a good thing because if you have a real estate agent that says, “Oh, I know that. Trust me. This is whats coming over here, or that stores never gonna make it. This has been the third time. And this is bad and that’s bad. They don’t know but they just built that on a whatever.” Who knows. I mean …

Jack Butala:                       Here’s a couple of examples of questions that I’ve actually asked real estate agents over the years and they just seem baffled by this. They seem baffled like a deer in headlights baffled. In the tri-county area of X, where is the best value? The cheapest property but you get the most value for it? “What?” What’s an average price per square foot east of [Pemer 00:09:20] Road? “What’s price per square foot?” They just don’t think this way. I’ve even had this response. This happens in Scottsdale for some reason. I would really like to offer about 40% less than the purchase price, and they just …

Jill DeWit:                           It’s math.

Jack Butala:                       No, I don’t think it’s math. They have this thing like, “Well, why are you treating my profession? Do you have such lack of respect for my profession?”

Jill DeWit:                           It’s not worth that.

Jack Butala:                       Yeah. It’s not worth it.

Jill DeWit:                           Oh no. That’s not worth that.

Jack Butala:                       “Who the hell do you think you are that you can scuff off my neighborhood and you think you can get that house for $400,000. The asking price is $500,000”

Jill DeWit:                           I think you’re right. [crosstalk 00:10:08] Then I want to say you pay full retail for everything then, right? Don’t you?

Jack Butala:                       Do you love my outfit today?

Jill DeWit:                           Oh, my gosh, which I paid full retail for? No. Did you pay cash for that car? You better have paid the sticker price.

Jack Butala:                       Lady, I don’t care. I want a good deal. I don’t care about the house itself. “Oh, but the house is beautiful. You should see.” I don’t care about the house.

Jill DeWit:                           “It’s worth it. Let me show you.”

Jack Butala:                       Every real estate agent that’s ever been any good at any of this stuff end up being an investor because they are applying common sense to an asset purchase.

Jill DeWit:                           Oh, you’re right.

Jack Butala:                       They are leaving the sales out of it and how they’re dressed out of it.

Jill DeWit:                           Dude, you’re right. You know what? We have a few in our group, and they see things very different. They are smart.

Jack Butala:                       That’s right.

Jill DeWit:                           They have always been buying their own assets and they always see it in a different light, and you’re right. I appreciate that.

Jack Butala:                       Somewhere along the line in the long history of all this somebody told intelligent people like us and like you listeners that you have to get your real estate license so you can access to the MLS.

Jill DeWit:                           Because that’s the end all, be all.

Jack Butala:                       Intentional silence for a second. I went and got my real estate license, not because I want to represent anybody. I’m actually an investor, but I just want to have access to the MLS because that’s where all the data is. Not the case. There’s so much data down to a zip code basis in places like Redfin and Realtor.com. It used to be maybe you could get access to some data but that’s not the case anymore. Step by step, chipping away at the big iceberg, real estate agents are going away.

Jill DeWit:                           You’re chipping away at their profession. I feel a little bad.

Jack Butala:                       The great equalizer of the internet is the great equalizer. The good news is that if you’re a real estate agent don’t worry. If you know how to buy and sell real estate, which you don’t you’re title agent does … If you actually know how to buy and sell a piece of real estate like a real estate professional like us-

Jill DeWit:                           Use your knowledge.

Jack Butala:                       … then you’re gonna do great.

Jill DeWit:                           And go get some properties too.

Jack Butala:                       You don’t need to represent anybody else and take your commission. Just buy your own stuff.

Jill DeWit:                           That’s it.

Jack Butala:                       I bet you know a lot of hard money lenders. More than I do. I know that. So, why not? Why not just go your real estate.

Jill DeWit:                           That would be the reason. If I was thinking about doing this that would be the only reason I would go get my license is to find out who’s doing deals, who’s got all the money, closing deals for other people, then saying, “Alright, now we’re gonna work together” kinda thing, but they don’t think that way. That’s not …

Jack Butala:                       Even what you just said I could contest that because you’re so much smarter than that. You can find people on the internet.

Jill DeWit:                           That’s true.

Jack Butala:                       You could drive around if you needed to and look at who’s got dumpsters.

Jill DeWit:                           I agree.

Jack Butala:                       You could take a look at a list of property or data that we provide and see whose got-

Jill DeWit:                           Figure out who the people are that own all the stuff. Flipping it or owning it for a brief time.

Jack Butala:                       Yeah. If one person or one LLC owns 20 properties in one neighborhood they’re a good candidate.

Jill DeWit:                           They own them for less than 10 days or 30 days or something like that, that might be …

Jack Butala:                       This is all the stuff we talk about. This is not a commercial.

Jill DeWit:                           It’s House Academy.

Jack Butala:                       In House Academy. I almost said Land Academy. That’s gonna take a while to get used to it.

Jill DeWit:                           Your good. That’s why you have me.

Jack Butala:                       Well, you’ve done it again. You’ve wasted another 30 minutes. In case, Jill wanted to say anything you can catch her at the end of the show here. Sometimes you turn off the mikes and Jill’s like, “Aw, thanks. I didn’t talk at all.”

Jill DeWit:                           I’m like, “I had six more points I wanted to make.”

Jack Butala:                       Do you have more points?

Jill DeWit:                           No, I don’t. Your good.

Jack Butala:                       You’re welcome to say anything you’d like about real estate agents.

Jill DeWit:                           No, it’s okay. I’m good. I’m here.

Jack Butala:                       Your mom was a real estate agent, wasn’t she?

Jill DeWit:                           She was.

Jack Butala:                       Give us a good story there. Did she come home and high five your dad and say, ” We got another one”?

Jill DeWit:                           No. No. No. Heres what I remember. The only reason she did it was to A) buy their own first house. Mom said, “We’re gonna do this” and she ended up buying it. She found an asset through a bank transaction and it really was all perfect. It was way under value. They really bought it right. Nobody was in love with it. It was an awesome asset in the right area. It was just perfect, and they killed it. So, that was right. That was a good thing to do, but then mom decided to continue on in the profession for a while. What I do remember is we never saw mom. That was why she ended up leaving because she said, “Your life is not your own.” When you lose your evenings and your weekends, forget it. Kiss that goodbye.

Jack Butala:                       That sucks.

Jill DeWit:                           She’s writing offers on Christmas Eve and you don’t get to see your family, which for us that was fine. I’m just kidding. I’m totally kidding. Sorry, mom. I’m just kidding. That’s why she ended up leaving because there was just a lot of hours.

Jack Butala:                       My sister, as I mentioned on the phone … on the phone … on the show several times is an extremely successful real estate agent in Michigan. Her husband just recently left his corporate job of a lot of years and they formed a management company because he’s got an investor mentality and she has an agent mentality. She’s doing really well. They are taking that money and paying cash for a lot of houses in a small town in Michigan, and renting them out. I never talk to her, but I talked to her because it’s my birthday today. They say, like you and I have different personalities. We obviously approach stuff differently. They are actually doing that now too and it’s really cool.

Jill DeWit:                           That’s awesome.

Jack Butala:                       Yeah.

Jill DeWit:                           Good.

Jack Butala:                       So far, so good. He’s got the patience to deal with tenant and stuff, which is good.

Jill DeWit:                           That’s really good.

Jack Butala:                       It’s all good.

Jill DeWit:                           I love it.

Jack Butala:                       Well, you’ve done it again. You’ve wasted another 15 or 20 minutes listening to the Jack/Jill show. Join us tomorrow where we discuss how to use real estate inside information. The same thing that will put you in prison on Wall Street is actually encouraged in our real estate environment.

Jill DeWit:                           And legal.

Jack Butala:                       Yeah, and very legally.

Jill DeWit:                           Very legal. And we answer your questions should you have one. Post it on JackJill.com, our online community is there. Go find it.

Jack Butala:                       You are not alone in your real estate ambition. Freaking hilarious, Jill.

Jill DeWit:                           Thank you.

Jack Butala:                       You’re just a piece of work today.

Jill DeWit:                           Oh, no. Oh, no.

Jack Butala:                       It’s not bad.

Jill DeWit:                           Okay. What did I do? Good. You brought up some really good points. Basically, the thing is the good real estate agents out there that have been there for awhile, they are an awesome resource. They have the inside information. That’s how you want to use them.

You know what I’ve done too, by the way? In the land business, I’ve forged a lot of nice relationships because I have several real estate agents that still to this day will send me land deals that are too small for them. They like the people. They are like, “Look, I’m not gonna do this but I can tell you who will” and they send them our way. Then I just pass them on.

Jack Butala:                       That’s awesome.

Jill DeWit:                           That’s another nice thing too. Some good stuff comes out of that.

Jack Butala:                       Good.

Jill DeWit:                           Thank you. Share the fun and subscribe please on iTunes or wherever you’re listening. While you’re at it rate us there. We are Jack and Jill …

Jack Butala:                       … information …

Jill DeWit:                           … and inspiration …

Jack Butala:        … to buy undervalued property.

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