How to Price Your Offer Campaign (LA 818)
How to Price Your Offer Campaign (LA 818)
Transcript:
Steven Butala: Steve and Jill here.
Jill DeWit: Hello.
Steven Butala: Welcome to the Land Academy Show. Entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWit: I’m Jill DeWit, broadcasting from sunny Southern California.
Steven Butala: Today, Jill and I talk how to price your offer campaign. It’s, it’s-
Jill DeWit: We’re putting people out of business doing this show, by the way.
Steven Butala: Offer week. How are we? I want to hear this. I love the sound of that.
Jill DeWit: This is, we don’t really have any competitors, ’cause what we do is so different. But this is one of those topics that people would be like, “Don’t share this. You should be charging for this. Don’t give it away for free.”
Steven Butala: Yeah, so last week, at our live event last weekend, I was sharing pretty extensively what House Academy’s all about, which we’re going to launch in next January, this January. Several people came up to me and say, said, “What’s it going to take for you not to launch that at all? Can you just share it with us?
Jill DeWit: Yeah, that’s very true. My God.
Steven Butala: Multiple people.
Jill DeWit: That’s true.
Steven Butala: I couldn’t answer the question. I’m like, but my first thought was, “Why would I not want to share this hope with everybody?”
Jill DeWit: Yeah, but I understand.
Steven Butala: There’s 150 million properties out there. Literally. That’s a real number. You’re going to get your slice of the pie. Don’t worry.
Jill DeWit: Well, everybody in the room said, “I want to be the last Land Academy member. I’m going to be closing the door behind me.”
Steven Butala: Everybody thinks there’s competition, and there’s not.
Jill DeWit: I know. He’s so good. I love that. I should make a shirt, actually, that says that I’m the last Land Academy member. It’s too bad. You snooze, you lose. That’s good.
Steven Butala: Before we get into the topic, which is pricing, by the way, which is incredibly important, there’s nothing more important than pricing, actually I don’t think.
Jill DeWit: Oh, boy. Yeah, yeah.
Steven Butala: Let’s take a question posted by one of our members on the Land Investors dot com online community. It’s free.
Jill DeWit: Carl asks, “Can more than one land investor operate in the same county? I spent 10 hours yesterday analyzing sold vacant land properties in Texas, Colorado, and Florida for the past two years. Clearly, data tells me other land investors are operating, and doing well in certain counties. The big question is is there room for one more? I would assume the land owners are getting hammered with offers. Thoughts?”
Steven Butala: May I?
Jill DeWit: You want to go? Please.
Steven Butala: There’s a few big picture points here that I want to make. Number one, looking at sales comparisons, meaning sold property for rural, vacant land is a useless waste of time, and here’s why, if not for anything else. Comparison values come up because of this. Somebody transferred a property into someone else’s name. It doesn’t mean that they marketed it, and they sold it to a retail buyer, or, Jill and I has, Jill has companies, and I have companies. I sell her, I deed her property all the time for a dollar. That gets into your sales comparison values. You don’t want to, sales comps are very important for [inaudible 00:03:03] lots, urban property, or change of use property, like you’re changing farmland into a subdivision. Or, houses. But rural vacant land, it’s going to skew everything incorrectly. The only way to price, this is pricing, it’s kind of a part of the show here.
The only way to accurately price property, in my opinion, is to look at for-sale property that’s being retailed out, or wholesaled out, through one or all of the values on the Internet, like Land and Farm and Landwatch, and things like that. We’ll get into that here in the meat of the show, but I, there’s a step-by-step process that we provide in all of our education, and methodical, straight-line linear thinking process, and it does not involve, not for one second, sales comparisons. What was the question, I guess?
Jill DeWit: The second part is can more than one investor operate in the same county? Yeah.
Steven Butala: Oh my gosh, yes. Yeah, the answer is hell yes, and here’s why. There is a primary reason why, ’cause you would think about, and I, when I started, I was worried about competition. We’re not worried about competition at all.
Jill DeWit: Yeah. We talked about that.
Steven Butala: Every single month, people buy and sell, people sell land based on life events. Their parents die, they have to move, they’ve actually realized the piece of property that they bought 20 years, they’re just not going to do anything with it. They’re tired of paying the real estate taxes. Every month, a new set of life events comes up. If you’re an adult, I don’t need to tell you this. Stuff happens. Kids get F in classes.
Jill DeWit: Kids graduate.
Steven Butala: Wives get upset about stuff. Things change.
Jill DeWit: Yeah. Right.
Steven Butala: Jobs change. You have to move across the country. 20% of the people in this country move every year.
Jill DeWit: I know. Is that crazy?
Steven Butala: That’s what cracks me up.
Jill DeWit: I know.
Steven Butala: In the next month, it’s all going to happen again. It’s not, if they get your letter that month, and you catch them at the right time, and one of these life events is happening, they’re going to sign it, and send it back.
Jill DeWit: Right, we talked about that.
Steven Butala: Maybe they got 14 letters before this.
Jill DeWit: Exactly. They threw them all away. That may have softened them up, or whatever it is. There’s a life event, and now, they’re interested. But more often than not, we are, we have taught our members how to not, how to do this for themselves, and how to think, and how to pick a county on their own. It’s not like there’s a secret county list. That cracks me up. No such thing. Our members are out there actually not tripping on each other, and they are picking counties, and sending off. Our scenario is, though, we had some stuff that we hadn’t even heard, there was a county that we did a deal review, where it was a We Should Do This Deal segment of our last weekend, and it was it was a county that you and I had never even heard of that this person presented. We were like, ‘This is a great property.”
Steven Butala: Exactly. At the end of our live events and all of our live events, now, in the future, we did something called We Should Do This Deal. Everybody that came there handed up a state, county, and APN, and said-
Jill DeWit: Lock it up.
Steven Butala: “This is a deal that I’m thinking about doing. Would you guys in the room do this deal?” We answered, and everybody else answered. The deals that were coming up were not counties that Jill and I would ever had considered mailing.
Jill DeWit: It’s awesome.
Steven Butala: Her point is get creative. Don’t just look at the same old stuff over and over again. ‘Cause chances are, you’ll be pretty successful with it anyway, but why?
Jill DeWit: Exactly. Exactly.
Steven Butala: Why not just make it easy on yourself. Today’s topic, how to price your offer campaign. This is the meat of the show.
Jill DeWit: You want me to start?
Steven Butala: Yeah, sure. That would be great.
Jill DeWit: Okay. The first thing you do is pick several counties, not just one. Pick several, and set your acquisition criteria. Comments from Steven?
Steven Butala: You set your, you pick those counties, and that’s not today’s topic, but picking counties, there’s an art to it, but I’ll just let you in on how the pros do it. Lots and lots of horsing around, research, on the Internet. Specifically, on realtor.com, and you look at how much land is for sale in each county, or each zip code, or an MSA, and there’s not an A to B to C way to doing it. You just have to apply a lot of logic, and a lot of test of reason, and look at properties that are there that are available. Look at their [inaudible 00:07:17] market. Check it across checkrealtor.com with Land and Farm and Landwatch, and wherever else that you think makes sense to you for this type of property that you’re thinking about purchasing or pricing. I will tell you, there’s a dramatic difference in these two processes for rural, vacant land and [inaudible 00:07:37] lots. [inaudible 00:07:37] lots are the tiny little properties in urban communities where there’s two houses up, and a lot right between it. That’s an [inaudible 00:07:43].
Jill DeWit: Your thing just [inaudible 00:07:46] me going into the next one, ’cause it rolls right into it. Okay. You’re [inaudible 00:07:49], some of the things that you-
Steven Butala: Sure. Thank you for keeping me on track.
Jill DeWit: You’re welcome. That’s why I’m here. Your part of the picking the counties follows into the second part of pricing, which is check for sale property pricing, test for reason, and work backwards to your offer price, which you should come up with a number like $192 per acre. Do you want to explain a little more about that?
Steven Butala: Correct. Yeah, sure. With rural, vacant land, your research, they’re for-sale for property. You want to take the bottom 10 or 20% of the properties that are listed in an area that you’re thinking about. Let’s say it’s Mojave County, Arizona. I always pick on Mojave County, and it cracks me up how many people actually just send mail to Mohave County, ’cause I talk about it all the time. That’s not what I mean. In fact, don’t do that. I’m specifically saying please don’t send it to Mohave County.
Jill DeWit: Please don’t do Mojave.
Steven Butala: Not ’cause we sit there and make money all day, ’cause we don’t. We haven’t done a Mojave County tour in probably years. But too many people take this Mojave County thing literally, and they’re disappointed. Mojave County, Arizona, let’s say you want to buy or sell, you want to send a mailer out for five acre properties. You go look at what’s for sale on realtor.com.
Make sure there’s enough property being bought and sold, and RedFin, or all the other places. Landwatch, and Land and Farm. You see that the bottom, there’s 150, 200 properties that are for sale. You take the bottom echelon of those properties, the bottom, let’s say 20%, and you average it out, and let’s say they’re selling for $1,500. You want to price your mailer at about 33% of that. You want to offer maybe $500, $600, $700 for that, and then, you want to double your money when you go to sell it. If you’re in it for $500, you double it for $1,000 and sell it. Everybody else is selling it for $1,500. I am grossly oversimplifying how to price a mailer.
Jill DeWit: Thank you.
Steven Butala: But this is the scope of this venue right now.
Jill DeWit: Yeah, and that’s where you, what happens. You picture, you use that data to come up with a price, and as you’re doing this, too, one county will typically rise to the top, and be-
Steven Butala: Yeah, it’ll make sense.
Jill DeWit: You’ll see it’s the easiest one, and the best one to start with. It’s got a good mix of for-sale property. Not too many availables, so you know that the market’s not already flooded with this many, like not going to do that one, not going to do that one.
Steven Butala: Well said.
Jill DeWit: Here’s one that has some for sale, but not a ton, so if I roll some in there, I’ll kill it. That’s great. Then, you’ve used, based on Steven’s steps and process here, how to take that bottom 20%, come up with an average of what your offer price is going to be, so maybe it’s, maybe you’re talking in acres. Maybe it’s $500 an acre, ’cause you’re doing it for an acre. You’re going to sell it for $1,000. Everybody else is selling at $1,500 an acre. Awesome.
Then, as you have that number, $500 an acre now to price your mailer, that’s what this is about, how to price, you’re going to come up with a formula, and this is Steven’s going to give you a little more, whatever you want to share, about how to make a formula on a spreadsheet so you can quickly run down your list. You’re not going to sit and price one, price another, price. You’re not going to type them in individually. That’s ridiculous. It’s just a formula. It will go all the way down your spreadsheet. Price them, done, ready to be mailed.
Steven Butala: Yeah. Here’s the formula. In reality, you don’t pull data where it’s just five acres. Five point zero zero. It’s always 4.8731, 4.92, and on and on and on, so you want to take advantage of that, and make each offer unique. You run a real simple equation that says if you’ve determined that $100 an acre, $150 an acre, for five acres is how you generally want to price this.
You multiply that $150 an acre times the acreage amount, five acres, six acres, three acres, four acres, and run it all the way down the spreadsheet, so now, every single line item, which by the way is every line item is an actual offer, go back and listen to yesterday’s show if you want to, where we talk about that, it’s a unique number, specific to that property. Take it out to the cents. $621.32, and every single one should be a strange number like that. Not 500.00.
Here’s why. When people get an offer for a very strange number, it makes them wonder, “How the heck did they come up with that number? Well, I’m going to call and find out.” Oh, [inaudible 00:12:37], and then, they get Jill on the other end of the line, and she dazzles them, and they fall in love with her, and pretty soon, they’re selling their property to her. You want to drive that phone traffic and the writing, signing the offer traffic submission. That’s basically how you price a rural, vacant land offer.
In 60 seconds or less, here’s how you price an [inaudible 00:12:57] mailer. It’s very, very simple. It’s much easier than rural, vacant land. You take a look at an average number for what prices houses are sold in that community, and I mean that community zip code, not the county. The zip code may be even smaller than the zip code census track. You multiply it by 25%, because that’s what a builder pays for a piece of land, and then you cut that in half. You want to go in at about 10% on [inaudible 00:13:52] lots, urban lots that you think are buildable. I know that’s just like, “Oh, come on, Steve. That’s too simple.”
Jill DeWit: That’s too low.
Steven Butala: Yeah, I don’t get it. It’s too low. It’s too simple. You’re not really telling us anything. What the hell? I’m not listening to your podcast anymore.
Jill DeWit: That’s it.
Steven Butala: We only have 15 minutes for the show. If you go and listen to our other contents on YouTube and stuff, I’m not driving our stuff. If you don’t want to, don’t. But I’m just saying, I-
Jill DeWit: Well, you just told. They don’t have to do anything now. I know.
Steven Butala: If I, if I had just heard somebody say that, I’d be like, “Don’t tease me. I really want to know how to do it. Show me. Show me on YouTube how to do it.” Go look at our other stuff, and listen to it and watch it. It’s in there. Is that it?
Jill DeWit: Yeah. That’s it. You did awesome.
Steven Butala: Well, you’ve done it again. You wasted, did I waste it? Wasted another 15, probably maybe wasted another 15 minutes listening to the Land Academy show. Join us next time when we talk about saving money on postage and data.
Jill DeWit: We answer your questions posted on our online community, thelandinvestors.com. It’s free.
Steven Butala: You are not alone in your real estate ambition. I hate leaving them hanging like that.
Jill DeWit: How did you leave them hanging? You just did it. You threw in the whole [inaudible 00:14:39]. I wasn’t planning on that.
Steven Butala: I just want to explain it all. Show everybody how to do it. That’s my first choice.
Jill DeWit: I know. That’s not this venue. We’re doing our best. We could do another podcast. It would be oh my gosh, it wouldn’t be a podcast.
Steven Butala: We could have a seven-hour podcast.
Jill DeWit: That’s right, and could you imagine?
Steven Butala: Somebody actually came to me, at this last event, they walked up to me and said, “Your podcast is too short.” I actually, I sat down with him. I said, “You know what?” We go back and forth on that. I think they’re too short too, but we can’t, Jill and I-
Jill DeWit: But there’s one every day. We could do longer ones, but not every day.
Steven Butala: Jill and I have other stuff to do, number one, and number two, shorter’s always better, for a social media standpoint, and what I told this person is you’ve got to, what I just said on the air, go back into YouTube, or back into our other podcasts, and really set yourself up to learn, ’cause there’s always, you can always listen to 10 episodes. 10 short episodes are always better than one long one. Don’t you?
Jill DeWit: I do. I agree.
Steven Butala: But I listened to that person.
Jill DeWit: I agree.
Steven Butala: They said they listen to another show. It’s an hour and a half long.
Jill DeWit: Oh, wow. I got it.
Steven Butala: It’s about real estate investing, not land and stuff.
Jill DeWit: That would be hard to do every day. Thank you, though. I appreciate the feedback, that’s awesome.
Steven Butala: [crosstalk 00:15:56]. Right. Right.
Jill DeWit: Share [inaudible 00:16:01] by subscribing on iTunes and YouTube and while you’re at, please rate us there.
Steven Butala: We are Steve and Jill.
Jill DeWit: Information? Nice.
Steven Butala: What happened? Let’s start again. Three two, we are Steve and Jill.
Jill DeWit: We are Steve and Jill.
Steven Butala: Information-
Jill DeWit: And inspiration-
Steven Butala: To buy undervalued property. I’ll tell you what. I’m the one that usually makes the mistakes.
Jill DeWit: Lost it. I know. It’s like, that’s funny.
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