Do Low Offers Really Work (LA 1103)
Do Low Offers Really Work (LA 1103)
Transcript:
Steven Butala: Steve and Jill here.
Jill DeWit: Hi.
Steven Butala: Welcome to the Land Academy show, entertaining land investment talk. I’m Steven Jack Butala.
Jill DeWit: And I’m Jill DeWit, broadcasting from sunny Southern California.
Steven Butala: Today, Jill and I talk about… do low offers really work?
Jill DeWit: Isn’t it funny? Oh my god, it’s 1,103, that’s hilarious.
Steven Butala: Yeah.
Jill DeWit: So we’re finally getting to this. No, I’m just kidding. Could you imagine?
Steven Butala: [crosstalk 00:00:23]
Jill DeWit: Show 1,103. So, I know up to 1,102, we really didn’t quite give you the whole secret, but here we are now on show 1,103. We’re going to tell you and we’re going to talk about these low offers.
Steven Butala: So between episode one and episode 1102, this whole thing has just been kind of a tease.
Jill DeWit: Yep. Skipping along the top.
Steven Butala: This is the meat of the whole podcast.
Jill DeWit: Do they really work well? Well, we’ll talk about that.
Steven Butala: 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: My watch here was just telling me that the window washer’s here. It’s hilarious.
Steven Butala: Jill loves technology. This is one of the greatest things about the relationship that I have with Jill.
Jill DeWit: That’s true.
Steven Butala: She’s a total tech head. So am I. Our kids all are. We spend more money and time on electronics.
Jill DeWit: It’s [inaudible 00:01:19].
Steven Butala: We’re not like the people who have, not audiophiles, like have to have the new stuff or the most recent technology. We just love… there’s a lot of technology in our lives. It hit me like a ton of bricks a year ago, like maybe there’s… because I was looking at our what we spend money and our financial statements. I’m like, wow. It’s all electronics.
Jill DeWit: There’s a lot on there. Well, remember when we first launched Land Academy and we had I don’t know how many people joined. It was overnight, four times what we thought was going to join. And it was like, what just happened? So, the first thing we do is go buy electronics. We’re like, great, now we can afford to get the computers that we need. Some of the equipment that we need. Hey, some better monitors.
Steven Butala: Some microphones.
Jill DeWit: It was the funniest thing that we didn’t go like… we didn’t take a cruise. We did not look at our vehicles. We didn’t look at our clothing or jewelry or anything like that.
Steven Butala: You’re really right.
Jill DeWit: Isn’t that funny? We went straight to Fry’s Electronics.
Steven Butala: The first thing we did is buy computers that were from this century.
Jill DeWit: Exactly.
Steven Butala: Because buying and selling land. When you buy and sell land, you can do that on a $200 Dell computer from wherever.
Jill DeWit: Yeah. We were doing that and then you don’t need a fancy monitor. You don’t need a fancy whatever. Sort of like, finally, I can get some stuff. Now, honestly our team, we had this happen recently. Not to go off topic a little bit, but.
Steven Butala: It’s too late.
Jill DeWit: I know. Our team, a lot of them are used to just working on laptops and they’ve never had multiple monitors. We’re like, what the heck? And they’re dealing with a little monitor. I’m like, imagine how efficient you could be. You could have three open at the same time and you have a decent mouse and a real keyboard and really get some stuff done. They’re like, oh. Now they get it.
Steven Butala: Yeah, well, once you get a couple of monitors like that, it’s like, wow, man. I had no idea the world could be like this.
Jill DeWit: And I think a lot of the world is like that cause that’s one of the very first things that people walk up when they walk into your office or my office. They go, oh look at all those monitors. I’m like, yeah, what are you using?
Steven Butala: A really long time ago, I had a continuing education, a mandatory continuing education class that I had to take for the company at the big company that was working for at the time. And they said it was all productivity. And it was right when cell phones came out and all these tools are really new. It was really a great class to go to. Well, maybe for me, I just justified buying new toys to be more productive, but.
Jill DeWit: Was that what the class was about?
Steven Butala: It was about productivity at work. That was the class.
Jill DeWit: What was it about?
Steven Butala: It’s we’re talking about. You need a cell phone. You need a cell phone where you can get your email. You need this stuff that’s really, truly, it’s not just convenience, it just makes you more productive.
Jill DeWit: Right. It’s true.
Steven Butala: What’s the productivity on two monitors with a keyboard versus just a notebook or laptop.
Jill DeWit: One monitor on a laptop.
Steven Butala: Yeah. Or just a laptop with no keyboard.
Jill DeWit: Exactly.
Steven Butala: Or what’s the productivity on voice activated Cortana or Siri?
Jill DeWit: What’s the productivity dealing with the tablet?
Steven Butala: Yeah.
Jill DeWit: Could you imagine how slow life would be if that’s all you had?
Steven Butala: So productivity really, really matters.
Jill DeWit: It does.
Steven Butala: And what I think the whole world needs shortcuts. That’s one of the reasons I can blow through these spreadsheets really quickly and all that because I learned, I’m dating myself, but I learned on computers before there was a mouse. So, the only way to get through it was these keyboard shortcuts. So I see a lot of really young people in our office, they might as well not have a keyboard at all. They just mouse their way through everything. It’s a lot slower.
Jill DeWit: I know. I’m actually teaching right now someone on my team about control C, control V. She’s not learning, though, she mouses. She highlights it and goes to open the thing up.
Steven Butala: Right.
Jill DeWit: Does cut. I’m like, oh, let me help you here.
Steven Butala: So honestly, I wonder if we should send our crew.
Jill DeWit: We should. Shortcut class.
Steven Butala: Windows shortcuts I think what it’s called.
Jill DeWit: Exactly. You know what? It wouldn’t be bad for, I’ll brush up on it, too. I think it’s cool.
Steven Butala: I’ll take it too. I’ll take it with everybody.
Jill DeWit: You know what? We’re going to put that on my list here. MS shortcut class. We’re all doing it.
Steven Butala: We’re all doing it.
Jill DeWit: Here it comes. All right. All the cool kids are doing it.
Steven Butala: That was Jill’s mom voice. That’s it, we’re all doing it. Stand up, stand in line.
Jill DeWit: That’s true.
Steven Butala: Me included.
Jill DeWit: Yep. All right. Back to the question. Okay.
Jill DeWit: Colin asks, I read various angles on this exact subject, but you guys are cranking out tens of thousands of mailers. What is the successful approach to addressing single owners of multiple properties? Some people just send one letter and then put in the offer letter. We’d like to purchase any properties you own. Others just send the single owner multiple letters. What’s the best? The…
Steven Butala: Impetus.
Jill DeWit: Impetus for my question is that I personally like to make offers on each of the properties. Might as well because we already have the data and pricing neutral properties, but of course when the owner gets five or six or more of the same letter, credibility may decrease beyond repair. Any novel approaches here? And thanks for any feedback.
Jill DeWit: So, here are my thoughts. Number one. Yeah, the data’s not expensive. It’s 10 cents a record. You have it. You did the work. I get it. But sending out at 40, 50 cents a unit to the mail, that’s going to add up. And I don’t know, I don’t need to get six, 10 offers. For what we usually do, we don’t change the wording. We usually send them, don’t we send them one and just scrub out the duplicates? You’re looking?
Steven Butala: That’s what we do now, yeah. Is that the right way? No.
Jill DeWit: And they get the point. At least, I’ve never had it not work because… And how I address it is, and we share this with all our… I know it’s on the landinvestors.com online community on the left. There’s an inbound caller checklist that I made. And on the checklist printed out, it says, do you have anything else available that you want to sell? When they call in and ask about that one, if they don’t prompt us, we’re going to ask them.
Steven Butala: If they’re a reseller and you caught them at the right time and they have a lot of properties, they’re going to offer that up pretty quickly and respond to that one letter.
Jill DeWit: Exactly.
Steven Butala: Is there any difference between sending one letter or nine letters to the same owner? No. I think it costs a little bit more, but in the end, it’s worth it. Because once you hit one of those multiunit deals, if you’re in this business, you know how profitable multiunit deals are. We are deal funding a multiunit deal that came about from one letter, exactly how you’re describing. And it wasn’t a multiunit mailer. It was one letter and we’re going to net 1.2 on this. All of us. So 1.2 million.
Jill DeWit: Yielded 80-something properties.
Steven Butala: Yeah. Exactly. What I used to do, and this is the right way to do it, but I didn’t feel like I could justify how much time it took, is I would take all the duplicates in Excel, separate them, put them into a macro that I wrote at Microsoft Access and generate an actual offer for all those duplicate letters that would add up what you were willing to offer.
Steven Butala: And so instead of getting an offer for, hey John Smith, I’d love to buy your property for $1,200, it was, hey John Smith, take a look at [inaudible 00:08:50]. we have identified that you own all these properties and we’d like to pay $42,000 for them.
Jill DeWit: Right.
Steven Butala: Was that super effective? Yeah. Is it more effective than the way we do it now? Not sure because we don’t really know, but it didn’t justify it with the amount of time that takes hours to implement. So in the end, after Joe and I spoke about… this is a good question. This is a very, very intelligent question.
Jill DeWit: It is.
Steven Butala: We do it the way we do it now. We work it out on the other end of the phone line and that gives Jill a chance to be Jill on the phone versus just a piece of mail.
Jill DeWit: Exactly.
Steven Butala: That’s really in the end why we decided to do it this way and it’s been working great.
Jill DeWit: The right sellers usually, they want to call you and have a conversation anyway. They want to know who you are, what’s going on, how you operate.
Steven Butala: Most of the people I know who have a lot of rural land accumulated, they’d been buying it for a while, especially if they’re local. And so they’re kind of in the land business, probably not full time and they may be ready to get rid of it if they’re calling you back. So they’ll offer it up.
Jill DeWit: Exactly.
Steven Butala: Those multiunit deals, I can’t say enough good things about them.
Jill DeWit: Oh, yeah.
Steven Butala: Today’s topic, do low offers really work? This is the meat of the show. This is a crack up topic for us.
Jill DeWit: I know.
Steven Butala: So, we just had a live event and I stood up and I said, this is one of the first sentences I said, “is there anybody in this room who doesn’t truly believe in their soul that sending blind offers to owners below the retail value of their property, regardless of type, that it doesn’t really work?”
Steven Butala: And everybody laughed.
Jill DeWit: Right.
Steven Butala: It was a mission accomplished for me from a speech standpoint and everybody said, yeah, I mean, come on. We’re all at this point because we know it works and we’ve got personal transaction history. So yeah, it works. It’s really interesting I asked that question because when Jill and I started out. Started with Land Academy, let’s say. We’ve been buying and selling property forever, but we started Land Academy in 2015, I think. And that was our biggest challenge. Everybody thought that there was something fatally wrong, innately wrong with sending offers to owners for below the value.
Jill DeWit: I think a lot of them didn’t believe it worked.
Steven Butala: That’s what I just said.
Jill DeWit: Oh, I thought you meant innately wrong philosophy wise. Like, that it’s a wrong thing to do.
Steven Butala: Yeah. Well, I guess we’re saying the same thing.
Jill DeWit: So, okay, yeah. But, and it’s so funny. I know we’re all over it. there’s so many people and so much history and so much of what this is all about. This topic to me is about not only does it work. People offer up their properties with love. They are so happy to get something for it because they thought they were going to get nothing for it. They are thrilled. I mean, and what breaks my heart lately is, and I have to put together another list again, to get it out to our people, but there’s deals that people just say take it, I don’t want it.
Steven Butala: Yeah.
Jill DeWit: It’s like shocks. I want somebody to have that deal, but it’s too small for me, obviously. But they don’t want to even think about it and they literally give properties away. And those situations especially, it’s like, it takes the same amount of staff and the time to do a free property as it does a $10,000 property. So why do I want to do that? You know, kind of thing.
Steven Butala: Every time we do these shows or these topics, these episodes, I have 14 stories of, over the years, just with people who have given us property, just cause they don’t want to deal with it anymore.
Jill DeWit: Exactly.
Steven Butala: You’ve got a situation like that right now. It’s the same $80+ plus property deal. They’re not giving it to us, but they might as well be. It’s that cheap.
Jill DeWit: There’s always a story. There’s always a story.
Steven Butala: When we all get together for these live events, everybody’s got stories, now there’s a million stories about people just giving property away because they just don’t want to deal with it any longer.
Jill DeWit: Right.
Steven Butala: Is that going to happen on your first mailer? The first person’s, you know, someone’s going to call you and say, yeah, I just want to give this to you for free. Absolutely not, but.
Jill DeWit: You never know.
Steven Butala: The more mail you send out, the more chances of it happening. It happens like once a year to us.
Jill DeWit: Well that’s not even the point here. I don’t want you to look at it like that. I want you just to let everybody know that it does really work. Check. You’re not a bad person. Check. Are you really helping people out? Yeah. Check. And if you’re not, then offer more or just pass. And there’s nothing wrong with telling people, you know, hey, this is my best offer. This is how I am. This is how I work. I’m a wholesaler. This is my gig. It’s up to them to say yes or no. It has no reflection on you at all. I think some people worry about that and it’s not at all. And if you ask what’s so funny, this is how I roll and my team rolls. We usually try to figure out what the story is.
Jill DeWit: I know we had one the other day because we’re buying it from a teacher’s association and the whole story behind it is, donated property. They sell and the money goes to help teachers with scholarships to improve their degrees, maybe to get a masters degree so they make more money, things like that. It’s for teacher scholarships. So it’s all really good and they’re not going to sit there and go, oh no, I only need $8,000, I’m not taking three or whatever it is. They’re not going to do that and they’re happy with it.
Steven Butala: It’s a win-win for everybody.
Jill DeWit: Mm-hmm (affirmative). It really is.
Steven Butala: When a church calls us back on a mailer, I get excited because I know the deal is going to happen. I know there’s a little meeting process that they have to go through, like the board has to meet, but they end up being very, very happy with us getting a few thousand dollars. We end up getting usually a really good piece of property. So nonprofits, don’t scrub nonprofits out of your list is my point.
Jill DeWit: It’s interesting too because they are the ones that absolutely do not know what to do with the property.
Steven Butala: Yeah.
Jill DeWit: If you weren’t making them an offer, it would sit there forever. They don’t know what to do and they don’t know how to sell it and it’s not high on their list. And for you to call them and not only offer to buy the property, but you’re going to do the whole transaction 100%, it’s like this is the greatest thing ever.
Jill DeWit: I don’t have to do anything. Yep. Just sit tight. Our notary’s coming on Tuesday.
Steven Butala: Right.
Jill DeWit: With a check. No brainer. No brainer. And that’s part of the whole thing too is that you have to remember when you’re talking to these sellers, explain the deal. That offer to you might seem low, but I want you to think about this. There’s no commissions coming out of it that you’re going to pay. We’re not splitting the escrow fees or recording fees or anything like that. I’m going to pay. You have to [inaudible 00:15:31] a notary, all that stuff. I’m going to pay.
Jill DeWit: So that amount, sometimes they’d look at it and they, and I think when people call in, they’re like, oh, they think that it’s going to be less, but it’s not. Just explain that that’s net to you. I’m paying for all this stuff and that’s partially why it’s priced this way. And then the seller will go, oh, now I see. And then they’ll really meet me at Denny’s where I always have coffee on Monday with the guys. Yep. They will come to Denny’s. We’ll have coffee with the guys. Done.
Steven Butala: So do low offers really work? That’s great, Steve. Why do I hear this stuff about people having a failed mailer or if it works so well, then why is it only every 1000 or 1200 units you send out, you get a deal?
Steven Butala: Well, that’s a very good question. It all comes back to two things. Pricing offers correctly. I can’t emphasize that enough. This is the number one question we get. The number one question we get is does this work? No. The number one question is am I pricing this right?
Jill DeWit: Correct.
Steven Butala: And then the other second thing that I see where mailers don’t work as well as they should. They all work, some of them, the yield is different, is really poorly choosing property owners to send offers to. Here’s a widely exaggerated example.
Steven Butala: If you sent an offer to every opposite building owner in Manhattan in New York for $500 to buy their building, that’s a waste of time. It’s a waste of your time. It’s a waste of their time. It’s just a waste. You’re wasting money on mail and all of it. So, that’s a very extreme example.
Steven Butala: But I can tell you from experience, and I pick on Michigan sometimes, because that’s where I’m from. You can send every property owner an offer in the Northern part of Michigan for $100 or $200 an acre, you’re going to get screamed at for a month. And I just know because the pricing’s so wrong, and I know from experience that for whatever reason, a property in Northern Michigan, not the UP, but the Northern part of the lower peninsula, it just doesn’t trade that much. The people just tend to keep property there.
Steven Butala: That’s great, Steve, how do I know that? Well , number one, I have 25 years of experience doing this and number two, there’s ways through the equity planner in our program that you can smoke the days on market and smoke this stuff all out to find out statistically where properties cycles through quickly.
Steven Butala: So, there’s answers to all this. Very technical answers to all this and it really does work. You just have to be real smart about it.
Jill DeWit: I have nothing to add.
Steven Butala: Join us next time for the episode called “why passive income is not passive income at all”.
Jill DeWit: And we answer your questions posted on our online community found at landinvestors.com. It is free.
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