The Reality of Pricing a Land Blind Offer Campaign (LA 1814)
The Reality of Pricing a Land Blind Offer Campaign (LA 1814)
Transcript:
Steven Jack Butala:
Steve and Jill here.
Jill K DeWit:
Good day.
Steven Jack Butala:
Welcome to the Land Academy Show, entertaining land investment talk. I’m Steven Jack Butala.
Jill K DeWit:
and I’m Jill DeWit, broadcasting from sunny southern California still.
Steven Jack Butala:
Today I talk about the reality of pricing a land blind offer campaign. Pricing, pricing, pricing.
Jill K DeWit:
Geez, God, I just can’t get away from it. Why are we always talking about pricing?
Steven Jack Butala:
Look, this is really timely for me.
Jill K DeWit:
Man.
Steven Jack Butala:
I feel compelled. Jill’s going to do her nails during this entire episode.
Jill K DeWit:
Totally.
Steven Jack Butala:
I feel compelled to happily report that I very successfully completed, not only completed about a 12,000-unit mailer very recently and got it to O2O on schedule, but as a result … Well, I’ll get into it in a second.
Jill K DeWit:
Yeah.
Steven Jack Butala:
But a lot of really, really cool little micro changes happened throughout that process that’s allowing me and the business partner that Jill and I have taken on to a bunch of these real estate deals …
Jill K DeWit:
Oh, this latest mailer?
Steven Jack Butala:
… To very effectively not just complete this mailer, but to really, we put a whole system in place to get to really never stop mailing out offers.
Jill K DeWit:
Yeah, we do that now and then, we shake it up. We’ll bring in other people, try to divide up the work. It doesn’t always go that way, but we sure try.
Steven Jack Butala:
What does that mean?
Jill K DeWit:
Oh, no, because we bring other people and sometimes I end up doing the work. And you’ll hear about it tomorrow in the case study. It’s not about you.
Steven Jack 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. And I just mentioned offers to owners, but I hope you know by now, Jill and I have a full-blown commercial printing company that’s completely dedicated to facilitating your offer campaigns. So we get it printed and in the mail, the entire deal start to finish. It’s called offers2owners.com. You simply need to go to support@offers2owners.com and take a look around and see if it’s for you. We send out between 700,000 and 1 million offers a month. So it’s really worked out as a product for our members and non-members too, people in the business.
Jill K DeWit:
Can I just add a little note on that?
Steven Jack Butala:
Sure.
Jill K DeWit:
Because you just recently did a new order for ourselves, and they’re constantly getting better. And it was kind of fun for you to show me, “Look at our company.”
Steven Jack Butala:
Yeah.
Jill K DeWit:
“This thing’s looking really good. Look how on if they are and how professional. I’m like, “This is awesome.”
Steven Jack Butala:
The person that runs that operation, his name’s Aaron Belt. We’ve been working with him for years now. And he’s, like we talked about yesterday, he’s got that personality type where we just all understand each other. He’s making constant improvements, to the point now where he doesn’t tell us any more.
Jill K DeWit:
We’re just surprised, we’re like, “Wow.”
Steven Jack Butala:
Or just checks with us. There’s a few parameters that we have about the number of promotions that we … But outside of that, boy, he just is an order machine.
Jill K DeWit:
Mm-hmm. Michael wrote, “Hi, friends. There are many folks here who unexpectedly had a large number of buyers bid on a recent purchase.” I wonder what that was. “When this occurs, do you actively focus on the same area and remail the same list but with much higher offer amounts, knowing that there are buyers actively looking in the area?” Buyers who bid on a recent purchase.
Steven Jack Butala:
Do you understand the question?
Jill K DeWit:
No. I don’t understand where he’s coming from.
Steven Jack Butala:
This is the Michael from the East Coast who you are very familiar with.
Jill K DeWit:
I know who that is.
Steven Jack Butala:
What happened is he bought a piece of property. They did everything right. I say they because he and his wife are a team. Got a broker, listed it for sale, and 10 people showed extreme amount of interest.
Jill K DeWit:
Oh.
Steven Jack Butala:
And started, it’s going to be sold for more than the asking price.
Jill K DeWit:
Oh, do I go back to the well?
Steven Jack Butala:
Yeah. So what he’s asking is, what do you exactly do? I know what I would do.
Jill K DeWit:
Okay. Okay, so now I know, all these people got excited about it. Fine. So do you go back to the same area and remail the same list but now with a higher offer, knowing what’s going to happen, that there’s buyers really looking in this area? And what offer amount below retail are you making, how long do you do this in the same area? Thanks. Now it makes total sense.
Steven Jack Butala:
Absolutely.
Jill K DeWit:
Yeah.
Steven Jack Butala:
I would literally take the exact same offer campaign, exact same mailer that you created to generate this kind of response. And what’s not important is, would I raise the price or lower the price? Because we all send out offers in the 25% to 35% range, or very low below retail. What’s important is that you change the number. And I’m going to talk about this in a minute in great detail. But for sake of argument, if you went in at 25% on the entire mail campaign, I would just change it to 27%. Because what happens is … Well, I’ll answer the question. That’s what I would do. I wouldn’t create a new mailer. I wouldn’t send out, if you sent an offer out for five to 10-acre properties, I wouldn’t send it out for 10 to 20.
I would immediately capitalize on this area that you found and send out the exact same offer campaign, change the number, send it to O2O like you always do. They’ll reprint out a 10,000-unit PDF, get it in the envelopes, and get it in the mail as fast as you can. Because what happens is, many, many, many people receive these offers. They talk to their spouses, they put it on the refrigerator, they don’t do anything about it. They don’t call, they don’t email. Now you’ve got their juices flowing about selling it. And so the next one, if it’s a different number, they’re going to look at it, they’re going to say, “Yeah, it’s the same person. Well, wow, the offer’s different. Oh my gosh, the prices are going down. Maybe we should do something about this. Oh my gosh, the prices are going up. Maybe we should do something about this.” All it is is triggering, it’s a call to action. It’s a very sophisticated, in my opinion, and intelligent call to action. And it works. Over and over and over again we hear multiple people in career path that approach it this way and it works.
Today’s topic, the reality of pricing a land blind offer campaign. This is why you’re listening. So in my opinion, the process of getting offers in the mail is very, very, very mechanical, if/then statement, up to the point of pricing. You do your trolling like we talk about in the second and third chapters of Land Academy 3.0. You find a place, a location. Let’s say it’s a county or a set of ZIP codes that pass the red, green, yellow test, very mechanical. You then download the data. You test the data before you download it, and download it as long as it passes all those tests. Again, very mechanical. You’ve got a data set you put in Excel. So you’re now starting to go down the path of actually creating a mailer. And then you take all that data and you scrub out the recipients.
There’s a few processes there where you scrub out things like the state, fill in the blank. People that you know are not, you don’t want to waste 50 cents on a stamp sending an offer to the state of California or the state of Tennessee or the state of North Dakota. You just don’t. So that’s very mechanical. And then you solve for that geographic area’s retail price per acre. So if you have a ZIP code, you want to capture all the property that’s for sale, all the land, parcels of land that are for sale and sold in that ZIP code. And there’s a process of scraping and going through it. Again, very, very mechanical, and you sell for it. So now you’re patting yourself on the back and you’re staring at this offer. It’s done except for pricing. That’s what this episode is about, because it’s changed for me a little bit. Every single time I do a mailer, I try to do it better.
Jill K DeWit:
What’s a trigger that makes you do a change?
Steven Jack Butala:
That’s the trigger that what?
Jill K DeWit:
No, is there some light bulb moment that you have that triggers doing a change every time versus just the response, obviously?
Steven Jack Butala:
Sure. So that’s a great question. And that’s exactly the path that I was going down here. The trigger for me is testing for reason. So what I do when I price a mailer, and this is the meat of the show, I’ll take an entire ZIP code, I’ll drop in some arbitrary number like 25%. Because I’ve already solved for retail price for acre. So I know where properties are being sold for, what they’re being listed for. So it’s no longer a dart board. I’m not guessing at all. I know that the retail price per acre in this area is $32,000. So now I arbitrarily just throw in a number, it’s usually 25%, and I look at, and it calculates based on the acreage. If they’re all one acre properties, then it’s that exact number. Whatever I said, $35,000.
Jill K DeWit:
Mm-hmm, $32,000.
Steven Jack Butala:
$32,000 or whatever I said just a second ago. And then I look up many of those examples as if the offer was sent back to us. Jill received it back in the mail, opened it, and the first thing she does is go on a parcel fact or neighbor scoop to see if it’s a good deal or not. She looks it up. And so that’s what I do. I do it at the end of the process while I’m pricing the mailer to see if we would actually jump up and down and say, “Oh my gosh, we’re going to buy this right now.” Because that’s the reaction that we want where we are in our career. We don’t wonder if we’re going to do the deal more than probably 30 seconds.
Jill K DeWit:
No, it’s really easy.
Steven Jack Butala:
And if you’re interested in getting all kinds of information about that, on how we do it, every single Thursday at 2:00 …
Jill K DeWit:
Pacific.
Steven Jack Butala:
… We have a webinar where we go through, Jill and I personally go through everyone’s deals that they submit. It’s called, “Would you do this deal?” And so we literally did go through the same process for us. And so what I found this time, and what’s different about this time than a lot of the mailers that I’ve done in the last two years is that we had significant staffing changes for Concierge Data. Concierge Data is a product that I developed so you can outsource your mailer. You can have us or somebody that works for us outsource your mailer. Well, that person made a career change, that did all of our data, and so I did it all myself this time.
And so I’m going through pricing and checking, testing for a reason. And I’m finding that there’s trends. Here’s one trend. In a given ZIP code there’s pockets of different pricing. And so I repriced it that way. I found out that, “Well, the northwestern part of the ZIP code, they need offers from me at about $2,200 an acre, and in the southeastern part of the ZIP code it’s a lot less. It’s a lot further out from town, and so it’s closer to $900 to $1,000 an acre,” which is very easy to capture by sorting for assessor’s parcel number or whatever makes sense to you. Assessor’s parcel number really worked for me.
In fact, I’m doing a demonstration right now, today, on our Thursday call because it’s so important. Does it take a lot longer? Heck yes. It took me a couple days to do this 12,000-unit mailer. Do I care? No, it was a blast. I actually loved doing it. And it came out, I always think about, when stuff comes out really well at the end, projects, I think about the work satisfaction that a good finish carpenter must have.
Jill K DeWit:
How many units were there?
Steven Jack Butala:
About 12,000.
Jill K DeWit:
How long did it take you?
Steven Jack Butala:
Probably two six-hour days.
Jill K DeWit:
How long should it take everybody else?
Steven Jack Butala:
Two days. If you know the program, watch it, review it, and if you keep up with the little tiny changes that go on.
Jill K DeWit:
That’s what we all want to know.
Steven Jack Butala:
Yeah.
Jill K DeWit:
We all want to know, “Okay, even if I did it wrong,” let’s just say it took me twice as long. I do four six-hour days. At least I got a handle on it.
Steven Jack Butala:
That’s a pretty large mailer.
Jill K DeWit:
Yeah.
Steven Jack Butala:
And so in the past what I’ve done, and it’s worked out incredibly well and it still works out, is I’m, “Oh man, 25% is not going to work. It doesn’t work for every single property in the ZIP code. I’m just going to offer 15% and Jill’s going to deal with it at the end.”
Jill K DeWit:
Yeah. If I’m really staring at something and I’m not sure if I should dial it up or dial it down, what would you recommend?
Steven Jack Butala:
Dial it down.
Jill K DeWit:
Thank you. Me too.
Steven Jack Butala:
What would you recommend?
Jill K DeWit:
I know, that’s the point here.
Steven Jack Butala:
Meaning offer less.
Jill K DeWit:
Yeah, offer less money. If you’re not sure, “Do I offer more money or less money on this one?” Go less. Because it’s always easy to add money. It’s harder to take it away when you’re talking to that seller on the phone. And that’s the whole point here. The end result and why everything, because we put so much thought and care and love into this, is because we’re trying to do our best to have a realistic offer price land in this person’s hands. And when they open that letter, that sparks them to want to pick up the phone, call me, and get a deal done.
Steven Jack Butala:
And have the property come back where we know we can sell it really quickly.
Jill K DeWit:
Yeah. And I don’t have to adjust.
Steven Jack Butala:
For a rational price.
Jill K DeWit:
Yeah. I just can go, “Yay, done. And let’s open escrow and move on.” That’s the goal.
Steven Jack Butala:
Because the truth of it is, I got done with this mailer and I’m looking at 12,000 units, and we’re looking for five deals to do. And so that’s very, very realistic. When you do the math on that, we’ll make $40,000 to $50,000 each.
Jill K DeWit:
These are different kinds of deals too. Yeah.
Steven Jack Butala:
But it’s what you choose. If you go through the program …
Jill K DeWit:
Probably going to get more of those.
Steven Jack Butala:
You’re going to choose to lock in your margins at $25,000 or $30,000 or lower. Either one’s fine. Or higher.
Jill K DeWit:
Right.
Steven Jack Butala:
But I can’t wait to see, I’ll obviously share the results as it comes in. But I felt good about it.
Jill K DeWit:
Yeah, it’s good. I’m so glad. Happy you could join us today. Five days a week you can find us here on the Land Academy Show.
Steven Jack Butala:
So now the episode is called, well, Jill’s going to do a land deal case study where she bought a property for $25,000 and sold it for about $51,000, but a year later. And this is by request.
Jill K DeWit:
People want to know this stuff. They want to hear step by step by step. So let me show you this piece of paper, by the way. Look at this page of notes. And then I have another backside of notes. I’m going to give you step by step by step, this case study. It’s not the best, not the worst. I don’t think it should have taken that long. This was a deal funding deal, so I wasn’t the one in charge, so wasn’t able to move it along as fast as I would have liked to do, but I’m going to give you all the details and I think you’ll really love it.
Steven Jack Butala:
Like it or not, it’s the reality of this transaction. You are not alone in your real estate ambition.
Jill K DeWit:
Yeah, sometimes things go slow. Sometimes things go too fast, and sometimes things inch along. And again, you’re going to get all the details tomorrow. It’s going to be with numbers and good stuff. I might tell you the state, that’s about it, but it’ll be good. Hey, by the way, and thank you for tuning in. Jack and I are really aware that not all of you have $200,000 lying around to fund your own deals like I’m going to talk about tomorrow. So that’s why we do Land Academy deal funding. So if you want to find out more, go to landinvestors.com. You’ll see a little menu item at the top, this is deal funding, click on that, and everything’s right there for you.
Steven Jack Butala:
We are Jack and Jill.
Jill K DeWit:
We are Jack and Jill.
Steven Jack Butala:
Information …
Jill K DeWit:
And inspiration …
Steven Jack Butala:
To buy undervalued property.
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