Assessed Value Pricing Strategies that Work
Jack Butala: Assessed Value Pricing Strategies that Work. Leave us your feedback for this podcast on iTunes and get the free ebook at landacademy.com, you don't even have to read it. Thanks for listening.
Jill DeWit: Jill DeWit with Jack Butala here.
Jack Butala: Hello today.
Jill DeWit: Welcome to our show. In today's episode, Jack and I talk about assessed value pricing strategies that work. This is really a show for Jack, so that's why I am taking the lead. This is going to be fun.
Jack Butala: I love when you MC.
Jill DeWit: Thank you very much.
Jack Butala: All I have to do is all the content. That's more fun for me.
Jill DeWit: That's just kind of. Just sit back and relax. It's good.
First, let's take a question posted by one of our members on the LandAcademy.com online community. It's free.
Jack Butala: Excellent. Jim asked this question, "How do you mitigate risk in an option deal? How do you mitigate risk in an option deal? Do you collect payment from your buyer before you execute the transaction with your seller? If not, if the buyer backs out are you stuck with the property? I believe that this is the correct approach, but I'm thinking if I collect from the buyer, and the seller for some reason refuses to complete the transaction I'm not at risk."
This is a good question. Here's what an option is. Can I answer this, Jill?
Jill DeWit: Mm-hmm (affirmative).
Jack Butala: There's a lot of things that ... It's called different things around the country, and depending on how old you are you may call it a dual escrow, or an option, or an option to purchase, or all kinds of stuff. They all add up to this, please retain this, this is the one thing you should get out of the show. An option is legal equitable title in a property. It doesn't mean you own it, it doesn't mean you paid for it, but you are now making decisions legally about this property, and you're deciding how much you can sell it for, buy it for, and the whole thing.
In lieu for getting that equitable title you usually give the buyer ... You agree with the seller that he's going to sell it, let's say, for $1,000 and that you are going to market it, and he agrees to that maybe you pay him money, maybe you exchange signatures, but you get equitable title.
Then you go market it. You lop it into all the other deals you're doing, and you sell it for $5,000. Then the question here Jim's asking is, "How do you close the deal?" That's the background on an option. What we call an option. I can tell you how we do it, but our members now do it a lot of different ways, too. Maybe you can tell us.
Jill DeWit: What do we do?
Jack Butala: How we close an option deal.
Jill DeWit: Yeah. I do exactly what Jim asked. Well, first thing I do before I collect any money, and I agreed on the sales price. You know, it's $5,000. Yep, I got it. I want to transfer the money. Great. I just want to double check my end real quick, and make sure everything's ready to go. I'll call you right back. I'm going to quickly hang up the phone, call my seller back and go, "Hi, Mr. Smith. Just make sure are we still good to go? I want to buy your property and I'm probably-"
Jack Butala: For $1,000.
Jill DeWit: "For $1,000. Exactly as agreed, and I'll transfer the money tomorrow." You know, whatever it is kind of thing, "And we'll get back to you, and make sure we're all good to go. Yep. We're good? Oh, I'm so excited. Yay. Okay, thank you. Goodbye."