How to Get Past Your First Deal
Jack Butala: How to Get Past Your First Deal. Every Single month we give away a property for free. It's super simple to qualify. Two simple steps. Leave us your feedback for this podcast on iTunes and number two, get the free ebook at landacademy.com, you don't even have to read it. Thanks for listening.
Jack Butala: Jack Butala with Jill DeWit.
Jill DeWit: Hi!
Jack Butala: Welcome to our show! In this episode, Jill and I talk about how to get past your first real estate deal. Great show today, Jill! Let's take a question before we get into it seriously, posted by one of our members on successplant.com, our free online community.
Jill DeWit: Cool. This was from Aaron. Aaron wrote and asked, "I've come across a relatively expensive property purchase in my county." Not his county, the one he's working on right now. "They're asking $15,000. I'm always hesitant to accept the first offer. Why is that what they're selling for? The comps support this price very well." I don't know about why he's accepting an offer. I'm a little confused here. "Before investing in this amount of capital, I want to ensure that I'm not missing the boat here, so I'd like to option the property. We could list an endless amount of reasons as to why this makes sense for me, however, what's in it for the seller? How have you gone about effectively pitching the idea of an option contract? What's the value proposition for them? Before I go back to the seller and offer an option, I'd like to be armed with sufficient rationales to why they should do it."
Jack Butala: This is an awesome question, Aaron. This is master's degree/PhD level question, and I don't know how far you are into this, but boy, you're going to go far. It has to work for everybody. Most people, a lot of people don't understand that. You're trying to make it work for the person that you're buying it from. This is how I do it with options. You obviously sent them a letter, whoever this person is, you sent an offer for let's say, I'm going to guess $4,000. They say, "Oh, no, no, no. I want 15." You say, "Okay. Then I'm going to give you two choices. I will pay you $4,000 now and we can be done with the whole thing, depending on your motivation. Or I've looked into it, and $15,000 might not be so unrealistic, but that's not my acquisition criteria, so I will option it for $15,000, and when I find a buyer, and that will probably be relatively soon based on my research, I will purchase it for 15,000 bucks. It's going to take a little bit longer, and it'll be a little bit more complicated, but not really."
That is what's in it for the seller. Obviously the price matters to them because the methodology that Jill and I use when we send all these offers out is to smoke out the people where price just doesn't matter. They just want to get rid of it. They want to clean out their attic. They want to have a garage sale, and they don't care if they make $4,000 or 400 or four dollars. They just want the stuff gone. This is not one of those people, and that's when it's appropriate to use an option. I hope that answers the question, Jill. Is that pretty clear?
Jill DeWit: I focus on the time.
Jack Butala: Jill is the option queen by the way. She'll option everything.
Jill DeWit: Yeah, here's what I'll do, and this comes up often. This exact situation, Aaron, is when I would do it. Or just not meeting on the price, but it is a good property, and maybe I can get $19,000 for it, right? It's not crazy. Here's what I'm going to do. I'm going to say, "Here's the deal. I'll give you $4,000 tomorrow, or really in two days. I'll do all the recording. I'll handle all this. You can have a check right now, or I will stress, I will go try to sell it and get that price. This may take some time. Give me 90 days, and I'll see what I can do. If it doesn't sell in 90 days, we'll talk," kind of thing. Then I send him a one-page agreement. They agree on it. Blah,