Thoughts from a Pro Land Acquisition Manager (CFFL 513)
Transcript:
Jack Butala: Jack Butala with Jill DeWit.
Jill Dewit: Hi.
Jack Butala: Welcome to our show today. In this episode, Jill and I talk about thoughts from a professional land acquisition manager. Before we get into it though, let's take a question posted by one of our members on the LandInvestors.com online community. It's free.
Jill Dewit: Cool. All right. So Dave asks, this is a long one. Let me preface this here. During last week's member call, someone brought up a great point. Using the pricing methodology that Jack teaches in the course, we find ourselves many times basing our prices on the lowest deal that just happens to be posted by a Land Academy member.
Jack Butala: This is a real good point.
Jill Dewit: This is true.
Jack Butala: We are now creating our own comparison value machine.
Jill Dewit: Exactly.
Jack Butala: Creating a monster.
Jill Dewit: We need to look at this a little differently, by the way, because of this. We need to know where they came from, so when we do. By doing this, we are driving each other's prices down.
Jack Butala: That's right.
Jill Dewit: Pretty soon buying-
Jack Butala: It'll be zero.
Jill Dewit: Right? Exactly. Pretty soon buying will be tough because we need to keep lowering our acquisition criteria, driving the prices downward. I have recently been doing several deals in a county in Colorado. At the time I prepared my list and priced my offers, there were no ads, and I know ads that I recognized as Land Academy members. However, I still brought pretty well, and when I went to advertise there were two Land Academy members already advertising property. One around $15,000, which I thought was really too high anyway since I based my pricing off of a low price of $12,000. The other was at $12,900. Then I hit the market with two parcels at $7,900, one at $8,900, and two more at $9,000, and one at $10,500. I'm sure that these two were quite happy with me. Wink, wink, right? I see that one of them has their property under contract-
Jack Butala: Contract.
Jill Dewit: -at $9,900 down from $15,000. I hope they still make a decent profit. I have sold three, and have three left, and did a two times 2.5 profit. I'm okay with that. Oh, so two to two and a half times my profit. Got it.
Jack Butala: Doubled his money.
Jill Dewit: Yeah, exactly. So I'm okay with that. You think? It's so funny. But one cannot go down from there. Really? Okay, anyway. What is the answer? Shall we possibly try to collaborate? I.e. if we see a Land Academy member with a 40,000-acre property at $10,000 and they are the cheapest, our properties are comparable of course let's just say, that we try not to price our property below them. Then it's up to each individual to do a better job of marketing to win the battle, but once one sells it opens up for another. Ideas anyone?
Jack Butala: Yeah. Here's the thing. This is a roundabout way of discussing the topic of pricing. Pricing is imperative. How your price your mailers, it's going to make or break the situation. You have to price properly or this will go nowhere. The greatest data in the world and the greatest mailer and a 25,000-unit mailer won't work unless you price it right. David is correct. David has been with us for quite some time. He's very intelligent. This is a very good question. What's the answer? Do we collaborate? Do we compete with each other?