Here’s something most wholesalers experience at one point in their journey or another: they price a property too high. While seemingly harmless, in some cases, pricing a property too high can cost you the deal! However, rather than looking at it as a mistake, consider it a great learning opportunity for you.
In this episode, the brilliant Cody Hofhine shared what you can do when you price a property too high, the valuable data and insights you can learn from the experience, and how you can use the information you’ve gathered to work for you.
If you want to make 2020 the year when things change for the better for you, consider listening to this episode a must!
- Two questions you should ask your cash buyers
- How you can learn from your cash buyers when it comes to price points
- How you can build an avatar for every city or zip code
- How you’ll know how much cash buyers are willing to pay for properties in specific areas
If you are Ready to Explode Your Wholesaling Business, Click here to Book a Free Strategy Session with me right now!
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Hey guys, Cody Hofhine with Wholesaling Inc, the number one wholesaling coaching program. Super excited to be with you guys today because we’re going to break down what happens inevitably, to probably every single one of us and that’s what do we do and what can we learn when we put a home under contract at too high of a price? This can happen, especially when you’re at the very beginning stages of wholesaling. Sometimes you go out there and you think you know the price, you put it under contract, and then you find out that, oh man, no one wants to buy this home. Nine times out of 10, it’s because you’ve put the home under contract at too high of a price. So what can we learn from this? How do we learn from this? What are the processes? What are the steps you should do so that this doesn’t happen in the future?
So here’s something I want you to think of. If you were to go out there, you put a home under contract and it’s at too high of a price, it’s probably because your cash buyers have no interest, you’re not getting any feedback, you’re not getting any of your cash buyers saying, “Hey, I want it.” In fact, maybe some of them called you back and said, “Oh, I can’t buy this. There’s just not a deal here.” Here’s what I want you to do: Instead of getting frustrated and taking this incredible teaching moment and learning something from it. A quote I just heard recently that was just brilliant, it says, “There’s no such thing as losing. You either win or you learn.” So I want you to think about this. There’s no such thing as a loss. It’s not a loss that you put this home under contract at the too high of a price. You’re either going to win or you’re going to learn. And this is an incredible, incredible learning opportunity for you. When you put a home under contract at too high of a price, you should be learning some of your greatest lessons during that moment.
So the first thing is, let’s say you hear from your cash buyers, or maybe you don’t hear from any cash buyers that the price is too high. What I want you to do is, this is a great opportunity to have your cash buyers start teaching you what is the good price, at what price point is this a deal. So instead of just giving up and then canceling the contract, what I want you to do is call one by one. This is where work’s going to take place, this is where it’s going to get tough because you’re going to have to take action and you’re going to have to call, and maybe there’s 250 cash buyers on your list. But what I need you to do is I want you to call each and every one of those cash buyers, every single one of them and I want you to ask them a couple of questions.
First, you want to ask them, “Hey, did you see the property located at 123 Main street, where I have the contract to buy that property? Were you able to take a look at this?” And they may say yes, they may say no. If they say no, “Awesome, I want to send this over so you can look at it,” have them look at it. Or if they say yeah, “Awesome, is it something you’re interested in?” Now start having the dialogue. They’re going to say like, “No, I’m just not, I don’t have an interest in the home,” don’t stop there. Most people are like, “Okay, thank you,” and then they hang up and they call the next cash buyer. No, take a moment to learn, okay so you’re not interested in this home, this would be the further question, “So you’re not interested in this home. At what price point would this make sense to purchase?” So I want you to think about that. It’s, “Okay. So you’re not interested in the home at this price point. At what price point would this make sense?” And start to get numbers from your cash buyers.
So maybe have the home put under contract at 150,000 and you marketed it to them at 160,000, so that you were going to make $10,000. And maybe you’re going to find out that someone’s like, “Yeah, I just can’t pay 160, but I could pay 155.” Awesome, you’re still going to make five grand, right? Or maybe you’re going to find out maybe what you think is bad. And they say, “I can’t pay nowhere near the 160. I have to be around 140.” Okay, so in your mind you’re thinking, “Oh, this is bad. That’s 10 grand less than what I put it under contract for.” It’s not bad unless you only think that direction.
This should be something that you’re calling every cash buyer and getting these questions asked, the same questions asked to each and every one of them, so you can find out what is the highest price that one of your cash buyers would be willing to pay if they got their price. So you’re asking them at what price point does this make sense? They tell you their price. Awesome, “So if I was able to get you this home at this price, is this something that you would move forward?” And you get them to commit, “Yeah. If you could get it at that, I’d buy it all day long.” “Awesome. I’ll let you know about that.”
And then what you’re going to do is, you’re going to learn from every one of your cash buyers at what price point you really need to be at. So you’ve got it under contract at 150 and you have a cash buyer that’s willing to pay 145. Now you know, when you go back to the seller, at what price point you need to renegotiate the deal. Now you know that you can’t perform at the 150, “I’m sorry, Mr. Seller, Mrs. Seller, I can’t buy this home at this price point. It’s not going to work. Is this the best you’re able to do?” And they may say no, or they may say, “Yes, that’s the best I can do,” and you might lose the contract.
They also might tell you, which has happened many times, “No, I mean, I still want to sell this. And so I still want to move forward. I can go down to 130.” Making this up, these are all hypothetical possibilities here. So you have someone that says, “Hey, I can go down to 130 or 140 or 135.” They tell you a number and then you look at it and say, “Oh my goodness, I have a cash buyer that’s at 145 and at worst case scenario, I had three or four that are willing to pay 140.”
So then you re put this home under contract because you’ve learned from your cash buyers at what price point it is a deal and you’re able to still find out if there’s money to be made and if you can get it lower than what someone’s willing to pay. So learn from your cash buyers, don’t just simply cancel the contract, go to them and ask them, what are they willing to pay, at what price point does it make sense and commit them, so if I was able to get it at that price point, would you move forward? Those are the things you really want to look at.
Here’s another thing I always do right out of the gates is, at the beginning you don’t really know every area, you don’t know, okay, if it’s in this city, it should go for this price, if it’s in this city or this zip code or this county, the home should be this price. What’s really nice is every time that you’re putting a home under contract, whether it doesn’t go through or it does go through, you really should remember all the data from that deal. You should look at it and say, “Okay, this is a rambler or this is a two story or a split entry,” or whatever the different styles are, ranch style house and it’s a three bedroom, two bathrooms.
So what I would do is I would get a map and I would put it in your office. The biggest map of your county, I would put it in your office, on the wall and I’d hang it up and I would learn every time you put a home under contract and you’re able to move it, at what price point did you get it for? At what price point did you sell it to a cash buyer? Or, “Hey, I put this under contract and it didn’t move because I thought it was going to move at 150, but I actually needed to be at 140.” What you’re doing is you start to build this avatar for every zip code, every city, so that what you can do on that huge map of your county, you can draw out zones. You can put circles around areas and you start to build out an avatar. If I find a home in this area and it’s a two story, then I have to buy it at this point … I’m going to put it under contract at this price point. If it’s a rambler or a ranch style home, I’m going to have to put it under contract at this price point.
And every zip code should have a circle around it or every area should have a circle around it, because you’re gaining knowledge every time you either close on a deal or every time that you assign a deal, but you’re also gaining knowledge every time you can’t move a deal and you have to cancel the contract. So going forward, what happens is next time you’re in that area, you don’t have to think, “Oh man, what was the price point, man? What was the price point that I put it under contract? It didn’t work last time. Ah, what was it again?” You just go to that map and you just look and say, “Okay, I’ve got a motivated seller, it’s in this area.” You go on the map and say, “Okay, last time I was here, I found out that I need to put homes under contract at this price point.”
Now you can just simply get out there and do your best at just getting it as low as possible because you already know the backend knowledge of your cash buyers on what they’re willing to pay in that area. If you will do this guys, you will indeed find out that none of these homes that you put under contract at a high price are ever a loss, they’re always a great learning moment. So remember, there’s no such thing as losing or losses, you’re either going to win or you’re going to learn, take this moment to learn and it will be some of the greatest, greatest lessons you will ever receive in wholesaling. Let your cash buyers inform you what they’re able to pay, let your cash buyers tell you what the price point is. And then you just got to go simply get it lower than that, so you can make some money.
I hope you took notes and I hope you see within your own self, the action you must take today, so that you can get out there and do your first deal or your next deal. And if you need help building your wholesaling business, head on over to wholesaleinginc.com, where you can book a strategy call with our team and begin to have the conversation and see if it is the right fit. And if so, we may just invite you to be part of this elite group so that you can just keep moving forward and accomplishing the goals that you want to accomplish and really make 2020 the year where things change drastically for you, for the better. So thank you for joining us on today’s podcast. Take care, and we’ll see each one of you on our next episode. Take care.