When Data Tells You to Pull the Plug on a Mailer (LA 1292)

Transcript:

Steven Butala:

Steven and Jill here.

Jill DeWit:

Hi.

Steven Butala:

Welcome to the Land Academy show entertaining land investment talk. I'm Steven Jack Butala.

Jill DeWit:

And I'm Jill Dewitt broadcasting from sunny Southern California

Steven Butala:

Today. Jill and I talk about what to do when data tells you to pull the plug on a mailer.

Jill DeWit:

This is funny. I like this.

Steven Butala:

Before we get into it, though, let's take a question posted by one of our members on the landacademy.com online community. It's free.

Jill DeWit:

Landinvestors.com. Thank you.

Steven Butala:

Yeah, Land Investors.

Jill DeWit:

Eraldo, If I'm saying that correctly, wrote, "I have a property under contract in which the electric poles and the lines cut across the property. I'm not exactly sure if they're more on the edge or if they run through the middle, but I would assume this would affect the pricing somehow, correct? Does anyone have any experience with this?

Steven Butala:

I have tons of experience with this turns out. When you send a mailer out the way that we do the data, what you're looking at are the basic facts that are provided by the assessor. So that that data set includes basic stuff like size, value, location sometimes. So it's a dataset that doesn't give you all the information. For instance, the assessor doesn't care if your property has a power line easement on it, and it also doesn't care if it's waterfront or any of that stuff. It assigns a value based on an algorithm that's probably been used for ... It's probably outdated, quite honestly. You're never going to tell some of these attributes, specifically in this case with the power lines running through it, until it comes back. And by design, these mailers are designed so that you can very efficiently send out thousands of mailers, but people choose the ones that they want to sell. They come back to you.

Jill DeWit:

They self-select.

Steven Butala:

Self-select. Yeah. It works itself out. And then you're staring at 20 or 30 or 40 deals if you do it right and choosing the best one. Well, in this case, this one came back and it's got, I'm assuming, huge power lines going from some power plant somewhere out to the public. And this comes back with us all the time, because chances are the seller has had some tough, some experience or lack of experience selling the property. So they sign your offer, send it back and they say, "Yeah, I do want to sell." And you find out that there's an easement on the property in it. So Eraldo's question is, do I care? And the short answer is, heck yes, you care. It's probably going to kill the deal, in my opinion. However, if it's around the 20 acres or more and the poles aren't running right through the middle, you can get around it, but there's still going to be power lines there. And they're still going to be, in my opinion, relatively devalued because of this. Jill's probably going to say some stuff like, well now wait a second. We don't want to kill the deal yet.

Jill DeWit:

No, I was just going to say I'm not exactly sure if they're on the edge or in the middle. I'm guessing that he may send out some offers. He doesn't have the right tools he needs to look at the property in full, by the way. I was kind of reading it like maybe the owner disclosed that, which they probably did. There's power lines there and he's probably going, uh-oh. How do I find out where they are? It's easy. Neighbor scoop. You need to have a good tool. If you don't, you have to, it'll save you so much time. And you can stare at it and decide what's possible. And I totally agree with you. If it's a 40 acre property and it's over here dividing up five and 35, done. I could totally work with that. I'm okay with 35 acres. And even the other five, whoever this person, whoever the buyers going to be, they can make that work because-

Steven Butala:

If it's cheap enough,