Overcoming Fear: Master Real Estate Comping Today!

Having analysis paralysis over comping deals? Check out this video I just made with someone that just said, hey, I'm having analysis paralysis over comping deals and I don't know what to do. Watch me address exactly what fear, what is concerning him to have that analysis paralysis, what's causing the fear, what's causing him to be so nervous. Watch me address it, and at the end of the call, I don't think he's that nervous anymore. But check it out and you decide for yourself. Tell me a little bit about how you're feeling because it's been a while since I've started. I've been in it for about 5 years. So tell me how you're feeling, what's going on?

I'm pretty nervous, I'm not going to lie. Been trying to do this for at least a month almost now.

Yeah, yeah.

And I finally got to the stage where I'm somewhat comfortable enough to go out and try and make calls and do all that. But I'm stuck on analysis paralysis essentially.

So let me ask you a quick question because I'm interested. What makes you most nervous about the process? Is it talking to the seller? Is it not Knowing, like talking to the agent? Is it not knowing what to offer? Like what's, yeah, what's making you nervous?

It's a combination of talking to the seller and the agent, but majority not knowing how to comp it properly. So for example, if I was to say find a property for $230,000 and I offered something like $160,000, I don't want to then later on find out that it was worth less. You know what I mean?

I know, dude. I know exactly what you mean, bro. Because it happens 99% of the time. I feel like wholesalers are locking up properties at the wrong price. Price, you know, and they're having that problem. They're getting that, they're offering, they get it under contract, and then they're like, oh, it's not a deal, right? So you're saying you're nervous, you just don't want that to happen to you, right?

Yeah, for sure, because I've heard a lot of kind of horror stories just trying to get into this on that specifically.

Yeah, it's frustrating. It can be very frustrating. So there's a couple things, man. Like, right now we can take a look at a couple properties and I can comp them and I can tell you what the numbers— like, what numbers you need to be at for it to be like for sure deal, right, for someone to buy it. The difficult thing with that is if you're in multiple markets, I think you You said Maricopa County in Arizona, and then you said Indianapolis. So a lot of people learn the 70% rule. They're like, hey, 70% minus repairs minus your wholesale fee, and it's a deal. Now, that may be true because you're getting such a big discount, but the chances of finding someone who's willing to sell at that low of a discount is—

Exactly.

It's difficult. Kind of low.

Yeah.

So in Arizona right now, because I understand the kind of the market, a lot of buyers are buying at 80%, right? They're buying by 80%, sometimes just 80%, period, right? Without even your wholesale fee, without— well, obviously your wholesale fee, but without even repairs. Some buyers, Some buyers are doing 80% minus rehab. So the rule of all across the board of 70%, 80%, 90%, it doesn't work just because you can't live and die by that. It's just not going to work because in Indianapolis, in specific towns in Indiana like Brazil, Indiana, Terre Haute, Indiana, just outskirt cities other than Indianapolis, sometimes it's 50% minus repair. So to live and die by that is difficult. You're going to get yourself— we're going to waste time. And I'm not about wasting time. Neither are you. The best way to combat this is to know what your buyers are buying in that area, just to ask them. Right? So for example, if I'm your buyer and you have a property and you're like, hey, I'm talking to a seller, they're pretty motivated, they're wanting this, obviously they always want more, where would this make sense for you, Mr. Buyer? Then Mr. Buyer looks at it, says, hey, they're motivated, okay, you're not wasting my time, it's actually someone that like if I make an offer and you can get it, this is going somewhere. They look it up and they tell you I can do $250,000. Then your job is to go to negotiate it with the seller for less than $250,000 for your wholesale fee. That is the easiest way as a new beginner to get a deal without having to worry so much about, did I comp it right? Because you're saying you're nervous, right? So if you had someone like me that would just tell you what they would pay, you wouldn't be nervous, right?

100%.

So that's what I teach. It's like, I got the hat on. It's pain— you— have you ever met me? I'm probably— you probably never met me before, right?

Nope.

No worries. That's, that's kind of what I teach, is painless wholesaling. My last name is Payne, so I say it's painless, bro. It's— if you have those relationships, you can literally just go ask someone like me. Now, not, not all buyers are just— if you don't know them, are just gonna like run comps and tell you exactly what they're paid because they're busy. So you have to develop those, those relationships with those key, those key people that you vibe with that can give you that information. Does that make sense?

Yeah, as well as not all real estate agents are all that keen on giving you information without kind of getting something in return, which is what I've realized already.

So another thing that's going to make you— help you not feel as nervous when you do this is when you call an agent, when you call a seller, kind of get out of your mind that you have to give them an offer on the first call. Don't, don't worry about it, man. Half the time when I call someone Well, sometimes I do make offers because I'm quick with analyzing because I have the experience. But you don't necessarily need to like feel the pressure to make them an offer there. You can gather information, see if it's the right situation and say, hey, let me go run my numbers, let me call you back. And then that's when you could reach out. If again, if you find the right opportunity, it's not worth analyzing every deal if like they're not motivated because that's who we're looking for. We're looking for people that need, you know, convenience, ease, speed. They need to move quick. They have distress, their properties need work. That's who we're trying to serve, not the client that just wants to sell. The person that just wants to sell and can wait 5 years or 1 year, doesn't have to sell, that's not someone we can really help that. Like, we're not agents, you know?

Yeah.

So hopefully those 2 things I just told you, knowing your buyers in your market and also knowing the buyers in your market and not feeling like you have to make an offer, know exactly what you have to offer on that first call. Hopefully those make you feel less stressed right now, bro. Nervous. All right. So let's take a look at some of those deals and I'll show you because it is important to know how to comp. So, but again, don't live and die by the 70% rule. I'm about to show you how I do it. All right. So give me the address of one of the houses that you want help comping.

Okay. So the first one is 6510 Lupine Terrace, Indianapolis, Indiana.

Okay. So this is on the MLS, correct? Well, it said it was listed right here, MLS number, but I guess not. I like using Zillow and Batch Leads, but I'm not going to show Batch Leads because then it will like block my live. It doesn't like when I use Batch Leads. So is this— tell me a little bit about this property. This looks like a condo or something.

Yeah, it's definitely a condo. It's a 2-bedroom, 1-bathroom, around 850 square feet. And that's as far as I know about it so far.

So here we go. Like, if you are to use realtor.com, it does a pretty decent job of kind of telling you if you scroll to the bottom, like comparables. Like for us, we can't really compare single-family. These are condos. So you want to compare condos to condos. So this one looks like it's in the same— might be in the same area, 3307. Let's take a look. So this, let's see if this has pictures. This is currently listed. Yeah, I think this is— man, they really need to paint on the outside. What do you think, man? That's crazy.

Yeah, for sure. The house or the property looks like it needs a lot of updates on the outside at least.

Is the house that you have, is it on— how did you get that lead?

I pulled it up on Propwire and Batch Leads.

Okay. And have you called it yet?

Not yet.

Okay. So not here to roast you. I don't want to make you feel bad, but if you haven't talked to the lead yet, it's a complete waste of time to comp a property. Because I could be looking at this house, get the numbers all right, and never be able to get a hold of the seller. He might not be paying his phone bill. He might just blown up his phone. Who knows? But, and I see this a lot, a lot of people like want to make sure they know what everything's worth before they call, and they just complete waste of time again because you'd never know. You might not be able to get a hold of them. Now let's just take a look. We're already looking at this one, so you can see from it that it's been flipped inside. Someone flipped this house, right? So they got it for $94,999. And let's see, it's been on the market for 14 days. So that doesn't really tell us if it's been on the market like for 100 days and no one's buying it and they're overpriced. So one thing you could do is you could call the real estate agent that has listed the property, Todd, and be like, hey Todd, I'm thinking about flipping a house, a condo right next to yours. But I'm just curious, is $94,999, is it moving quick? Are you getting a lot of offers or are you going to have to bring the price down? That's like a quick way to find out, you know, the heat in that area, right? So I am curious what they bought this for. I don't really use Realtor.com very much. I use Batch and Zillow, but I think you might be able to find the details here. Let's see, property history. Okay, cool. Yeah, check this out. Listing removed. Okay. They took out the information. Price $94,000. Okay. Yeah. So they had a listing, they listed it, they took it off and they rented it out and then they're listing it again. All right, let's run the numbers on this thing really quick. So you got to have a calculator. I know, Brent, you're in TTP, so Brent probably has a calculator. I'm not exactly sure where you would get it, but this is the one that I use. So let's run the numbers on this. So let's say you're talking to this seller, you call them, and it's a really— the house is distressed, right? It's all math. It's all math problem, right? So here's how I analyze it. I would go into this and I'd say, okay, a flip comp in this area, a condo, is $95,000. Does that make sense? That's the ARV. And that's not 100% sure. Like, we're not sure. I usually look at for sale instead of what's for sale versus what's sold, just because markets are changing pretty quick right now. So if I check like 6 months or a year ago on what's sold, it might not be very accurate because, you know, the market right now. So I just say what's for sale. And that also helps you if you're in a non-disclosure state where they don't even tell you what something sold for. So let's just assume it's $95,000 and I'm talking to the seller. The seller is like, hey, everything is destroyed, right? Like you got to tear out— it's a teardown. Okay. So for me, I'm like, okay, tear down. What's the square footage in this property? It's 966. So I put the square footage in here, 966, and I'd say, okay, this house needs everything. Right here is the rehab cost for me. Everything. $40 square foot times 966. This would be about $38,000 rehab for everything. And a lot of people, they might increase these numbers, but I think it's fine. How much are you trying to make on your wholesale fee?

If I can make $8,000, that'd be great.

Okay. That ain't great. Okay, so you want to make $8K. So then just to teach you, most flippers do not just take a pile of cash and say, hey, I'm going to invest this in one property. What they do is they say, I'm going to get a hard money loan and I got to borrow, let's just say $25,000. That's the purchase price of the property. I got to put down $3,750 and I have to pay interest on the rest of the money I borrowed. And it shows you what the monthly payments are. Does that make sense? They're borrowing money so they don't have to come up with the whole amount. They just put down a little bit and then they get loaned the rest, right? So you got 12% interest is what they do, and 2 points is how much they pay just to borrow the money. So if you want to borrow $23,000, it's 2% of $23,000, then it shows you your points. That's how much you pay. 15% down, that's the number here. And then hold time. So this house, it's a condo, is $966,000. It probably wouldn't take someone very long to rehab it. So just from my experience, I'd say 2 months to rehab it and then 2 months to list it in case Slow. Doesn't go quick. Commission and sale. Do you know what commissions and sale is like? Okay, so you know how real estate agents— listen. Yeah, real estate commission. You know what that is? So there's 3% for someone to list the house and then there's 3% for a buyer's agent to come in. So it's usually 6% is what a buyer would have to pay if he was not an agent. He'd pay 3% to a realtor to list it and 3% for a realtor to bring a buyer. Okay. Most flippers know somebody that's an agent or they are an agent, so they don't pay that listing fee of 3%. So there is 3% close closing costs, usually 1%, 1.5%, 2%. But I do 1% because the buyers that I use, they're good with the title companies. They know exactly like how to, you know, get a little bit of a discount. You follow me on everything? Okay. So if you were— I just threw in the number $25,000 just because from experience, I'm like, okay, it's probably gonna have to be around that low. If you want to make $8,000 and the rehab is everything, and it's about $38,000 rehab, you would have to, in order to get your investor in the green— that's where all investors want to be, they want to be above 15%, 20%, or higher, in order to get your investor in the green, you would have to get this from the owner. You'd have to get it from the seller for $25,000. Okay. And then you would wholesale it to your buyer for $33,000. It's all it's doing is taking the price that you got it for under contract for adding $8,000 and it's giving you the— what you wholesale it for. Okay.

Okay.

So if you're talking again to the seller and they're like, look, the house, blah, blah, blah, this is my problem. Um, and I need to sell quick. And you're like, well, you know, uh, we usually buy properties in this area for around, uh, $20,000 to $25,000. And, you know, I'm not— that's not my final offer, but would that make sense if we were able to offer you something in that range? No way, your offer sucks. And you're like, okay, well, tell me, you know, what would make sense. I said that's not my final offer. They'd say, you got to give me at least $33,000, right? So you're like, okay, well, let me see if this works. Now you're at 10%. Now most buyers in, you know, Salt Lake City, Utah, Phoenix, other like major metros are okay with the 10%. Like, that's like you're getting low, you're getting to like an iffy deal right now. Like, if it's below 10%, because that's how much they want to make on the return on their net profit, right? This is calculating— they buy it, yeah, that's how much money they make on their, uh, I'm having a brain fart, but that's how much percent they make net profit. So this is getting a little iffy. So you might, if you can't get any better than 33, you might have to adjust your wholesale fee, right? And then it gives them a little bit better of a deal. Not that you, you'd have to, or you could just say, hey, look, you know, if I did that, if I came up with a 33, it's actually, it's kind of getting tight for me. Could you do 30? And that's where the negotiation, right, is coming into play. But that's why knowing your buyers and how I suggest in the beginning is really important because you might have someone that is cool to buy at 8%, right? They're willing to pay a little bit more, but you're kind of in a scenario right now where you're like, I don't know, right? I don't know what someone's going to buy at. So that's why I suggest to do the painless way and network, you know, go to REAs, find people through title companies. You can use batch leads to find buyers. You can reach out to agents and network. And this isn't like something that takes years. It takes days to, you know, really reach out. And it's a continuous thing where you're always trying to find, improve your relationships. A lot of people, what they'll do is they'll find some buyers and they'll never do it again. Like, they'll just keep— just look for deals nonstop. So you want to keep on cultivating good relationships with your buyers. So that is how this works, man, because what you are, you're pretty much getting a deal for a flipper. So what makes something a deal? Well, you got to talk to the buyer, but it's usually if they can make a 10 to— between 10 and 20% net profit on their investment.

Okay.

Does that help?

Yeah, very much.

And by the way, if you like this video, smash that like button so more people can see it. And we'll get you more content like this where we show you exactly how to do it step by step.