Declining Wholesale Markets

Check out a recap of Nate Payne's Deal Analysis livestream. Real Estate Nate provides tips and tricks that will help you become a better real estate investor.

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what is up everybody we are live with
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investor thrive is real estate nate and
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i got my man
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hey
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hey knows the ways let's get it done
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today we're basically going to talk
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about today guys um how to analyze
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properties right now in a declining
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market because it's extremely important
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for you guys to know that you cannot use
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comps from a year ago two years ago even
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i mean 90 days ago yes yes sorta but i
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mean with interest rates have been
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changing and the property value is going
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down you can't you got to comp a little
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bit differently right now so that's what
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we want to talk about and sean what is
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what is this call brought to you by this
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leads come on down come on down
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sean why is it so important to uh you
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know comp deals a little a little bit
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differently than nor people normally
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have been for the last uh you know a
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little while it's a great question dave
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there's a lot of reasons why i think the
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most important one is that if you're
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going to
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wholesale it
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and you you're going to look for the
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data you need to come up with a number
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right that you need to offer
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and if you don't even know what it's
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worth you know how are you gonna
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backtrack your way into your max
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allowable offer if you don't know so
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that's really important um and then of
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course is if you're gonna buy it right
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then you definitely don't want to be
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you know looking at data from yeah like
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nate said a year ago six months three
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months ago probably about as far out as
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you want to go let's just dive right
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into it how do you value properties now
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well what you have to do because you
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can't if there's not enough data on sold
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comps that's recent within the last 30
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35 days 60 days you have to go off of
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what's selling right you have to go off
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of what's listed what's active right so
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um how do you do do that using batch
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well it's pretty simple guys let's let's
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go right into it so a man that's a small
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town nate what are we at so i want to
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show someone really quick so there's a
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lead i went to college out in rexburg
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idaho and i know no one's really ever
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probably even heard of rexburg idaho but
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it's a pop in place
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rexburg is right here
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and it's got you know
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a lot of good investment properties
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because it's a college town right here
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is idaho falls and then later on is
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pocatello so
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if you don't know eastern idaho you're
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probably like dude there's no deals out
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here but there are there's a lot of good
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investment opportunities and basically i
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have a deal right here there it is
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that's the house and she's like hey you
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know we're looking at some comps you
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know according to the comps recently uh
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in the area like that's sold in the last
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year the house is worth this and i i'm
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basically i'm calling her and letting
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her know i've already told her this but
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i'm like hey um it's not really worth
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that right now because of the the
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changing in the interest rate so what
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you can do with batch is you just search
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the address
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and you um you know you
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you mark it with the boundary area and
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you can see what's active and guys this
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is a very small town and there's a lot
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of active properties right so
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a small town the active is green so for
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me as an investor
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i'm like
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of course this is a small town so i'm
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gonna tell her hey look i just don't
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feel comfortable investing in this area
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but um you know according to this
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there's quite a few active properties
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that aren't moving that quick and you
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can click on let's go this one that's at
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130.
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so her house is because i've looked at
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this before her house is a two bedroom
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one bath as well 900 square feet this is
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720 square feet so you can go to the
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details and this one is actively listed
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for uh 130 000 according to this
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but you know then you got to determine
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if it's a a legit comp this is a mobile
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home and it doesn't look terrible but
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it's it's it's not necessarily the same
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comp because it's uh
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and it didn't even look to be like it
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was in a foundation it's before 1975 so
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bank wouldn't even lend on it right not
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a comp at all um
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yeah right but you would use this
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somewhat to basically like help you
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determine the value right so yeah yeah
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for sure it's selling okay so hers is
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over here so let's see
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um and so how much nate where how much
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were you uh ballpark what's she asking
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uh she wanted 220 uh or 230 cash okay
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and i told her um you know i'm gonna
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have to be around 150. and i just
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reached out to her the other day i i
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what can you buy in that town right now
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what's for sale that's under that number
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that she's asking under 220 yeah
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um i mean you're an investor right what
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else can you get for t20 let's look i
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meant for sale right now at the moment
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it doesn't look like much is under 220
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but you also look versus a 2-1 right
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this one this one let's look at this one
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this is a 3-1
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129 square feet
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uh
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let's take a look at it right but then
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you also have to determine how long has
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this been on the market yes it's been
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just sitting there look at this this has
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been on the market since 11 10 20 this
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is actually 21 because i i know i've
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looked at this so this house these
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people are just sitting hoping someone
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will buy this piece of trash and they're
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not moving off of their listing price
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all right let's see if she answers the
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phone
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if she doesn't she's getting the double
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triple quadruple dial for saturday
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morning oh brother but wait a minute
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it's uh yeah it's uh what time is it
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over there for her
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oh shoot you know i forgot i'm on the
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east coast so it's uh what is it
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wider up
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lighter up she might she might be ready
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brother
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let's give it a shot
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can you hear that ringing sean you can
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hear it beautifully
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crystal clear you're so clear
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oh guys we're getting we're getting a
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call from our girl
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okay guys this is uh this is it
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hello hi jennifer how you doing this is
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nathan hi i'm good how are you jennifer
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i want to apologize i don't know if i
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called you too early um is did i wake
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you up no no i was actually in uh in a
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meeting room so okay
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yeah i know you're good i didn't know if
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i woke you up so
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again another thing i want to apologize
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for is i know i haven't reached out to
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you in a while it's just i've been
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extremely busy with work and we got some
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flips going on so i'm sorry about that
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oh no that's okay so jennifer um do you
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have about five five minutes or ten
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minutes to chat yeah i do okay so about
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the property i mean last time we talked
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i was kind of gave you an idea of where
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i was thinking we would be around did
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you get a chance to talk to um your
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family or husband about it yeah that's
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that's gonna be too low on that yeah
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yeah i totally understand i mean i know
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i offered you what i felt like uh was
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you know something we could do have you
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have you since we last talked have you
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you know what other options have you
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looked at have you talked to other
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investors thought about listing it um no
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i haven't talked to anyone we're we're
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just gonna um list it my husband wants
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to list it okay he's listing it do you
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know when you're gonna pull the trigger
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on that um well i need to get stuff
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cleaned out so um probably in the next
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week too okay i'd like to do that so
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gotcha yeah so i basically this is the
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reason i was calling you is because you
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know right now i don't know if you you
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follow the real estate market too much
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but you know it's the interest rates are
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causing properties values to go down
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unfortunately
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and um you know i personally like i was
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looking at it if i were going to buy it
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if we agreed on that price or around
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that price i was one i wasn't sure if i
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felt 100 confident investing in in that
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area because you know how it is like
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it's going to be a little harder to you
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know resell the properties but i
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actually have a couple investors that i
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know in in rexburg and idaho falls in
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that area that um you know i could
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potentially reach out to and say hey
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guys like would you be interested in
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going on you know this property on this
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project so it's just not me right so i'm
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not just you know doing it by myself but
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i wanted to see if that would be an
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option that you know you'd be okay with
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if i could you know reach out to them
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and see if they'd be interested in
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flipping the house with me i i wanted to
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check on and see if you'd be cool with
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that i'll get back to you like i said
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once you text me back if you give me the
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okay i'll send that over to your email
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and we can just continue and like i said
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it's just a seven day period it's not
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gonna i'm not tying you up for you know
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month or months okay thanks jennifer all
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right okay thank you all right bye i
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read on this before this call and about
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170 i think the arv of the property
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let's just look at it one last time so i
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think uh this house the two one it's a
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thousand square feet and if you look at
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what houses are selling for right now in
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this area again we're not going to go to
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solds because that's not useful but this
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property right here is a three one it's
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about a thousand square feet right uh
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without 129 square feet bigger than hers
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and mine was a two one right yep so this
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one is a year 1900 right super super old
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and it's not it's outdated hers is not
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that bad according i have actually have
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a video so this is
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this has been on the market for so long
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so i don't think it's a legit comp 300
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000 but i believe hers is worth about
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250. so i really believe it's worth 250
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so i'm going to type it in our
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wholesaling calculator i'd have to find
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someone in in rexburg or someone that
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would want to rental in that area so i
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think this house is worth about 250. um
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i offered her 170 1000 square feet and
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she showed me video she says it's not
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that outdated um yeah it actually didn't
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look bad when we looked at it last time
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didn't you i think we did we looked at
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it together on let's actually look at it
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i have a video right here
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yes okay beautiful yeah so they got the
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lpv on the floor i mean you know
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they went ahead and
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slapped them granite on some old
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countertops but what are on small
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cabinets that's okay flooring doesn't
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look bad yeah the lpv's seems like it's
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in okay shape
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um
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it's just outdated
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yeah i mean it needs it needs some tlc
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you know some doors some new doors some
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new knobs some new lights fixtures right
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but again you're in a smaller more rural
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area um
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cleanly you know
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having a nice ac unit or whatever right
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i mean the the
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the way you would do a flip here is not
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the same way you do flip you know
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i meant to be honest this is clean like
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i think if you just clean the house out
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it you know it looks good yeah i think
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the house probably needs about ten
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thousand it's not i mean you're not
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going to do a full-blown rehab in this
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area you might even just want a rental
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in this area and see what rents go for
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but you know you're gonna list it we we
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have connections so listing commissions
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will probably just be three percent for
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us in that area so if we got it at 170
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and wanted to make a wholesale fee of 10
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15 000
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the flipper if he flipped it got it 170
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paid us 15 put 10 into it paid all the
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holding costs he'd make 34 000 in four
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months and we'd make 15. so if we
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decided to flip this ourselves instead
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of wholesaling it we'd make about 49.
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now i think that's pretty conservative
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250 is the arv considering you know it's
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not no that that bad even um the other
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homes in the area that are above this we
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had some other pictures right there was
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some other stuff too not in that video
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like it's not it's not that bad of shape
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so yeah i mean normally you guys we say
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overestimate when it comes to rehab but
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let's overestimate then so even at 20k
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if we wanted to make 10 000
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most most flippers want to make 20 10 to
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12 of the arv on their flips so this
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would hit right in the office well 10 to
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12 gross return on the sale price of the
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property right so that would be 250 000
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times times 0.1 that gives you 25 000.
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so that pencils that is what you call a
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deal to pencils but the problem is it's
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so rural someone might be like look it's
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more i mean i need twenty percent
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right yeah exactly i am curious i don't
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know if batch will let us know but what
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rents are going for in this area usually
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it does it's estimated right 7 30 788 i
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don't think that'd be like the greatest
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return i mean if you get on terms it
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would be sick right it'd be great on
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terms but yeah not probably no
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definitely not straight cash so again
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guys we usually don't waste i don't want
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to say ways we don't put this much time
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into property like this i'm just showing
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you an example of how to you know comp
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properties the right way use an option
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to purchase agreement and negotiate with
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the seller she wanted i originally
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offered her 150 and she wasn't willing
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to do that but she's probably open at
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170. give me seven days i'll find
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someone if i don't you know and then
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let's say i found someone 165 and say
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hey i found someone 160. i need
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obviously i'm they're going to pay me so
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don't worry about it um but this is this
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is what i can do to get it done and if
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she says no and list it and it's going
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to sit on the market for uh you know a
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couple couple months never give up
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ladies and gentlemen go back and make
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your offer again if they do it you know
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don't give up represent your offer
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that's the jerry norton special you say
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you keep calling say my offer is still
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good you remember that 155 i sent you
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four months ago it's still good
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that's the beauty of making an offer
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that you know is a deal that if it
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doesn't sell you're confident you can
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always go back and you know hey it's
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still good at that number i'm still good
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make offers that you can stand up on and
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feel good about yeah and you want to get
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something down so you make some money up
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front from the person that you sell to
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on a lease option or rap you want money
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that's how you make money okay this is
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the next question i love it keep the
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questions coming and sean hey if you got
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to go sean i ain't going to be mad i
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know i'll be taking it i do have to
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leave it a second but uh let's see how
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do you make the make sure the seller
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makes the mortgage payments when you're
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making payments to the seller services
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yes there is company yes
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you can either use a servicing company
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or you can get the seller's uh login
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information uh to pay their mortgage and
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you can pay it directly for them like at
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their login which i've we've done before
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anyway guys uh that that kind of pretty
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much wraps it up uh for today i wanted
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to let you guys know those are what i
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wanted to talk about it's been a long
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conversation thanks for tuning in but
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anyway guys in today's market with the
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declining uh you know prices that are
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going on
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you want to use not if you can use sold
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data if it's relevant right if it's
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within the last couple you know 30 days
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35 40 60. but if you go a year six
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months it's not going to be relevant so
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you've got to use selling data and if
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you're not sure and you don't want to
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lock up a seller where you're you know
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you're not sure you can get it done
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because it's rural you don't know the
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area use an option to purchase agreement
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people use them all the time don't get
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don't die on that don't live and die by
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that sword uh because you know
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peep sellers want uh consistency and
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they want you to be sure they want you
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to be confident um so
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don't use that all the time but use it
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where you feel needed okay all right
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guys have a great saturday and uh thanks
14:51
for tuning in and by the way this call
14:53
has been brought to you by batch leads
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if you haven't tried them out you need
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to try and we use in our business all
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and we will catch you
15:02
later peace out
15:19
you

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