Pace Morby Says Wholesaling Will Be Illegal | The King Closer Reacts

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Transcript

Welcome And The React Format

SPEAKER_01 0:05

What's going on, everybody? Welcome to the King Closer Reacts. I am the King Closer, RJ Baset III. And this is the series where I'm going to watch a bunch of YouTube videos and attempt to make you laugh. At least that's the goal. Let's get into the first one.

SPEAKER_02 0:19

Over the next probably, I'd say 10 years, mark my words, wholesaling will be illegal in all 50 states. Why do you think that? Well, it's already happened in 11 states. In Illinois, I can only wholesale one time a year without a license. Arizona, I can only wholesale if I tell my seller I am wholesaling your property. Sign here that you agree I'm wholesaling your property. It has to be in the contract telling them that you are wholesaling. South Carolina is banned 100%. And there's like four other states, like Kentucky and other places that are banned 100%. You cannot wholesale whatsoever. It doesn't mean you can't wholesale. It just means you need to call it something else, meaning you have to double close or you have to buy the property and resell it. And you actually have to close on it. I think what's going to happen in the wholesale industry is just not going to be called wholesaling. You've got 11 states right now that are currently talking about legislation passing. 11 extra states in the next 24 months will go illegal. All illegal.

SPEAKER_01 1:10

Oh man. And watching videos like that, I just realized that my future is absolutely fucked. Like my entire industry is going to be illegal. Or we just realize that it's not actually making it illegal. It's just regulations, which he actually does touch base on. He does actually kind of talk about the fact that you can still do it, you just have to do it a different way. So it's evolving, it's changing, it's not going away, it's not becoming illegal. It's just that there's rules, which are fantastic because we haven't had any rules. And because of that, we've had really bad wholesalers. People that have done really horrible things to sellers. They have tainted our industry. They're snakes, they're liars, they manipulate both buyers and sellers and tie deals up, cloud titles, do all kinds of things. So we can look at the regulations and we can say, oh, it's becoming illegal. We have to do something else. We have to change the name. We don't have to change the name. We just change to play by the rules, the rules that we needed because we couldn't play the game the right way without them.

SPEAKER_00 2:32

10% of wholesalers are probably at least doing deals. The other 90%, they're just getting contract. The market's saturated, but it's saturated with a lot of bombs. These guys have probably cost you the contract now. I checked the story. This person ended up locking up the deal way too high, and the buyer wasn't with that person, but locked it up too high, couldn't sell it. So then he came back styled forth way lower than what offered him the first time because he was even more motivated because they strung him alone for like a month or two. That's why follow-up is really key.

Saturation After The Rate Shock

SPEAKER_01 3:02

Okay. So we've been talking about wholesaling being saturated for a decade. Probably even longer. But that's how long I've been here. It's a decade. And so it's always been saturated. Is it though? I don't think it's nearly as saturated as it was in 2021, 2022. And then came November of 2022. If you were around, you know what I'm referencing. Interest rates went up, skyrocketed, and things changed. Our whole industry changed. Hedge funds pulled out, they stopped buying. You couldn't go sell a deal in Phoenix, Arizona at 92% of ARV anymore. Oh my god, things changed. And the saturation really kind of went away. And are we starting to grow back up? Are there new people coming in? Yes. Do I believe 90% of wholesalers are not doing deals? I think it's probably more. I did a video a year ago that said uh 80% of wholesalers quit in their first year. It's why I show up every single day to try to provide value for people that want to wholesale. Why? Because wholesaling changed my life. It's what's fed my family and my entire staff for the past decade. And so I want to keep it around. Do I think that we're oversaturated today? No. Do I think there's people still out there locking up deals too high? Yeah. Which is why I have job security right here sitting at this desk, continuing to bring you guys content to try to make you better.

KPIs That Measure Results

SPEAKER_03 4:47

That's it. I want them to focus on hitting those golds two times a day first, then get to your silver. Now, what are some of the KPIs for this cold caller? They are to make 150 calls per day. Okay. No matter what, things are going well, things are going poorly. We need 150 calls per day. Want them to focus on hitting those golds two times a day first.

Deal Discovery And Rent Rate Traps

SPEAKER_01 5:14

Why don't we have cool cameras above my head where I can write on my desk? I've never seen that before. That was cool, right? Normally I'm like, that wasn't cool. That one, that was unique. The writing on the desk? 150 cold calls a day. This depends. He was using some of his own language there. Golds, silvers. I'm assuming that's the level of motivation or maybe a timeline. I know Michael does a quite a bit of pre-foreclosure situations. So it could be like the foreclosure dates coming up. The closer it is, that's a gold, and the silvers are further out. Maybe that's what he's talking about. I don't know. 150 cold calls a day. This depends on your data. What kind of dialer are you using? How many hours a day are you working? And what's your connection rate? One thing that I've always tried to avoid when I'm talking to people that do acquisitions is by giving KPIs and metrics that don't reward the result. They just reward being busy. For example, 150 cold calls a day. Well, what if the first 10 dials that he has in the day are connections? And they're great connections. Connections that lead to lengthy conversations, uncovering motivation and the true seller's problem. And it leads to getting a contract. Are we going to penalize that cold caller because he didn't get to 150 dials? Or are we going to reward that cold caller because it led to results? The KPIs and metrics are important as long as we're prioritizing the actual result that we want and not just busyness.

SPEAKER_05 6:59

Are you stuck on what to look for when wholesaling a property? Well, there's a few things that I look for when wholesaling my properties. I make sure that I gather four main things the seller's motivation, condition, what the actual value of these properties are, and what the rent is. But like, what do you need to know about the seller's motivation? Like you might need to just do some discovery about like how they're going through the process, because they might be in a pre-foreclosure, a divorce, a probate, and there's a lot of emotional things that they're going through. So now once you kind of get the understanding of what they're going through, you're going to need to understand all right, this might help me make a decision on the property and place a cash offer, a sub to a seller financing. So you have to know which path to go on being a solution provider and a helper. So you're going to have to learn fail forward on doing these discovery calls. But the first step is taking action and moving forward.

Modern Data Tools For Lead Picking

SPEAKER_01 8:05

Want to practice these damn pickle had me. The guy's last name is pickle, so he's got a pickle on his hat and shirt. He had me. He had me tickled there at the beginning. And then the actual video itself had me tickled. Um man, that guy was struggling a little bit. Hey, man, he's failing forward though. He's taking his own advice. He's like, I'm gonna create this content and I'm gonna bust it out. We ain't taking multiple takes. Whatever comes out is what comes out. We're editing it and we're throwing it out there, man. Oh man. Four main things. He said seller's motivation, uh, the value of these products, the rent rate. The rent rate is what really threw me off. Like, man, we we don't need to know the rent rate in for every single property. We especially don't need to know the rent rate when it's not tenant occupied. Like, this is where people have an issue wholesaling, especially when they're new, when they try to underwrite deals as rentals uh when it's vacant. And why would you need to know that rent rate? Probably because it doesn't pencil out as a flip. And so you're trying to buy it higher so it can pencil out as a rental property, right? And then you find out that no one wants to buy it because you're not providing any value. What are we doing? We're not selling properties retail, we're selling them wholesale. Our job is to get them for a discount. So don't use things like rent rates to overpay for properties. But overall, Mr. Pickle, I'm proud of you for listening to your own advice, man, and going out there and just failing forward. You did. I probably sounded worse than that on some of my first videos. In fact, it took me like two years to even turn a camera on. So kudos to you for getting out there and taking some action, man.

SPEAKER_04 10:13

Because if you're gonna get into host sailing, it only works if supply does not meet demand. It does no good for me to put you in a boat, have you start fishing your neighborhood if there are a hundred houses for sale that aren't selling.

unknown 10:28

Right.

SPEAKER_04 10:28

So first we have to pick a property type and product that is in short supply.

Wrap Up And Viewer Callouts

SPEAKER_01 10:33

Because if you're gonna get into host so this type of video right here is always alarming to me because it's basically telling newer wholesalers that they have to figure out the specific neighborhood, the specific area in which they're going to target the sellers before even talking to sellers. And so it's kind of like reverse engineering it. We're gonna go to where there's the buyer activity. I think that was important in five, six, seven years ago, because we were having to do a lot of the lead generation. And listen, you guys probably are tired of hearing me talk about this, but the technology has changed. We have vendors out there now that provide us that data up front. Like you can go on the speed of lead and you can see the seller's motivation, you can see the property condition, and then you can see how many buyers are active in that area, in that city, in that county currently. Then you can see what are the comps before you even purchase the lead. And so, because of that information, we can reverse engineer why would this seller be willing to sell this property for a discount? And then are there going to be buyers that are interested in purchasing it? And then we buy the lead, and now we're having a quality conversation with a motivated seller. That is the benefit of what we have today. And so we don't have to try to reverse engineer where our deal is gonna be coming from, what neighborhoods, what zip codes, what lists should I be pulling. It's an old school way of doing wholesaling, and we just don't have to do it that way anymore. All right, guys, that's our episode of The King Closer Reacts. I don't know if today was as funny as I was hoping it was gonna be. I was hoping pace was gonna go a little bit more crazy on the, you know, wholesaling's illegal. We kind of just had some like, eh, we gotta break it up. Mr. Pickle was pretty funny. Outside of that, pretty straightforward. Hope you guys enjoyed it. Let me know if you did in the comments. Regardless, show me some love, like today's video, and we'll see you guys tomorrow.