Epic Real Estate Investing - Real Estate Disruptors: Open Door, Zillow, RedFin, OfferPad, iBuyers | 815

Episode Date: October 25, 2019

Matt got back from the real estate conference with a bunch of recordings! He asked some of the most successful real estate investors what they think about iBuyers and how this shift impacts their business. Take a listen and find out more! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit rei-aase.com.

Here's Matt. Hey, Matt Dario here from Epic Real Estate. And today we're going to talk about real estate disruptors. And specifically, we're going to talk about eye buyers. What do they do? What do they mean to your business? And what is there that you can do about it? So if you're not aware, I buyers,

they're companies that are purchasing homes right online, right through the internet, right there on your computer, in a way that they don't have to pay any agent fees. They don't have to fix up their house. They don't have to sit around and wait for buyers. I mean, they hardly have to even talk to a. a person. Instead, with just a few swipes of the keyboard, I buyers are presenting sellers with offers. And within a few days or a few weeks, if the seller finds the offer acceptable, that's the

part that the eye buyers aren't telling you about and we'll get to that. But if the seller does find the offer acceptable, they'll receive their proceeds with relative ease. And this new process, it's causing a real stir amongst real estate agents and real estate investors alike. So should they be worried? Should you be worried? What does this mean for us real estate investors? Is this the of real estate investing as we know it. I get that specific question for my clients all the time, and understandably so. But here's the thing.

Back in 2001, when I became a real estate agent, there were about 1.1 million licensed realtors in the market. And everyone that I knew at that moment was really concerned about technology replacing them. And here we are today, almost two decades later, and there are 1.3 million approximately licensed realtors. They're not being replaced. There's actually more of them today than there was then.

Here's the deal. A person's home is typically their most valuable asset. And there's a lot of emotion behind the sale of that home. Which means it's been a lot tougher than the I-buyers had anticipated in removing the personal element from the sales process. You see, every house you buy or sell is going to be from or to another person. It's a people business. And the numbers are showing that people would still rather deal with people when it comes to the sale of their property. Technology, over time, may educate the public that this is a good way to go about selling a house.

I'm not blind to that potential. The fact that I buyers are taking this so seriously, what that tells me is that you and I, we are in the right business, and they want a piece of it, but it's going to take a really long time for them to cut into our market share. For example, I purchased a home last month from someone that still doesn't even have an email address, and that's not an uncommon occurrence for us. The point being, the eye buyers, they've got a lot of work to do. And even more so, I think they've got a lot of waiting to do before the public accepts their ways as the norm.

But I certainly don't have a crystal ball. Yet I've been doing this long enough to where I'm trusting more and more my crystal intuition. It's a people business. With regard to eye buyers over here inside of my business, it's not changing the way that we're doing things. And I don't think it's going to have an impact for a very long time. There's still plenty of time for you and I to go out and make our fortunes, flipping houses, holding houses, building our real estate portfolios. But, you know, I am curious?

Am I the only one that is thinking this way? So I just got back from a conference. And at this conference, there were more than 100 of the most successful real estate investors in the country. And what I did was, I recorded a few of their answers to this question just for you. What are your thoughts on companies like Open Door and Zillow Instant Offers and Redfin Now on Offerpad and how they're buying houses directly through their websites. And how is it impacting the way that you are doing business?

Well, first off, great question. Second off, I admire them for their technology and what they have brought to the marketplace. They literally streamlined anybody that wants to sell. They streamline that process of actually getting to an offer. But the competitive advantage I think we have over those different companies, especially in Phoenix because they're everywhere, is the person, the personality,

finding the solution to the problems. So that's our competitive advantages, although they do a ton of business, of course, but we are talking to other people that have not had a good experience with them and because we have that personal experience where we have able to win the business from the seller. It's interesting you asked that

because I'm in Birmingham, Alabama, and it really has not affected us that much. So I can't really talk about that intelligently, but I know it's affecting other markets. I know it's coming, but it really hasn't affected us at all yet. Well, I think those companies are more going to affect the list and sell realtor than they are the real estate investor.

They're not problematic buyers. Real estate investors buy assets that needs a problem solved. And those guys are not really solving a problem. They're just making the transaction more efficient than listening and selling it through a realtor. I don't think they're drastically going to affect our business like people talk about it happening. Whitney, what are your thoughts on I buyers and how is it impacting the way that you do business? That is an excellent question. Let me think about this for a second.

So there's a lot of online companies that are making offers and buying houses. And I don't think they have anything to do with my market, the way I buy houses, because I am really good at establishing a relationship with my sellers. And they like to know that they're working with a person and not a machine. Okay, so the big guys are coming into the space. The way they're coming in, they're going in at a large, large level. And they're not going to get everybody. You know, they're going to put a big net out there, but there's still going to be a lot of deals.

So it's important you diversify. You don't just do the direct mail anymore. I send 70,000 pieces a month. I do ringless voicemail. I do text messages, SMS. You got to beat them at their own game. You got to get better customer service when you come in and what you're going to find. And I know guys in the market competing with them.

They'll go head to head and they'll still be able to buy the deal for 10% less just because of the personal one-on-one touch. So they can come in. They can buy a lot of houses. But if you're good at what you do, you can beat them. When you think about these larger companies buying properties through these, obviously they have a lot of capital backing them. I think if we can find a way to partner with them, capitalize on them. If they're purchasing all these properties, they know something that we probably don't know. But if we can find a way to work with them, network with them and turn them into a buyer and find these properties for them,

I think it opens up a whole new world of investment opportunity for all of us. I mean, I think it's just like anything else, right? The market changes, you have to change. So we look at it as an excuse to just keep getting better and better and better, right? You can get complacent, stagnant. So they're upping their game. That means you're going to have to up your game as well. Instagram.

Social media something. Do I have to pull all that up more? All right. This will make good to you right here. Let me find my Instagram. All right. Zach underscore Childers. There it is.

All right. Take nine. So Zach, what are your thoughts? How are these eye buyers changing the way that you do business? Well, that's an excellent question. Honestly, it doesn't affect me at all because they're not even in my state yet. So are they coming? Yes. You know, I question the fact is, is it really going to have legs? Because I was looking at some reports not too long ago on Zillow and how much money they've lost running that model. So it's like how long can it be a lost leader for them before they actually start realizing that that's not their model anymore. But it's like anything, you know, there's going to be times where it could be failing and they could figure it out and it could succeed. But what it ultimately says to me as an investor and other people as an investor is we can't be relying on public. seller leads. We have to really get into private seller leads and dial in our marketing processes

and systems. It's not changing the way I do business at all because frankly if you ever get one of those companies to make you an offer, you'll find out that isn't what it's cracked up to be. In my world, I buy houses on terms anyway. Seller takes a monthly payment until we pay them off. I pay them full price once we agree on that. It doesn't bother me one bit. That's a great question. You know, we've seen, of course, the industry is changing. And one of the things, of course, is that it's making real estate agents redundant, redundant. So one of the things that we are doing is we're community-based buyers. We connect with the community.

As a result, we are getting deals that nobody else knows about. We're connecting with the barber, the beauty shop, the dry cleaner. Everybody in the neighborhood is bringing us deals, and that's how we're able to get deals that even open door doesn't know anything about. Yeah, baby. Yeah, baby. And my Instagram is the Mike Hambright. You're like the micawbrite?

Yeah. I thought I just talking to my camera. On the actual one, yeah. Okay, got it. It's definitely putting a lot of pressure on the industry and kind of forcing, you know, at the end of the day, the real estate investing industry has benefited from a long time from the markets being inefficient and it's just getting more efficient. So I think it's forcing people to get more creative on how they do deals.

And so there'll be a lot more kind of creative ways to do deals going forward that you'll have to use to monetize to offset all your advertising costs. Tom Crowell. Yes. What are your thoughts on the? these eye buyers and what are you doing about it? They're not in my market yet, but I know that they're coming. I believe in collaboration, not competition, so I'll probably find a way to work with those

corporations when they do come. I think it's a good thing. You know why? Number one, I like competition. In fact, I'm worried if there is no competition. There's not a lot of people doing this because if there's a lot of competition, it means I'm in a good market. It's a good time to do deals.

So I look at competition like that as a potential partners. What are some ways that I could work with these guys? maybe sell them some of my deals. In fact, I know somebody recently that is buying a bunch of houses from the courthouse and then selling them to Redfin and Open Door and Z-buyer, Z-Code, or Zillow buyers and stuff like that, right? Hello, Freud. Yeah, yeah. So I think there's a lot of opportunity.

You know, the constant in real estate is that there's always change. And so as a real estate investor, you've just got to see how the world is moving. You've got to see what technology, what opportunities are coming into the space, and you've got to evolve with it. I don't look at it as a bad thing. I look at it as an opportunity. What are they doing to open the market up? How do I participate in that? How do I take advantage of it?

I see them as a buyer. I think they're going to pave the way for more institutional money to come in. And as a guy that can find deals, it's my opportunity to find those deals and sell it to them. Okay, but wait, I'm sorry. You say what you wanted again? Am I focused on the three things? Yeah. Okay.

The I buyer's question comes up a lot. I feel like I have a little bit of a unique opinion on it. I don't think that we should discredit them as much as people like to. I'm one of the odd people in the space that actually believe that the game is already over when it comes to them. They're coming and there's nothing you can do about it. Aside from fighting them the only way that we can, which is with humanity. There's always going to be the people that want to deal with the brick and mortar store. And you just have to, if you will add humanity to what you do and actually,

care about people and go and meet with people belly to belly, find out what their pain points are, and solve their pain points. That's the way that you compete with eye buyers. That's the way that you compete. That's the way that you compete with eye buyers. Once they change the mindset of people, people will buy and sell homes that way, but there will always be that segment of people who want to actually meet with somebody and that's where we fit in as real estate investors. That's our niche. Well, here's the reality. I've been doing this for 20-some years. And strategies, companies, different ways of doing things. That's an ongoing thing. And tell you the truth, I really don't pay attention to it too much. You know, there's really, if you think about it in the last 20 years, there's really been no so-called open door that's coming to the market and stayed in the market. So from my end, absolutely no impact. We're not changing how we're doing things. What we're doing works. The basics work. They've always been working and we're sticking with it. I think that those companies that are coming into the market now are really making a difference in the marketplace.

In a lot of ways, they are driving prices. It's definitely impacted me as a real estate broker because of listings being sold so quickly to those types of companies. From a wholesaling perspective, it's changed how we do business because our offers and our numbers have to be extremely tight. At the end, when all of a sudden done, I think, a couple of things. Number one, it's always a personal relationship. Most investors don't put enough emphasis on their ability to build report with sellers and to establish those relationships with the sellers in order for them to be able to have a chance of being able to get a deal over someone else. Secondly, I always think about there's always the perception of competition versus the actual competition.

Because if you look at the stats, the total number of properties purchased throughout the whole entire country, they're buying just a small segment of that. And if you really think about that, you really don't, you really don't have competition. petition from them. I'm Matt Terrio. God bless. To your success. Bye for now. Yeah, yeah, we got the cash flow. Uh, yeah, yeah, we got the cash flow. Yeah, yeah, we got the cash flow. You didn't know home for us, we got the cash flow. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.