On Friday, September 28, the Norris Group proudly presents its 11th annual award-winning black-tie event, I Survived Real Estate. An incredible lineup of industry experts will join Bruce Norris to discuss perplexing industry trends, head-scratching legislation, tech disruption, and opportunities emerging for real estate professionals. All proceeds from the event benefit Make A Wish and St. Jude Children’s Research Hospital. This event is not possible without the generous help of the following platinum partners: the San Diego Creative Real Estate Investors Association, InvestClub, Inland Empire Real Estate Investment Club, ThinkRealty, Wilson Investment Properties, Coach Fullerton, First Lending Solutions, PropertyRadar, the Apartment Owners Association, MVT Productions, and Realty411. Visit www.isurvivedrealestate.com for event information, and see Amazon Prime or YouTube for past events.
Aaron Norris is joined this week by Rich Swier. He is the co-founder of Offrs.com and a serial entrepreneur based in Sarasota, Florida. He is the founder of the HUB, co-founder of Offrs.com. His previous ventures include Sarasota Online, acquired by Comcast at the ripe age of 24 and Backsoft, acquired by SAP. In addition to his primary business pursuits, he is an author and speaker on topics including broadband development, predictive analytics, and building startup ecosystems. He has been awarded a number of industry awards and accolades for his work with startups, and he continues to promote entrepreneurship in schools and communities.
Episode Highlights
- What does Offrs.com do, and how does Rich market it to people?
- How does he integrate predictive analysis and mathematics into the real estate industry?
- What have people’s responses been to his methods of analysis and predicting?
- Having a background in math, how did he end up working in real estate?
- Are there other service providers who use this same type of data analysis outside of real estate?
- Where does he see Offrs going in the next several years?
- How do he and his partner at Offer.com work together with their different talents in their company?
Episode Notes
Offrs.com has been around since 2013, but a lot of people still do not know this kind of technology exists. Aaron asked what Offrs.com is as well as his elevator pitch. Rich said predictive analytics, which was how Offrs.com got started, is a fancy term that explains how we can predict the future based on what happened in the past. Unfortunately, it hasn’t really made its way into real estate until recently, but it has been used in many industries for years. In Las Vegas, the entirety of that place is based on predictive analytics. They know what the score of the next football game is. Whether or not they are right, they are typically pretty close.
Weather patterns have always been predicted using mathematical algorithms. There is a great movie about the California Angels making it to the World Series using predictive analytics. Billy Dean uses math to put together the perfect team. It is in our everyday life, just not a lot of people recognize it. In real estate, it is almost a perfect place to use it because everyday homes are bought and sold, and they are typically bought and sold for only a handful of reasons, which can be somewhat predictable. This is how they deal with the algorithm, and it has been very successful. They have proved it year after year, and he has leveraged it to give it back to real estate agents so they can be more successful.
Aaron was really excited to stumble upon Rich as part of the National Association of Real Estate Editors. Aaron had been talking to Daren Blomquist over at ATTOM Data Solutions, and they were excited about it since a lot of people are worried for companies like Zillow who control such a huge amount of consumers’ eyeballs when it comes to people researching when to buy and sell. Zillow has made it not secret and are after the top 10-15% of top-producing agents and have put their hat in the iBuyer space buying real estate. How can the average real estate agent who has this love/hate relationship with Zillow compete with them? Aaron asked this before stumbling upon Rich.
Real estate is not known for exactly being tech forward, so Aaron wondered how the response toward him had been. Rich said what is beautiful about what they provide is it can be boiled down into is they provide listings, which is what every real estate agent wants. No matter how you look at it with the mathematics and all, what they are really trying to do is get the agent in front of the seller. A pretty well-known stat is 70% of homeowners choose the first agent they talk to, so being first in the door is absolutely critical. How you become first in the door is simple: use predictive analytics. If you know a homeowner is likely to sell in the next twelve months, then you can make sure to reach out to them and farm to them in a much smarter way. How they sell their information is they call Smart Data or Smart Farming.
Every real estate agent understands the importance of working their territory. If there are 2-3,000 people in your farm or neighborhood where you work, you can market to every one of those people. However, it is very expensive. Smart data and predictive analytics allow you to hone in on those few hundred that have statistically said what is most likely to sell based on the algorithm. Being first in the door is how you beat bigger companies since the reality is portals like Zillow and others are getting people further down the pipe and they already decided they were going to sell their house. A real estate agent can beat those people to the front steps. With a firm handshake and a nice smile to win the deal, this is really how Offrs.com is playing in the industry.
Aaron asked what percentage they are letting agents know for a certainty that somebody is going to end up selling their home and what period of time. Rich said it is not perfect, but what they have done is created a series of very innovative approaches, one side mathematics driven and the other point-blank brute force. With the mathematical side last year, they predicted about 70% listings. They score every home from 0 to 100, just like a grade. For every home they predict to list, they get about 70% correct. They are still targeting a larger pool than the typical 5% turnover, which is usually about 15-20% of the market space. If you work with 1,000 homes, about 50 of those homes will sell and that is about a 5% turnover. They try to get people to hone in on 200 of those homes. With those they identified as being highly likely to sell, about 70% of those listings are correct. With that being said, what they do on top of that which really makes them unique is they provide and do their own surveying of that area. Once they have identified those 200 that are likely to sell, they survey homeowners.
Using a variety of mechanisms such as Facebook, Google, phone, text, and email, they engage with the homeowners and survey them to not only verify their prediction but also gather even more information they couldn’t find before that would be useful to real estate. It is a two-punch approach. Using just math alone may not get you to where you can have actual data, but it does save real estate the time and energy since they do not have to waste their time on the 80% of people who have no interest to sell in the next 12 months. You can reduce your marketing budget and time you take to door knock, and focus on those most likely to sell.
Aaron was really surprised in looking at Rich’s offerings that he talks the conversion language. A lot of realtors don’t know too much about this. You see them show up on different social media sites, and it is clear they are looking at a new space and just like it multiple times. They approach it from an impression standpoint, not the conversion standpoint. The fact that Rich’s company is already vetting these leads for them is pretty exciting. Aaron asked what the response has been from people when he presents the information. Are they excited and come at with the frame point that they can come at it with the Zillow groups of the world? Rich said there is some excitement as well as frustration. The bottom line is this is new and old. What is old about what they are providing to real estate agents is that it is farming. At the end of the day, they are telling them who they should go talk to and you go around door knocking to see who will hire you as a real estate agent. It is not too different on how the real estate agent has to engage with their audience. That being said, it is new in terms of the mathematics and technology, and people get excited about learning about these things.
Rich said the challenge on his side is to re-train the perception about how this is being used in the industry. It is not really about the details of the math or how the real estate agent wants to move forward to use the math. It is really about the numbers of conversions. If you hit 100 people and are able to have good conversations with a good chunk of those people, it will result in leads, which will result in lists. It is about creating systems. This is where they get the most frustration. A lot of real estate agents are not used to doing outbound marketing or putting systems in play to get their name out there. They work with them to provide the best practices and write scripts. These are things the best real estate agents have mastered, and a lot of these things just haven’t been provided. The math gets you to the 20-yard line, but they have to work hand-in-hand with their customers to help them understand how conversion follows work, how to get beyond the frustration of not getting ahold of everyone, trusting the math, and working, the funnel, results are there. This is something on which they focus a lot of their time.
What is interesting is that Rich’s background is math and he has done a lot of things in the internet space, so Aaron wondered how he ended up in the real estate space. Rich said he has been an entrepreneur all his life and a technologist, so he has built a lot of software. He met his partner who was from the real estate side, and Rich was coming in as a newbie and trying to learn the industry very quickly. He had this idea of predicting listings and looking at ways of trying to drive new inventory that was not in the MLS yet. This was where it started, and Rich had a technology incubator where they incubated the company. They both founded it, and it was your typical startup company. You have one side that really understands the industry, and this is where his partner Mark comes in since he really understands real estate and was an agent himself. Rich understood the math and technology side, and they put their ideas together.
He and Mark spent the first year of their company going around door to door talking to real estate agents, learning their frustrations, and building a product around them. They also understood they were going through a massive transformation in the real estate industry. Aaron mentioned iBuyers and portals overtaking a lot of the business, so they understood that the agents needed something to battle that technology disruption. They don’t really know what it will look like, but one thing they know is that the reality is it all boils down to who has the listing. Whoever is first in the door to get the transaction will own the industry. Up until today, real estate agents have had a pretty easy time doing this since it was what they were assigned to do. Now, you have all these people flanking from left and right.
At Offrs.com, their position is how to strengthen the real estate position in not only maintaining but also improving on how they can maintain the ownership of that listing. Unfortunately, having it on the MLS today was taken away from them by Zillow. Being the best broker or having the best market space may not necessarily get you since it is very highly competitive today. It is about data and understanding who is potentially going to sell their home and be first in the door. This is how they see the industry. Aaron had just seen a great video that was between Brad Inman and Gary Keller. Gary talked about whey he was spending $1 billion on technology for the Keller Williams brand. He created four categories. On one side, one was the old school realtor who once upon a time had their value in the MLS. He crossed this out and consider it dead. On the far side, you have just technology where we get rid of realtors altogether. He crossed this out and said this would never be fully automated.
In the middle, you have either the tech-enabled agent or the agent-enabled tech.
This is really what they are talking about, and it is exciting to hear about things going on like Offrs that can give realtors the tool if they want to sit down and learn. It is not just technology, it is a marketing play. Rich is really enabling the tech-enabled agent. When an agent has this kind of tech in place, Aaron wondered what he thinks is the best thing to be doing to survive. He wondered if it is relationship-building and really knowing the community as well as whether they should be focused on elevating themselves to the next level. Rich talks to customers all day, every day, and he talks to the most frustrated customers. They are trying to evolve, and they may not understand how to use the product or how to integrate it.
There are two things to understand. One is that you are a creature of habit. Whatever you currently do that has made you successful or has gotten you listings should never be abandoned overnight. You need to figure out how to use what Offrs.com has and incorporate it into that. On the second side of it, you need to understand what the best practices are in conversion marketing. The reality is when an agent signs up with them, they choose their territory and Offrs gives them all the data they have from 25+ data sources, including emails and social media links. He was not just talking about people who scored high with the algorithm, but also everybody who held a home in that area. They gave them a 360 view of every homeowner so they can more proactively start with a database.
A lot of real estate agents surprisingly do not have a database. They may have 50 or 500 people on their email list or 300 friends on Facebook, but they are sitting there wondering how they get their name in front of people in their area. On day one, they give them the toolset to do this. Then, they prioritize every homeowner, score it based on the algorithm, and they give them the 300-400 people on which they really need to focus. Training them on how diversion marketing works and understanding how to best leverage marketing is key. Up until recently, 98% of most of their customers drive their business through referrals or passive marketing. This could mean a sign in the yard or an ad in the newspaper. These are things that are all going away. Referrals are still very strong, but unfortunately, they are being diluted because the reality is homeowners now have access to the internet. It is more important to be proactive and in front of all those people than being first in the door.
A lot of real estate agents do not know how powerful they are in the world of this transaction. What Rich is trying to press with a lot of his clients today is at the end of the day, you are usually the first person a buyer meets in their own neighborhood and the first person a seller trusts to make the largest transactions in the world. It is important to be the listing agent and buyer’s agent, but the reality is that you are the connector to everything they make a decision on for the next 6-9 months, which could be hundreds of thousands of dollars. You are the ultimate affiliate and referral. One of the things their data does for that agent is the power an agent can go to other people in the industry, including their mortgage broker or local home services company. Now that they have this database, they can go to a local company, tell them they want to work with them and ask them to give them referrals.
Rich had an “Ah Ha” moment with an agent about two years ago who was having great success with her platform. When he asked her how she used her platform, she said all she did was she went to all the local restaurants in her town and would do co-marketing. Every time people would come in, she would have her brand on her coupons and started getting referrals from all these people thanking her for the free appetizer or food. She leveraged the data in her brand and built out this massive referral network. Every time people would visit the area, the restaurant owner would tell people to go talk to her.
It is going above and beyond just signing the transition. It is about being the expert in the community and knowing everybody in the community, and Offrs.com plays a big role in that. The first step to that is knowing everybody’s name, get their phone numbers, be able to contact these people, invite them to his nonprofit events, share with them news about the community, and be the expert. This is something that Gary from KW has always emphasized, and they have been partners with them forever. He has always emphasized building and growing your database. Whether there is technology or no technology incorporated into that, the reality is that is the only way to build. The tech is just about making it more efficient, getting you started at a higher level, and filling in those gaps you need to fill in to compete in the modern day world. The reality is if everybody loves you and you know more about the community than everybody else, you will win 9 times out of 10. You just want to be first in the door to do that.
Aaron said this was not something he expected somebody in the real estate space to really discuss. There is definitely such an important soft skills piece to what the real estate industry has to offer. It is one of the biggest investments people will make. Rich had covered earlier some interesting way other agents are leveraging their data. Aaron wondered if there are other service providers using his data for purposes other than real estate. Rich said absolutely since they sell their data to a variety of others, anything from around the home transactions. It is about a nine-month curve where basically a person decides to sell their home, move, buy a new home, and anything they buy and sell in between can literally be $100s of thousands or even millions of dollars of transactions. Whether you buy a new car or furniture or decide where to shop for groceries, whatever decisions you make when you move could impact what you spend if you stay there 7-10 years and it’s massive. When you make all those decisions in a short period of time, the real estate agent is the one person who people typically look for when wanting to recommend title or a good moving company.
With everything from a $10 transaction to a $10,000 transaction, a real estate agent has that power. Rich said they have blown into that network through their real estate agents very well. At the end of the day, that is the time a lot of money and business transactions are happening and where you want to be as a service provider, like if you are a home service provider. They work with everybody from Home Depot all the way to title and mortgage companies.
Aaron asked Rich where he sees Offrs going in the next several years. Rich said first and foremost, they want to be the best ad provider in the real estate world. Whether it is using an algorithm to acquire more data or have all these ad providers they work with, they want to provide the best starting point. You have to start with the best ingredients if you are going to make a nice little cake. The second tier is they want to empower and leverage their network of real estate agents, people who join their family and people with whom they work. They want to make sure they can cross that chasm.
This is a new world, and they are going to get frustrated and say things do not work. Rich said this when he started his first company. He did not think the internet was going anywhere and thought he would not get any leads on his websites. He wanted to go back to the old methods, and you have to fight through that. The world is data. You name the top five companies making billions of dollars, you see they are making it because they have data. Once they realize that, empower it, and adapt to that, it will transform the real estate world and they will be part of that. iBuyers and Zillow will take a little percentage, but the reality is there are 5 million transactions a year. You absolutely need people involved in this, and real estate agents have to understand you have to make this happen, not just with our technology but technology in general. Then, you have to integrate this with what you know and love and do on a day-to-day basis. This is really where their vision lies.
To visit their website, it is actually www.offrs.com since they could not afford the “E.” Check it out. It is not if but when real estate understands the importance of this. It is definitely worth the time to talk to one of the experts just to learn about it. Technology may not be the most fun to get involved in, but this is more than that. It is really about learning, marketing, and farming. The math and predictive analytics are fancy ways to say this is something new and cool. This is not the lead generation from the 1980s. This is really exciting and worth taking 15 minutes to discuss.
The Norris Group would like to thank its Gold Sponsors for supporting I Survived Real Estate: Guaranteed Rate and Nathan Chabolla, In A Day Development, Inland Valley Association of Realtors, Jason Thorman with Coldwell Banker, Jennifer Buys Houses, Keystone CPA, LA South REIA, Las Brisas Escrow, Lawyers Title, Michael Ryan & Associates, New Western, NorcalREIA, NSDREI, Orange County Real Estate Investors, the Outspoken Investor, Pacific Premier Bank, Pasadena FIBI, Pilot Limousine, SJREI, Spinnaker Loans, South OC REIA, Tri-Counties Association of Realtors, uDirect IRA Services, White House Catering. See www.isurvivedrealestate.com for event information.
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