Editor’s Note: The Disruptor Roundup analyzes companies implementing unconventional models.
There just aren’t enough houses for sale—that is the experience of a large number of agents in this current market, as underbuilding and other demographic-related factors have left a dearth of available properties. From a macro perspective, building more homes and enticing owners to sell with policy changes will almost certainly be necessary. But as an agent, is there anything you can do right now, specifically to find a home for your buyer when choices are limited?
For some, the answer is looking beyond what is listed on the market. While trying to generate listings by soliciting off-market homeowners is nothing new—postcards, cold-calls and the like—a historically tight market has inspired a few to go even further.
Greg Burns, a Compass agent based in Hawaii who focused a lot on off-market properties, says that a couple years ago he had the idea that technology could change how agents approach off-market properties in a fundamental way. Joining with patent lawyer Kimani Clark, that idea became a company called DropOffer.
“Part of my success was the fact that was providing inventory to my clients that they were not educated on, and what I was able to do is kind of shift the story that was happening to many agents these last several years, where your clients are coming to you sometimes more educated than you are on certain markets,” he says. “I was able to spin that story a bit because I was now educating them, and it turns from me just being a real estate agent to me being their trusted advisor.”
DropOffer claims that they can do much more than a real estate agent pounding the pavement in high-value neighborhoods and at scale. A buyer can choose off-market properties and, working with their agent, come up with a specific offer to buy that home. The homeowner then receives a personalized postcard, an email and micro-targeted ads on their social media and web browsers (linking to a custom landing page with photos of their house) letting them know someone is ready to buy their property right now.
“I knew with the data and the technology that this could be done,” Burns says.
Because the process is automated, agents and their buyers save a tremendous amount of time, Burns claims. Clark adds that the personalized and specific way DropOffer functions sets the company apart from iBuyers or other institutional investors.
“The picture of your house is a way to know that it is individualized for you. What we’re used to is someone kind of contacting us, but we know in advance that those people want a house, they don’t want your house,” he explains. “That’s the difference between someone lowballing, someone who wants to pay 10% less, versus someone who wants your house may want to pay 10% more.”
Recently opening in a few test markets, DropOffer hopes to be able to essentially open up the off-market inventory to buyers all over the country, as well as give homeowners more ways to engage in the real estate market.
Other real estate professionals are also using personalized, targeted approaches to find off-market opportunities. Greg Potts is the district director for Fathom Realty in Texas, which is home to some of the hottest real estate markets today. He describes the current inventory and affordability issues as “a time of crisis” and pushes for “unconventional” and “creative” solutions to finding homes for buyers.
“We’re hired fiduciaries for our clients, so we’ve got to get unconventional and be willing to step out there,” he says. “We just want the homeowner on the other side to realize we have a real-live breathing client who says your house is possibly a fit for my family or what I’m looking for.”
This same personalization that DropOffer seeks to scale with technology Potts says still works for the average agent—at least in some circumstances. Besides plowing through databases of old FSBOs or writing form letters, Potts says he has clients write open-ended “love letters” (removing personally identifiable information that could violate fair housing statutes) that he can use both to identify and solicit off-market properties.
Potts also says that targeting very specific demographics can make all the difference—whether that is building relationships within fast-moving industries like tech and military contractors, or reaching out to older homeowners who might be open to moving but simply aren’t as plugged into the real estate market.
“You’re looking at markets like that that are being, areas that have higher age demographics that they’re at the point they want to downsize or even move into a rental,” he says. “And that demographic is not going to be one that’s aggressive, that goes out online looking for someone to list their homes.”
A new landscape
Burns says DropOffer specifically fits this market, which has (at least until recently) battled a significant imbalance between buyers and sellers. As supply and demand return to a more stable level, the urgency to access off-market properties will certainly decline, at least in most markets.
But Burns argues that even as the market shifts, making off-market properties more visible and accessible will be valuable. A tool that allows homeowners to “raise their hand” within the DropOffer ecosystem can let prospective buyers know they are at least tentatively open to selling their home. They can even put a price point where they would be willing to accept offers.
“What we’re doing for that homeowner is we’re giving them an opportunity to raise their hand and present their property to a real buyer, not just to an iBuyer, because that’s really their only option right now,” he says. “But what is staggering is, as big as those companies are, how many of their offerings are getting refused because of price point.”
Clark goes further and says that he wants to fully shift perspectives and begin seeing off-market listings as available, at least to some degree. Many homeowners who are not going to list their home under most circumstances would be interested in at least starting conversations if the process was simple, straightforward and trustworthy.
He uses ride-sharing services as an example, pointing out how Uber upended how people thought about taxis.
“There was probably a time when we thought the taxi cab market was good, until Uber showed us that it just wasn’t and it never was,” he says. “They made an app that just made it easy and you could have the information.”
Trust is incredibly key, according to Potts, as currently most homeowners are selling based on a “life event” rather than a desire to make some cash. Those who are not pro-actively trying to list or sell their homes are even more likely to look to someone they already know or have a relationship with—sometimes built through off-market door-knocking that didn’t initially work out.
“The first conversation they’re gonna have is with us because we’re already down the road with them,” he says.
Especially with DropOffer, as the company places unsolicited ads on people’s smartphones and computers, both trust and privacy are going to be a delicate walk. Clark and Burns say they are fully aware of this, and allow homeowners to opt out of any and all future solicitations if they aren’t comfortable being targeted. Burns says they do not share information with agents or buyers until they are “actually now speaking” with the homeowner.
“We understand the homeowner’s privacy,” he says. “Our messaging is clear—although we’re being very hyper-targeted in delivering our messages to you, we do not share any of your information with our agents until a deal is closer.”
At the same time, though, the company has access to data showing homeowners who have clicked through the ads they receive, rejected offers at certain price points, scanned QR codes on a postcard, entered their information on the landing page or raised their hands in the past—all data that is incredibly valuable to an agent, Clark says.
Burns adds they can target these previously-identified homeowners with marketing materials once they start browsing real estate portals—though he again claims the company is very focused on privacy.
“We understand the homeowners privacy, and to be candid, that’s why a lot of especially the high net worth individuals sell off-market because they can do so in a private manner,” he says.
From a purely real estate perspective, Burns says a successful solicitation by an agent for an off-market listing creates a “higher likelihood” of a dual-agency deal. People who sell their homes through DropOffer can get their own agent, or not use an agent at all (not something the company recommends), but the way the transaction takes place opens up the possibility of representing both parties, he says.
On the same note, DropOffer deals do not take place on the MLS. Burns says he made “exhausting efforts” to be compliant with National Association of REALTOR® rules in order to receive their “blessing” for the model. DropOffer deals are more akin to iBuyers in that respect, Burn says, though he again emphasizes the personal, targeted strategy that puts a specific number and a real buyer behind their offers.
“We’re presenting you with real offers, not just trying to get you as a listing,” he adds.
Potts says in his experience, a lot of agents think they can get away with calling a FSBO or off-market home and essentially misrepresenting the level of interest. Both Potts, Clark and Burns all reiterated that finding ways to be authentic—connecting a real person ready to make a real deal with a potential seller—is a much better investment than trying to make up clients out of thin air or air-drop mailers across a neighborhood.
“It’s all in the approach—if your house is a fit for my client and they’re willing to pay top dollar, would you consider selling?” Potts asks. “Well if got top dollar would consider selling—great!”
Editor’s note: an earlier version of this story misstated Kimani Clark’s name.
