MARKETS & TRENDS
PROPERTY DATA
On the Radar: Off-Market Deals
DATA-DRIVEN STRATEGIES TO IDENTIFY DEALS IN 2021
by Aaron Norris
oreclosures will make head - lines in 2021, but real estate
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turn to distressed debt, build-to- rent, and buying directly from iBuyer brands. Some of these entities have been around since the foreclosure crisis and continue to amass large rental portfolios. Realogy and Keller Williams have announced their own branded ver - sions of the as-is, cash offer. Other brands are also rolling out various efforts to aid consumers in noncon - tingent sales, be it a cash offer or money to rehab before a sale. Expect more real estate brands to jump on this wagon next year. So, why is this important? These NO. 3 Major real estate brands: competitors will increase your mar - keting costs and put downward pres - sure on profit margins in markets where they operate. Early on in the pandemic, iBuy - ers briefly disappeared. Real estate investors who left their digital mar - keting running in March and April probably noticed a dip in advertising spend for key and branded terms. Yes, Wall Street targets known active cash buyers in select markets, driv - ing up rates! These Wall Street competitors are typically seeking a 7-15 percent discount off an as-is price. They’ve readily admitted to losing money on average, but their unique mod -
investors stockpiling cash in hopes of the Great Recession Part 2 will likely be disappointed. The Fed and Congress have shown little desire to allow a mass wave of evictions and foreclosures, and we should expect more from that playbook in 2021. For real estate investors, that means off-market deals will once again be where most opportunities reside. In some markets, investors will experience increasing competi - tion from Wall Street money and tech disruptors in a few categories: Zillow Offers, Refin Now, Open - door, Knock, and Offerpad are a few of the most established iBuy- ing brands. Covid may have slowed these entities temporarily, but don’t count them out. These tech-savvy, cash-rich buyers spend millions in marketing and also generate rev - enue integrating ancillary services like mortgages and closings. Some readily admit to losing money on their all-cash, as-is offers. NO. 2 Institutional buyers: Deep-pocketed Wall Street players are looking to place over $1 billion. Unable to place that money in dis - tressed real estate, they will likely NO. 1 iBuyers:
el of making money with ancillary services will make it more difficult for Main Street investors to compete. And, just because they aren’t in your market now doesn’t mean they won’t be soon. In your quest for off-market deals in 2021, this means playing a better data game. Understanding what Wall Street is chasing allows you to strategically decide to compete with them, sell them what they are look- ing for, or avoid the inventory they’re chasing. Every market is different, so homework is a must. Keep in mind Wall Street is after volume (AKA scale). Spending bil - lions safely and efficiently is not easy. Main Street will thrive where Wall Street can’t survive. That means focusing on strategies that don’t easily scale and on inventory they
72 | think realty magazine :: february 2021
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