Off-Market Real Estate Tech Landscape

I’ve been building Goliath for the past year, and I believe it’s time to share some insights on what I’ve learned. In residential real estate, transactions are typically classified as either on-market or off-market. On-market transactions involve listing properties on the MLS, engaging realtors on both sides, and following a timeline that usually spans 3-6 months. Conversely, off-market transactions, often favored by investors and wholesalers, have shorter timelines and frequently offer discounted pricing. While only about 15% of US real estate transactions happen off-market, these account for up to 40% of properties acquired by real estate investors. The question then becomes: how do you find off-market deals?

Inbound vs. Outbound Strategies

Finding off-market deals involves two primary strategies: inbound and outbound.

Inbound - (Homeowners reach out to you): This strategy focuses on attracting homeowners to a platform through advertisements like billboards, bus stop ads, and “we buy homes” websites. Homeowners find the website, the property is underwritten, and an offer is made based on 60-80% of the ARV (after repair value). If the offer is accepted, the investor can either keep the property or sell it to another cash investor for a profit. The strength of the inbound approach lies in its efficiency, as it tends to attract homeowners with a strong intent to sell, resulting in higher conversion rates. However, reliance on keyword advertising on platforms like Google can quickly lead to diminishing returns.

Outbound - (You reach out to homeowners): This strategy involves actively reaching out to homeowners who may be interested in selling their properties. The goal is to connect with homeowners just as they are considering a sale, allowing the investor to make a competitive offer. Outbound operations generally require larger teams since the targets may not have explicitly expressed interest in selling. However, the key advantage here is scalability. An investor can start solo, cold calling, and gradually expand to reach more homeowners without facing diminishing returns.

Typically, investors begin with outbound strategies to start their initial pipeline. They then build their business using inbound strategies through Google ads, before finally returning to outbound methods to achieve scalable growth.

Inbound vs. Outbound Workflows

Inbound Workflow

• Website Builder: Carrot, Wix, Weebly
• Phone Call Taker: Various agencies and call centers
• CRM: Followup Boss, HubSpot, Lofty, REI Reply

RE Investors start by setting up a website using platforms like Carrot, Wix, or Weebly. Initially, they connect their phone to their personal cell and link any online forms to their CRM. Ads target keywords such as “sell home fast” in their regions. As operations scale, they transition the phone number to a call center, which can cost between $1k to $3k per month. A specialist on the team handles pre-qualification, and investors establish a network for property disposition after the sale. This approach relies heavily on ad spend, meaning operations can slow significantly if the ad budget is paused.

Advertising spend is crucial for this approach, but it often encounters diminishing returns sooner than expected. To scale effectively, investors typically consider expanding into neighboring markets. Once their ad spend reaches approximately $30k per month, they usually shift focus back to scaling their outbound workflow.

Outbound Workflow

• Property Data: PropStream, PropertyRadar, PropWire, Property Shark, auction sites like Xome, RealtyBid.com, and various county websites.
• CRM: REISift, Followup Boss, Lofty
• Phone Caller: Various agencies, call tools, Phone Burner, Ringless Voicemail software

Outbound strategies start with sourcing property data from services like PropStream, PropRadar, PropWire, or Property Shark. Investors also use auction sites such as Xome and RealtyBid, along with various county websites for additional data. They often begin with affordable subscriptions around $99, typically providing 10,000 free numbers, though many may be disconnected. As they grow, investors invest in higher-quality phone numbers and may set up call centers, possibly overseas, to support outbound efforts.

A mature outbound operation usually starts at around $3,000 per month, with significant expenses related to phone numbers. Each caller typically requires 10,000 numbers monthly, which often costs more than the labor. To break even, the operation needs at least one wholesale deal every two months. Advanced teams compile their own lead lists from public notices, county data, or court dockets for a competitive edge and use services like Experian and TransUnion for skip tracing.

The major costs in this approach are phone numbers and caller expenses. Quality phone numbers range from $0.25 to $0.09 each, and it’s common to spend $3-10k monthly on skip tracing alone. But the benefit of this approach is that it is infinitely scalable.

Software Solutions for Real Estate Investors

The choice of software depends on your strategy and goals, generally addressing key tasks:

• Finding raw information or analyzing property data
• Managing relationships (CRMs)
• Contacting homeowners (Phone, SMS, Email, Physical Mail)
• Enabling homeowners to reach you (SEO/paid ads)

The Real Estate Industry’s Willingness to Pay

Real estate professionals often hesitate to spend on software. Moreover, operator sophistication varies greatly. For example, 50% of realtors sold one or fewer homes last year. The wholesaling and investor market is even more skewed, with many drawn in by get-rich-quick schemes.

How do software companies charge for their services? They adopt low monthly SaaS fees in the hopes of finding whales, similar to the modern video game industry. They partner with real estate gurus and sell software cheaply due to the availability of nationwide homeowner data. While sophisticated feeling but non-actionable information like title documents and the number of fireplaces is provided for free, charges apply when you need to contact homeowners, whether for phone, SMS, or physical mail.

Outsider Perspective

The current software ecosystem is surprisingly polished, with well-integrated tools. Newcomers to the industry are guided on what to purchase, typically spending around $300 per month to get started. From importing data from PropStream/PropRadar into REISift, skip tracing on the platform, dialing from PhoneBurner, marking numbers as good, wrong, or disconnected, to tracking leads and listing properties for disposition, the process is streamlined.

The tools are designed to make the unsophisticated feel sophisticated, whereas the teams truly closing deals pay for a dialer software and DocuSign. Due to low willingness to pay and high churn among aspiring RE investors, venture often avoid this sector. Growth is often driven by internet personalities, with pure SaaS facing high churn, the true economics comes from a few power users buying data.

Unlike most industries where the sophisticated move off of excel and onto software, this industry moves from software to excel.

So Where Does Goliath Come In?

We help sophisticated real estate investors executing outbound strategies solve their data problems.

Power users looking for an advantage in their outbound sequences often create lists themselves by monitoring county data, public notices, or court dockets. When they receive lists from the county, these lists are often incomplete or lack the full picture to make them actionable (example 1, example 2). Whether the homeowner names are in a format that their skip tracing software cannot recognize, or the entity is stored in an LLC that is difficult to unravel, the data cleaning process is highly manual. Most virtual assistants burn out after a month or two, not to mention the time it takes to process the documents.

This system works because they go gather data others in their market do not have access to. They find people when they are most likely to sell, rather than just calling people whose properties fit certain criteria. Here is what we do today:

• Help our customers monitor the specific data sources they need, such as court records, public notices, and county records.
• We format data to make it actionable. We extract data from PDF, Word Docs, and TXT files and parse that information and normalize homeowner names, and addresses.
• Unravel LLCs to uncover the owners of single family homes, multi-family homes, and other structures.

We are tackling the problems sophisticated real estate operators, teams and investors face day in and day out. We are enabling them to spend 100% of their time doing what they do best: building relationships, not finding or compiling lists.

On AI...

There is a lot of hype right now surrounding AI in real estate. AI dialers. AI co-pilots. AI assistants. You name it, and there's likely someone building an AI tool for it.

The reality is most of these tools are not AI. And to tell you the truth, we're not an AI company. Do we use AI in the products we build? Yes. Is AI helpful in completing some of the tasks that our customers rely on us for? Yes. Does that make us an AI company? Debatable.

The reality is we're building products that solve problems. AI just happens to help us build better, faster and more efficient solutions.