OfferMarket Podcast, Episode 2: The Story of Frank, A crash course in wholesaling

Podcast transcript:

[00:10] Daniel Sperling-Horowitz: Hello, and welcome to the OfferMarket Podcast! I'm your host, Daniel Sperling-Horowitz, CEO of OfferMarket. And today we're joined by a very special guest, my cofounder and chief technology officer of OfferMarket, Martin and Terskin. Martin thanks so much for joining us.

[00:27] Martin Terskin: Yeah, of course. Hi, everyone.

[00:29] Daniel Sperling-Horowitz: So it's great to have you on the show today. I just wanted to provide a quick overview. Our background story. We went to the University of Maryland together. Martin, you did a stint in investment banking and then got heavily involved in software development. My background was e-commerce, building software for Amazon Marketplace sellers and really becoming very familiar with the rise of e-commerce and marketplace e-commerce. About a year and a half ago, we got together and said, let's start a company. We're both real estate investors, both passionate about real estate, and we both felt very strongly that the real estate transaction is extremely inefficient and illiquid as an asset class. And so we started to figure out, how are we going to make real estate transactions more efficient? And with that, I want to dive right into the legend of Frank

[01:37] Martin Terskin: The origin story.

[01:39] Daniel Sperling-Horowitz: Exactly our origin story. We decided, let's learn how to wholesale real estate. Seems like off market transactions are an opportunity to provide value and learn all of the ins and outs of real estate. And we just dove right into the deep end, didn't we?

[02:02] Martin Terskin: We sure did. And we realized there's a lot of opportunity and off market transactions, a lot less barriers to entry in some ways. And we actually see that model to be somewhat more efficient than what happens on-market transactions. So we really wanted to understand that model, how it works and tell us about Frank.

[02:23] Daniel Sperling-Horowitz: Yeah. Well, actually, you brought Frank to my attention because you built a data collection engine that showed us all of the distressed sellers in Baltimore City. And I was the front end reaching out to sellers, seeing if there were opportunities to help connect them with investors in our network. And I connected with Frank, had a very interesting conversation. He had four properties in a very prime area of Baltimore in Fells Point, and actually Upper Fells Point. And he agreed to work with us. We were very transparent about how we operate. And he had high expectations. He wanted a lot more.

[03:09] Martin Terskin: Remember, actually, the first time you contacted him, he's like, not another one.

[03:13] Daniel Sperling-Horowitz: Yes. And I have to say it's important to have empathy for anybody who's in a situation where they need to sell their house and they need to sell it fast. But they are just absolutely bombarded with outreach, and it's all the same. And that's a major opportunity for wholesalers. And it's probably something we can talk a lot more about in future conversations and episodes. But Frank agreed to work with us, and he gave us a shot. But he wanted top dollar for his properties. And we realized pretty quickly once we presented these properties to investors. Oh, this is Frank. Good luck with that. Right. I've seen this deal before. And no one..

[04:04] Martin Terskin: He was a celebrity in the neighborhood.

[04:06] Daniel Sperling-Horowitz: Yeah, exactly. People kind of laughed at us, and ultimately, we need to figure out how to make a deal work. We need to figure out how do we make Frank happy. And how do we make an investor happy? And that meant compressing our margins and taking very small transaction fee, an assignment fee in the process. And we made it work. It took a lot of time because of all the liens on the properties and it's something we're very proud of. I think what we learned from that, Martin, is something I'm excited for you to get into here is everything that goes into the real estate transaction.

[04:54] Martin Terskin: We really learn the process.

[04:55] - Daniel Sperling-Horowitz: Exactly.

[04:56] Martin Terskin: We really learn the process. Kind of like you always say, that building airplane while in flight. That was really what happened. As we were doing these transactions, we were learning as we were going. We realized so many things that go into the mix. You got to handle all the inquiries. You got to talk to everyone who's interested. You got to advertise to make sure you have enough interest looking at the properties. Then you've got to really understand and filter out, like, are these people legitimate? Is it just another layer of wholesalers that are trying to come in? Is it legitimate cash buyer, or even if it is a buyer, do they have the right financing? It just became kind of like a process exploring this really long funnel that at every point of it, it was like a breaking point where this prospect could disappear or evaporate because he didn't meet this criteria. So it kind of revealed to us how fragile the funnel really is for this process and how important it is to make these transactions efficient. You need to not only screen really well, but also you need to have a bulletproof process.

[06:15] Martin Terskin: And one interesting discovery we found was that people are not familiar with, like, there's no standard process. And every time you engage with a different property, different seller, everyone has different expectations, and they often don't really want to follow, like, what you prescribed to them. So there was kind of, like, a bit of standardization that needed to happen. And what does that mean for what we're trying to build, right? Like we're here at OfferMarket, we realize, like, hey, well, that's I think why all of these real estate transactions are so expensive it's because there's so much kind of bespoke servicing that needs to be done.

[06:55] Martin Terskin: There's no one glove that fits all despite kind of like, every property having indeed, every property is recorded with the county. And it was kind of like we couldn't wrap our head around that, why everything has to be so custom, while the recordation and the way you keep track of it is kind of standard across the whole country with what is it, like, millions and millions of properties. So that's kind of like where we're coming from, what we really want to build out here. And what does that mean for kind of like our market , the wholesalers right.

[07:29] Martin Terskin: OfferMarket, the way we see it is kind of the beginning of a true one stop dispositions platform. The first step they always teach you when you're becoming a wholesaler is build your buyer's list. Right.

[07:43] Martin Terskin: Well, we see OfferMarket is kind of like an open buyer's list. If you're a cash buyer, you can come to OfferMarket, you sign up for alerts. We immediately have you as part of our platform. You're part of our network. So now, anytime anybody - and that's what we mean by open buyers list - f you have a deal, come post it through a couple of clicks of the button uploading some pictures, kind of like massaging your message. You can immediately reach thousands of cash buyers that we already have that we made available for your benefit in your area. They're specifically focused in the area where you post the deal.

[08:23] Martin Terskin: And why is that helpful? It's helpful because you don't have to build your buyer's list. You don't have to spend the time wondering if I'm going to reach everybody or it's a good supplement. Like if you already have a buyer's list, maybe you don't have everybody on it. Related reading: How To Build A Buyers List

[08:37] Martin Terskin: Right. So. Apart from that apart, just even starting the conversation with the buyer's list, we realized a lot of inquiries you'll have are not going to be legitimate. They might not be actual cash buyers. They might be people who just want to spend time talking to you. Maybe it's just tourists who kind of just want to talk about the property and learn the market. But they're not serious. Right. So we realized quickly that once again, we need to standardize as part of the process, too. We need to figure out how to filter and screen for these kind of things. So one of the things that we implemented in OfferMarket is we have a way for inquiries to submit proof of funds. So if they submit proof of funds, we immediately know that these people are a lot more serious. It's a great way to filter out differentiate between just a query and kind of taking them to the next step of the process.

[09:31] Martin Terskin: All right. They have proof of funds. Okay. Well, do they want to take a tour now in this property? Once again, a lot of problems we noticed is like it's tough on the seller to make sure everyone can go to their property, check it out under kind of like fixed conditions. So once again, we needed to verify the buyers. We take their ID. We make sure they are who they say they are and yeah it adds a little bit of friction in the process.

[09:57] Martin Terskin: And we definitely had some people kind of being sketched out and asking us, like, 'why do I have to give you my ID? Is it secure?' Yes, it absolutely is. We have very limited access to that information, and we really only look at it if something goes wrong, which knock on the wood. Nothing has ever so far went wrong. But it just gives us kind of more assurance that you are serious. You just want to look at the property, you want to understand what's going on inside of it. And it gives us assurance that you are very serious. You want to go through with this because I'm telling you, for every ten inquiries, nine of them are other wholesalers. They're trying to get, like, another layer of contract on top of us, for example, which is okay, everyone got a hustle. We understand the game. Everyone has to start somewhere.

[10:45] Martin Terskin: And in the end, after we kind of start to standardize this pipeline, it gives us better outcomes. It gives us these better outcomes faster because we have more legitimate tours, which usually results in way more legitimate offers. And that's kind of like how sellers in our platform really understand what their true market is for their property. This is the widest market that they can muster up.

[11:14] Martin Terskin: And that's basically what we're trying to build, a very standardized process that anybody can become a part of. You don't have to be a real estate agent. You don't have to have super connections. You don't have a very intense buyer's list. You just come to the platform, you post your deal, and everyone who is interested and is already on our buyer's list becomes aware of it. And that's what we really think of when we talk about inefficient versus efficient transactions, less barriers, more direct conversations.

[11:43] Martin Terskin: Once the deal is supposed to market, you can talk directly to the person who posted it, right. Like, there's no additional middleman to kind of like muddle the water, so to speak. You can talk to the seller. You can go check out the property you can put in whatever you think the fair offer is, or given your conditions or your current portfolio. And that's kind of like, as simple as it should be in our minds because, yes, selling and buying houses. All of houses are unique. But the process isn't unique. And that's kind of really where OfferMarket comes in. We think the process of buying and selling should be standardized. But we do understand that each product, each house is unique within its own kind of considerations, but only through full transparency. All of these considerations can kind of come to light, and you're never playing broken telephone, so to speak.

[12:39] Martin Terskin: And I just want to give it back to Dan and kind of like, expand on what it means to other parts of the market. Like, I touched on what it means to wholesalers where it's kind of like we are the disposition platform for them, where they can just focus on acquiring more properties, posting them, not caring about building their buyer's list and just focusing on what they're good at we would focus on bringing the buyer to their inventory. But I think this also has implications for fix and flip investors.

[13:07] Daniel Sperling-Horowitz: Absolutely. And thank you for that deep dive into what OfferMarket means for wholesalers. There's some background noise that I'm trying to avoid, so bear with me here. I might need to move to a different location, but I think that you hit the nail on the head what we want in terms of the ultimate experience for selling a house, we want you to be able to create a listing in a matter of minutes or seconds, and then in a matter of minutes or hours, we want you to start receiving real offers and real inquiries to tour the property.

[13:48] Daniel Sperling-Horowitz: And we want you to have all the tools in one central place to be able to get that transaction to the finish line efficiently and safely, right. And just to touch on the point that you made with verifying buyers, proof of funds and IDs, trust and safety is a huge concern. And if you're not sure who you're working with, who's giving you an offer, you can be not only wasting your time, you could be dealing with a potential scam or fraudulent situation. Right.

[14:23] Daniel Sperling-Horowitz: So make sure that you are verifying, if you are not using OfferMarket to sell your property, make sure you're asking for proof of funds, make sure you're asking for an ID. Make sure you know who you're working with. Trust and safety is extremely important, and we make it so easy, and it's free. And that's the final point. Everything that you just described is available free. It's a free dispositions platform for wholesalers. We have leading wholesalers who are very forward thinking who recognize that and are taking advantage of it. And if you're listening to this and you're wholesaling, you should be using OfferMarket. And if you're not using OfferMarket, you have this incredible tool that you're just not taking advantage of. And that could mean lower profits, it can mean deals falling through, price drops and just less turnover of inventory. And that's the name of the game.

[15:13] Martin Terskin: Lots of waste of time.

[15:15] Daniel Sperling-Horowitz: Yes, exactly. And I can tell you we like to say we eat our own dog food. As we're building our platform, we're learning how to wholesale. We're using the same tools to perfect them that all the other wholesalers on our platform are using. And I can tell you that once we started being able to instantly verify buyers, once we started being able to centrally schedule tours and chat with buyers, wow, we saved a ton of time, so not to go too far into the wholesale thing, because there's just so much more to talk about.

[15:53] Daniel Sperling-Horowitz: We're going to jump right into what OfferMarket means for fix and flip investors and for rental property investors. This is the other side of the marketplace, right. You have local fix and flip and local rental property investors, and you have institutional rental property investors. The single family residential market is just a tremendous asset class at this point. And Wall Street is very involved. If you open up.

[16:39] Martin Terskin: The Wall Street Journal just today published a new article, they are saying that single family rentals are the best performing asset class in the last two years and build to rent is exploding right now. Apparently.

[16:51] Daniel Sperling-Horowitz: Exactly. And those people are on our platform. They're in our network. If you want to think about OfferMarket on the buyer side, it's a huge buyers list of verified buyers. It's growing very rapidly. If you're listening to this right now and you are either a local investor buying and renovating properties or buying and renting properties or looking for turnkey rental properties subscribe to our deal flow. You're going to be able to get alerts and be among the first to know about exclusive and off market inventory that's in many cases only available on offer market. You're not going to find it on Zillow. You're not going to find it on the MLS. You should be subscribed to our deal flow. You're not going to regret it. And again, it's free, so you have no excuses there.

[17:39] Martin Terskin: If you're an experienced investor, I'm sure you're subscribed to like, five or six different local wholesalers and you get like, these long email chains that you have a deal today, a deal tomorrow, and your email inbox is just flooded. And then you don't have a centralized place. Like we even saw one wholesaler said in his distribution. He says, 'oh, to check my other deals, just search your inbox with this keyword', like my name plus deals and like a times stamp or something like that. And I mean, it's kind of silly at this point, especially if there's a lot of deals going on, and that's what OfferMarket is for.

[18:20] Martin Terskin: It's centralized. Everything is on the map. You can see exactly what deals are still available. Obviously, when investors get alerts, deals go quickly. But that's the beauty of it. Like everyone gets a fair chance. Everyone gets immediate distribution. When something new comes up, everyone has a chance to reach out and start that conversation. And that's what OfferMarket is really about, it's honestly everything begins with just the initial contact of conversation between the buyer and the seller. And on OfferMarket, there's nobody in between. You're talking to the person who is trying to just get rid of their property (direct to seller).

[18:58] Daniel Sperling-Horowitz: Exactly. And that's a perfect segue into what distressed sellers can accomplish by leveraging this platform that we're building, right. If you're in a situation like Frank and you need to sell your house fast, you see all of these signs, 'we buy houses'. You're getting contacted by phone, by text message, by mailers. You really want to be able to verify who's actually trying to buy my house. Are they really buying the property or what does this entail? So if you're a distressed seller, you're for sale by owner, do it yourselfer, you want to sell your house without an agent -- use OfferMarket, create a free listing, start to get inquiries and offers directly on our platform. Compare offers and select the best one and close very quickly. Like really, it's a centralized platform to sell your house. And the last thing that you want to do with a property that could be the most valuable asset that you own is to accept a low ball offer without any competition. Right?

[20:11] Martin Terskin: Yeah. Because that's often what happens. You go to one website, you say, oh, they give me a cash offer right now. Somebody shows up, they give you one cash offer. But did you compare it to another person, another similar type of enterprise that gives you another offer? Oftentimes not because you're pressured for time, right. Like you want to get rid of it as quickly as possible. Well, if you post on OfferMarket ten guys that do that, hear about you, and then you'll get ten offers that you get to compare.

[20:39] Martin Terskin: And then once again, now you actually have a kind of few offers you can pick the highest one from. You never know, because usually these kind of distressed sellers just go to one offer and then that's it.

[20:53] Daniel Sperling-Horowitz: Yep. Exactly. So if you're selling your house because of financial problems or you need to relocate or you inherited a property

[21:03] Martin Terskin: Or a divorce or a thousand other potential things that might happen in anyone's life, which is unfortunate.

[21:12] Daniel Sperling-Horowitz: Absolutely. Our mission as a company is to democratize residential real estate. People think about, when we explain our platform, 'oh so you're like Robinhood for real estate'. And that's a pretty good analogy. It's a market that has so much opportunity for efficiency to be introduced. Right.

[21:41] Daniel Sperling-Horowitz: And there's one other area of inefficiency that we haven't covered yet, Martin, and that's this really unique view that we have on our marketplace. We see how all these deals are funded, and in so many cases, it's funded by a private lender, a hard money lender who charges really high interest rates, really high loan origination points, and all these other fees -- legal fees, doc prep fees, title coordination fees. The list can go on, and it's pretty compelling to us how uncompetitive those terms are and how inefficient those terms are.

[22:27] Daniel Sperling-Horowitz: And that makes it harder to buy real estate, which is absolutely everything that we're trying to change. We want to make it easy to buy real estate, we want to make it easy to sell real estate. And so we are very excited to announce this week we announced OfferMarket Capital. And so our aim with OfferMarket Capital is to provide the most competitive, the most transparent and the most simple private lending experience. And the way that we're able to do that, and we're very excited about this, is we work with institutional capital providers.

[23:09] Daniel Sperling-Horowitz: So there's a major market forming around fix and flip bridge loans, ground up construction loans, rental property loans. These are 30 year rental loans, no doc, debt service coverage ratio or "DSCR loans". All of these products are available on our lending platform.

[23:30] Daniel Sperling-Horowitz: And if you are wondering, if you've ever wondered, is my go-to lender giving me their best rates, I can tell you that we lead with the best offer that we can possibly give you. So all of our terms are the best we can offer.

[23:48] Daniel Sperling-Horowitz: And if you want to find out if your go-to lender is really giving you that great of a deal, get a quote from OfferMarket Capital, right?

[23:59] Martin Terskin: Yeah. And like Dan said, we always give you the best offer the first time because we don't want to waste anyone's time because everyone in the industry wastes so much time on these inefficiencies. And I hope this is a reoccurring theme in our talk today is that we are all about injecting more efficiency.

[24:18] Daniel Sperling-Horowitz: 100%. So just to take this episode home, and Martin, thank you very much again for joining us here. Our mission is to democratize residential real estate and do exactly what we've been saying. What Martin just mentioned: to make real estate transactions more efficient. That means eliminating unnecessary fees in the transaction. It means promoting buyer competition, trust and safety to make sure you're getting offers from real buyers. And it means providing funding sources that are competitive so that you can do more deals and do deals profitably. It really makes the industry healthier, in our opinion.

[25:02] Daniel Sperling-Horowitz: So some action steps here. If you're a fix and flip or a rental investor sign up for OfferMarket deal flow, go to offermarket.us, scroll down and there's a big button to access our deal flow. If you are doing any projects, fix and flip or refinancing a rental property or even looking for a rental portfolio loan, see if your lender is giving you their best terms. Get quotes from OfferMarket Capital. I'm very excited to see how this product performs. And if you're a landlord, for sale by owner, or a wholesaler: create a listing on OfferMarket for that property that you're trying to sell right now.

[25:47] Daniel Sperling-Horowitz: And if you have additional properties moving forward every time you have a property list it on OfferMarket. Our buyer's list is strengthening by the day, and we really think that you're going to get a lot of value. It's a free platform.

[26:08] Daniel Sperling-Horowitz: Share your feedback with us. Let us know we're building this for you. If you're a rental investor, if you're a wholesaler, if you're a landlord, let us know how we can use technology to help make you more successful in what you're trying to accomplish with regard to a real estate transaction.

[26:28] Daniel Sperling-Horowitz: Like us on social media, subscribe, invite your friends, tell your friends. I know that we're giving you a lot of homework to do, but we're very excited for you to join us on this journey that we're on.

[26:42] Daniel Sperling-Horowitz: And, Martin, thank you again. So much for joining us today.

[26:44] Martin Terskin: Of course.

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