347: iBuyer, Property Radar & Foreclosure Radar, Sean O'Toole

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It gives me great pleasure to welcome a guest back from a long time ago, maybe longer than I originally thought. And that is Sean O', Toole, founder of PropertyRadar, otherwise known in the past as Foreclosure Radar. And I said, you know Sean, it's been years since you've been on the show. And he said, I think it's actually been about 10 years. I didn't think it was that long. But Sean, either way, welcome back and a warm welcome from a decade ago maybe. Wow, we got to get you back more often.

Well, thanks for having me. Thanks for having me back and sorry it's been so long.

Yeah, yeah, it's good to have you. And you're coming to us from Northern California, right?

Yeah, Truckee Tahoe.

Good stuff. Yeah, beautiful, beautiful place up there. Taxes are a little too high, but oh well.

And maybe that's something we'll talk about is the migration out of high tax jurisdictions. Who knows? But you know, just give us and I know you've got some slides to share for those watching on video on the YouTube channel. And if not, we'll try and make those slides understandable if you're listening to audio only, of course. But what is your sense of what's going on? I mean, there is a lot to talk about nowadays.

Yeah, boy. Wow. There's so much going on all over the place. But we'll stick to real estate. And you know, on real estate, we've got this really incredible kind of cycle happening right now that we've not seen before. And it was really funny. Right. As Covid was starting to pick up, I got all these calls from my past customers. All of the big boys used us to buy foreclosures back in the day. And I mean, hundreds of thousands of foreclosures. I think it was like, you know, a quarter million foreclosures. People used our platform to buy. And they all called me and said, hey, we're putting together a fund. We're putting together a hundred million dollar fund, a $500 million fund. And is your software still up and running? We're going to go buy all these foreclosures. And I said, yeah, we're here for you, we're ready. And I don't know that I'd bother. And we'll see how this all plays out. And I think it's going to take a little while, but I'm not sure we'll see a foreclosure crisis like we saw in 2008.

Okay, so I just want to go back. So now they're saying that, or they said that back during the Great Recession that they're buying all this stuff or they're being opportunistic now, saying they're looking for the big foreclosure crisis that's not really going to happen.

Yeah. So really, in April, my phone started ringing off the hook from a lot of players that raised big money last time saying, hey, we're putting together a fund, we're gearing up and we used you last time. Are you going to be here for us this time? We know you changed your company name. Are you still doing foreclosures?

Right.

And I said, oh, yeah, we still do all the foreclosure stuff we did back then and we're ready to go if it happens, but I don't think it's going to.

Okay, good. I'm glad you clarified that. And Sean, you know what, I gotta say I agree with you. I think these bottom feeder vultures that are, you know, out there and listen, I want to be one too. I'm not, I'm not faulting them. I'm ready to be a vulture at any time, but I just don't think it's going to happen this time around. You know, the, the financing has been underwritten pretty conservatively. Granted, unemployment is very high for certain segments of the population, but it's really uneven what's going on, which is very sad. But some people are doing great right now. They're doing better than ever. So I don't know, it's kind of hard to get a sense of it. But just in your own words, why do you think there's not going to be a big foreclosure crisis this time around?

You know, history, I don't believe that history repeats itself, but I do believe it rhymes. That's not my quote. I can't remember whose it is, but. And I do think we learn something from each of these crisis. Not always the right things, but we do learn some things. And I think there's no question that the banks and the regulators learned that, you know, pre September 2009, if you were a bank and you had somebody stop making payments, it was your job. And the regulators held you to that job to get rid of that bad asset and get it off your books as fast as possible. Going through the foreclosure process, taking that property back, putting it on the market and selling it at whatever price it would sell at at the same time that you're stopping lending. Right. So just, there's just no floor, there's no bottom there on that market. And I think universally the regulators realized By September of 2009 that was a mistake and they started shifting those policies to mark to model was the big talk of the day back then. Right. Like okay, banks, you can pretend this thing's worth more than it is worth more today rather than forcing it onto the mark, onto it. You can rent it out even. And that was really the beginning of the end of the foreclosure crisis. It still took quite a while. There was so much, the pipeline and I don't think we'll get back to that. We won't have that price drops. Price drops require a motivated seller. And yes, you have some motivated sellers in San Francisco in New York, but even in San Francisco so far prices are flat versus I think statewide they're up 8, 10%. So that's still bad performance for San Francisco, but they're flat. Right. There aren't motivated sellers, there aren't people willing to take a 20, 30, 40% discount.

Yeah. And the people that have money and can afford to live in an expensive place in San Francisco, for example, it's not like they lost their money. You know, they still have money and in fact some of them have a lot more. But then you've got to sort of go to the next layer of this discussion. I think it's not a matter of do I have to sell? Am I a motivated seller, am I desperate? I have to get out of this property. And what you said was very poignant about, you know, the banks are thinking in a much more business like fashion this time around. In other words, they're going to do workouts, short sales, loan modifications or become investors, which I don't know if that's savory overall long term, but I would.

Only change that slightly is rather than they are thinking that way. A they're being allowed to by regulators and encouraged to by regulators.

Yeah, yeah, yeah, yeah. Well, however they came, that came about. Fair enough. The fact is it's there. Yeah. But then the question is, you Know, do you want to live in a place that has civil unrest, that has a high density environment where you can get a contagion, you can get a virus and maybe, you know, maybe this is even post vaccine. I think really Sean, this pandemic that happened to us is going to cause a, literally a generational suspicion even after there's a vaccine, even after seven and a half billion people then vaccinated and a lot of them won't agree to get vaccinated. We know that, you know, it's there, you know, there's a very strong anti vaxxer movement long before we ever heard the term coronavirus. Right. You know, there were things before this. There was sars, there was bird flu, swine flu, mad cow disease. You know, there's little things have been out there or just the regular old flu. And then now people have really adopted this remote working. I mean it's certainly the technology was available 20 years ago, it's not new, but it's that it's been, the adoption has been forced upon us. Right. So that's the next layer of that discussion I think.

Right, yeah. You know, so we've been calling it the re realization of America and there's a couple of things that I think re.

Ruralization.

Rerulization.

Yeah, I just want to make sure we caught that because I haven't heard that one before. The rerulization. Say that ten times fast, folks. Okay, go for it. What were you going to say?

And I actually think there's a couple of things that are maybe coming together at the same time and I think there's still some challenges with this concept too. And I think this is maybe a 50 year cycle, not a 5 year cycle, but there's a few things happening. One is, you know, work from home. Right. So now I can be somewhere else. Why am I in this place that I don't really like when I'm a mountain biker and I could be someplace that's great for mountain biking and is a small town. Right.

For one third the price.

For one third the price too, for sure. Right. But there's a couple requirements there.

Right.

Like you know, a lot of people love this little town called Downieville, but it doesn't have Internet. And so the other thing I think that we're going to see is low earth orbit satellites. You know, like SpaceX is working on Starlink. Yeah, yeah, exactly. So you know that changes that where suddenly you can have gigabit Ethernet in the middle of nowhere. Right. So there's that and then we have.

You know, or just have a 5G tower in the center of town. Right. And you kind of solve that problem, right?

I don't think so. I don't think 5G gets us there. And the problem with 5G is I'm a huge fan of 5G. I think it's super important. I wish it was a national priority to get a real rollout of what it's truly capable of, because I don't think the karios will do it on their own. But the downside of 5G is it has a fairly short transmission span. So you need a lot of towers.

Yeah.

So doesn't really work in rural areas at all. And I don't think it solves Internet in rural areas.

Yeah. Because. Because it's such low density. But in a small town that's not necessarily rural, it could potentially solve the problem. But okay, so the re. Ruralization, what else? Any other part of this trend? I mean, I mean, you know, because that was already happening, like people were already leaving high tax environments. That trend has been going on for a while now, whether it be a city or a state.

But I think that's more of a. There are people leaving, but there are also people coming. You have California is growing. Right. Like, so this idea people put out that everybody's leaving California. I mean, we'll see what this year's statistics bring. Right. And there's definitely with the wealth tax and some of the other things that are on the plate, all of which never got out of committee, by the way. Right. But if some of those things start to go through at some point, that might come true. But right now it's just a talking point. It's not actually happening. There are people that are leaving, There are people are coming. And largely that's gentrification. Right. It's. The state of California, for example, is getting stronger. It's now the fifth largest economy in the world.

Okay, so who's leaving and who's coming, though? Because a lot of middle and upper middle class people that I personally know, and I'm one of them, I left nine years ago, you know, so moved to Florida. And I love having no state income tax. I think it's fantastic. It's a lot better than the 13.3% in California, you know, and cost of living in general is so much lower. So. Yeah, I mean, who's going to come in?

I've got a really good friend who's making that decision right now and moving to Austin and you know, so I totally get it and respect It. There's a lot of people making different. You know, they want the beach, they want the mountains, they want. California is a pretty special place. There aren't many other places like it in the country or in the world.

Yeah, there's no question it's a beautiful place and we have the beach, but it's flat as a pancake here.

So, yeah, I'm a water guy, so, you know, I like Florida and I like all the water sports and stuff down there.

So the highest altitude in the state of Florida is like 340ft. That's our biggest mountain. Crazy. Yeah. You've got some charts and graphs, and I'd like to dig into those if we could. If you could share your screen. And let's look at, look at some data here.

The thing we were talking about here a second ago is the. I was running around doing a presentation in 2016 that I think is particularly interesting given just where we are today. And so in 2016, I was basically running around telling folks, look, I actually said, I'm going to stop doing economic updates. And I did. In 2016, I stopped doing economic updates because nothing was changing. Prices were going up slowly because of a lack of inventory. Sales were flat. Just wasn't much interesting happening. And I basically said three things. One, flat is the new black. Right. Things are going to be pretty calm. Slight price increases, but pretty calm in the real estate markets until we have a black swan. And Black Swan is from Nassim Taleb's book.

I'm a huge fan of his work. He's great. But what's interesting is I was calling this a black swan when it first hit, and Taleb was actually on TV and I saw an interview where he said, this is not a black swan, it's a white swan, for whatever it's worth.

Actually, it's funny you say that because. And it's funny he said white swan because Michelle Walker wrote a book called Gray Rhino, which was basically to say, you know, that a gray rhino is the obvious dangers we ignore. Right. It's a highly probable, high impact, yet neglected threat, which we have a lot of. You know, you know, the power grid, you know, lots of things that we are not taking care of that we should be taking care of. So, yes, I totally agree, but back then, I don't think her book was out yet, and Taleb was not talking about white swans yet. So we used Black Swan.

Yeah, absolutely. Okay, take us through this a little bit.

Yeah. So, you know, basically the thought here was that I thought there would be Something that comes up at some point that rocks the boat. Right. And I walk through a whole bunch of things from technology and automation to cybersecurity, you know, nuclear war, war. Right. Terrorist attacks. You can see there in the bottom right corner, this slides from 2016, you'll see a quarantine area. And so that was actually one of the things that I put out. Bill Gates and lots of other people were talking about the possibility of a pandemic, but it was just one of the things that I said, look, there's things that can happen that are coming up. But my point to the folks in real estate at the time was that it's not going to be the same as 2008, which we just talked about a little bit, because, you know, Janet Yellen was Fed chairman at the time. Right. And I argued basically that she had a shrink ray and would use it to turn the Black swan into the. I always forget the name of the baby swan. It's a weird, It's a different completely not anything you expect.

I don't know that. But yes, the Fed can basically change anything, right? You know, it's magical. You can just create money or ease the money supply or ease the credit supply in some way and it just changes everything.

Everything.

You know what, a lot of these doom and gloomers that have been predicting the end of the world for decades and it just never happens. They're just constantly wrong. They sort of act like things happen in a vacuum, like, okay, well, the economy is going to do this, that and the other thing. But they forget that there are all these response mechanisms, you know, and seems pretty ridiculous a lot of times.

Yeah, well, you know, yeah, there are all these response mechanisms and you know, and what's interesting is we've been in this boom bust cycle really since 99the.com. I was a tech guy in Silicon Valley and definitely experienced the dot com bubble. And we rescued that really with Fed policy, low interest rates that blew up a housing bubble. And then we rescued that again by creating a strong stock market and other things. And so we keep having these boom bust cycles. There's winners and losers. You mentioned earlier that it's not evenly distributed. The wealth gap is growing, I think as a direct result of the way we're dealing with these crisis.

Oh, definitely, because all the banksters just keep getting richer every time there's a crisis and everybody else gets their money inflated away. So you're absolutely right. The people close to the money always benefit and everybody else gets the scraps and sometimes those scraps actually make things worse, not better, at least in the long run. Yeah.

And no question. Right. But when you have these Fed responses, right, that we're just not very good, the concept of let's pump money back into the economy. Right. So we're having Covid itself is going to cause a deflation. Right. And so you pump money out there which causes inflate, should cause inflation, but to the degree that it offsets inflation, it's just reflation and gets you back to flat. Right. So that's kind of the goal with these, these policies is to get us back to where we were. The problem is we're not very good at handing out that money. As we saw with ppp, as we saw with the unemployment insurance. Right. So we put out unemployment insurance and then people don't want to go back to work and small businesses can't reopen because people are making more money staying home or ppp, where you get people that don't need it, getting it and buying Ferraris and other people who do need it can't get it because the stars aren't aligned for them. We're just not very good at, at distributing the money. And that creates these, this unequal divide of where it goes.

Absolutely.

Where it goes for sure is asset prices, which is why housing right now is not surprising me at all that.

It'S booming and prices are increasing.

Right, right.

Yeah, yeah. So where it always goes. That was a really key line that you said. Where it always goes, meaning the inflation always goes, is it goes to asset price inflation versus consumer inflation. Now we've definitely seen a decent share of consumer inflation recently with grocery prices at a 50 year high. But if you go with the core rate of inflation, then they're going to exclude food and energy. So we're not even counting that. But energy has been pretty deflationary lately, so we'll see. But do you think asset prices will continue to soar? I mean, that seems to be the trend right now, but is that going to continue?

Yeah, it's funny, it's just everything I watch there, you see you have some art behind you. Art. Cars.

Classic cars.

Yes, yes, classic cars. Single family, real estate, lots of things like that are all doing very well right now. Because basically what you have is you're printing more money, the money becomes worth less. And so you want to have tangible things so that you're not losing the dollar's losing value.

So this is really predictable. And this is kind of what I was saying back in 2016. We know what's going to happen. We're going to have a crisis. The Fed's going to come in, they're going to print, and we're going to see asset price inflation. Now, it's not quite that easy though, because, okay, I'm going all in in real estate in San Francisco and then it's a pandemic. Right. Or nobody's working from home. And I went all in on office. Right. This is where diversification is still important because you don't know what that crisis is going to look like. Did they just move coast? Did they Whatever. Right. This kind of boom, bust, crisis cycle, I think is our future as long as we're the world's reserve currency.

And I think there'll be another one.

Okay, so what does having the dollar being the reserve currency have to do with it? Why does that make us more boom and busty than another economy? That's not the reserve currency.

We have a lot more flexibility in our ability to print money and still buy goods cheaply. Right. So we basically export inflation, put that burden on, take it on ourselves. We could talk about the impacts that has on the world and the view of the world, of us and the rest, but it has a lot of.

It's not very fair, for sure.

Right. It's not very fair. So as long as we have that power. And this is the whole modern monetary theory, which I think both parties are embracing, frankly, whether they think they are or not, it basically says we can print all the money we want to print and do whatever we want. And that is the cycle I expect to continue to happen until we lose that world's reserve currency status. Now, we're a big enough country, we import a lot of stuff, we're dependent on other folks we might have to play by at that point.

Yeah, well, the MMT thing, modern monetary theory thing, that seems to actually really hold true. And I think modern monetary theory is largely a fantasy. Okay. That you can just spend as much as you want and have no consequences ever. Right.

To be fair, MMB actually says there is a consequence that when you start having high inflation, you pull inflation into control with high taxes, and then that once you get inflation down, you lower taxes and that you use taxes as the control to control the economy rather than interest rates.

Right. So the thing though is that the IRS is the biggest taxing agency on earth and you have to pay the IRS in their currency of choice, which is dollars, and the US is. It's a huge debtor. Okay, I get it. But it's also a huge lender okay. And all of those loans have to be repaid in dollars. And that strengthens the dollar. It puts a floor onto how weak it can get no matter how much money we create.

Which is why we can kind of print like crazy like we are.

I know it's a pretty beautiful concept for the U.S. it's not very fair to everybody else, but the U.S. is obviously in the bully pulpit for better or worse on that deal.

Other things that I think a lot of people don't realize, like, a lot of people think that the trade deficit's a bad thing, but what the trade deficit really is is we import goods, we export dollars, but they can't spend those dollars other than to reinvest it in our debt, which drives our interest rates lower.

I know our running a big trade.

Deficit is part of why we have such low interest rates. So all this stuff is like a lot of people just don't understand how intertwined it is.

It's super interconnected. Absolutely. And the trade deficit shows you, is it shows you how much lifestyle benefit Americans are getting at the expense of somebody else. Like, you know, this whole trade war is. I don't know, it's almost funny to look at. I hate how the media characterizes it in the sense that they use it to bash Trump. It's really a trade negotiation, and he is right about some things. But all in all, the US Is definitely getting a good deal just because of its lucky position in the world, largely. But could, I mean, is it even plausible that we would ever lose the reserve currency benefit? I can't see that happening in decades at least.

Well, this is where I think we have to be a little careful with how anti trade and anti trade deficit we go. Because we were such an important trading partner for China for so many places that as we take an anti trade position or try to even bring stuff back here, we become less important as a reserve currency and it's easier for other countries to go, forget it. There's a lot of those conversations around oil where people are saying, hey, let's trade in something else. I think we have to be careful what we wish for there. That we are such a big consumer of goods and that we import so much and have such a big trade deficit is part of how we get to maintain a world's reserve currency. China's a lot less dependent on us now than they were five years ago, 10 years ago. And at some point that breaks. So they go, you know what? We don't care anymore. And Russia goes, you know what we don't care anymore.

Yeah, well, that's the theory that Peter Schiff has been espousing for almost 20 years, I think this decoupling idea, which has been gloriously wrong.

So far.

And yes, China, until it isn't right.

Fair enough, fair enough. I totally hear you. You know, China is creating its own middle class, but it's been a long slog. Even though they've done it faster than anybody, it's still they got a long, long way to go to get to.

A lot of problems.

And the thing that's going to hit China at the time when they're just maybe hitting that power curve of creating their own consumer class is their demographic problem that is coming with a vengeance because of the one child policy. So, you know, what they are doing.

And what we should be doing right, is they're investing in infrastructure. They're investing in a lot of things to the point where you have ghost cities that they're building ahead of any need for which you can debate the validity of that for sure. But there's still a major investment going on and we've gotten soft. We're not investing, we're not rebuilding our infrastructure. We're turning off power in California because the power grid can no longer support the power needs of the densest state in the Union.

Oh, it's truly depressing in a lot of ways, Sean, because you look at like, I remember last time I was in San Francisco last year and I've been there a million times, but I went to look at the Golden Gate Bridge with my girlfriend, right. And I thought, when are we ever going to have like a great project like this again? In the US there's been no. Well, the World Trade center, they finally rebuilt. It took forever. And I don't know if it's that incredible, frankly. It's not the tallest building in the world. Doesn't hold any records that I can think of. You know, we haven't been to the moon again, you know, I mean.

Famous railroad town.

And you know, you can walk some of the railroad tracks around here and you look at what they did at the time they did it, and it is truly unbelievable.

Yeah. And we're not doing anything like that anymore. It's just. Yes, it's crazy. But hey, let's circle back to get more granular before we wrap it up, if we could and talk about, you know, your company is property Radar. So talk to us about some of the stuff that you guys are researching and, you know, maybe any surprising things that people should know about Real estate investing and markets. I mean, we've alluded to that. We talked about people leaving or not leaving certain jurisdictions. Yeah, but tell us what you're working on.

Wow. So much there. So we've a couple things. We started off in the foreclosure space and we still have, I think, the best foreclosure service out there. But we expanded in 2013 to cover all properties, not just those in foreclosures. And originally we're really used as like a property information due diligence service. Most of our customers use this today on the real estate investing side to acquire, find properties, to buy off market properties. And realtors look for off market properties as well. And then we have like solar and folks like that that use us to find property owners to market to. So that's really, you know, we've kind of went from marketing information to like, I mean, property information to marketing audience creation. But we still do dive in and do some analytics. We tend to do it at a lower level now. For example, there's a Senate bill in California that's changing some of the foreclosure laws. And they base this on the idea that there was a lot of vacant homes as a result of foreclosure. But they used a study from the St. Louis Fed, I think that was not going to remember. But basically it was a different place on the east coast where there was such a glut of homes, they ultimately had to bulldoze homes because there just wasn't people to buy them. And they're using that logic in California to say we need to change the foreclosure rules or we're gonna have a bunch of vacant homes. And it was never a problem. And we'll dive in and get that data and say, okay, look, on average, homes that were purchased by investors were flipped in 154 days. And if you think about that, that includes eviction and rehab and marketing and the sales and all those different steps took banks 278 days. So we'll dive into things like that. Or right now we're doing a lot of looking at the ibuyers. Right. Opendoor is going public. And so we're looking at what their activity is. How long does it take a deal? What's the difference between what they buy things for and what they sell them for? So lots of, you know, lots of really good stuff like that. But, you know, everybody's like, what's going on in real estate? And I've kind of stopped answering that question because real estate is not One market in the US it's hundreds of markets.

Yeah, well, it's about four. It's 400 MSAs almost. Right. Metropolitan statistical areas, I think 392 or something like that, if I remember correctly. And it's over 3,000. And it's over 3,000 counties.

Okay, 144.

Yeah. See there. There he goes. Folks show off.

But. But even that isn't granular enough with 3144 or whatever you said.

A county is way too big. I mean, you know, you know, you got to go. Even a city is way too big. Even a neighbor. I mean, you know, even a zip code's way too big. Right. I don't know how many zip codes there are.

Real estate's local for sure.

Very. It's hyper local. Hyperlocal. Right. So now answer the question when it's hyper local. Okay, what next?

Yeah, what next? You know, and I do think, you know, that's. That's. So what's next for us is we are going national, right? Though our company's been in five states. We're going to be in all 50 states. And. And we've been loading all that data for the last two years. Super excited about it. Over a billion transaction documents, et cetera. So for the first time, we'll be able to start really doing that comparison, not just in the five states, Arizona, Nevada, Washington, Oregon, and California, but for the whole nation. And we're just diving into that now.

Good stuff. So maybe we'll close with this, Sean, but ibuyers, that's. I'm wondering how significant their impact will be on the marketplace. And, you know, a lot of these companies, I mean, Zillow's doing it Opendoor, there are others, of course, but these ibuyers that'll buy properties sight unseen, they'll give people instant offers. In some ways, this is really interesting because it makes the real estate market a lot more frictionless. And that's a market that's always had a pretty high degree of friction. You gotta get your house ready for the market. You gotta deal with showings, hire a realtor.

Deal with negotiation and escrow length, and the deal falls through and you gotta go do it again. And then you gotta buy a house and you're displaced, and maybe you make a contingent offer. Like, that's complicated. And when I was in the resale business for many years before doing the investor side of the business, I mean, that's a lot of juggling, right? No question.

And all that juggling has created a huge opportunity for us on the investor side to come in and solve that problem for folks. Right. And I guess Opendoor is just doing that at a larger scale. Right. And on much lower margins, potentially. Certainly they're doing it on much lower margin so far. Right. Some of these things, they're selling for less than they bought them for.

That's. I wanted to get there. So go ahead.

Yeah. So, you know, as we dive in and we look at that, there's definitely. And you see different results. So we talk a lot about Ibuyers in 2019. 60,000 homes, $8.7 billion, 0.5%, one half of one market share. Right.

So still very small impact. Right?

It's a very small impact unless you live in Phoenix. And I think it's like 5% somewhere in there. Right?

Yeah.

We talk about Wall street domination trying to come in and take over all this stuff, you know. And here's their pitch. Right. This is an actual letter that one of our clients got for their home with estimated offer range. So you said they make an offer site unseen. That was kind of the pitch. But that's not what's actually happening on the ground. It's kind of. You get this kind of range estimate and they ask you to upload photos and other things and then maybe they'll fine tune it. But you don't really get your final deal until they've inspected the property.

So I just did it myself with Zillow for my home because, you know, I'm thinking about moving. So I thought their offer sucked. I mean, it was not impressive. So I told them, I said, your offer's terrible. Don't waste my time. But what I was getting at is you were talking about how maybe it was Open Door specifically or just ibuyers in general, how they're selling the properties for less than they buy them for. And this is the dysfunction of all these overfunded tech companies, right. They do all these dysfunctional market distorting things, like they'll do deals that don't make sense just to make the machine go. It's like a really irrational proof of concept. You know, you're in tech, so, you know, the tech market is dysfunctional. I mean, I think it is, right?

So we looked at 371deals from Opendoor and their average and, you know, profit's tough here because, you know, we have to take a guess at how much they spent fixing up the house. Right. So if they spent more than we think, then it was worse. Right. Like, so their average deal, though, is maybe 7,500 bucks of profit on the deal itself. Now, they may make money elsewhere in the transaction with like, referring mortgage or title or other things like that, but, you know, very little in the deal itself. That was Sacramento. So here's just an example.

What's the upshot of that deal, though, that study you did? Did they lose money on the deals you think, or did they break even or make money?

Certainly with the cost of operating opendoor, they are losing a lot of money, right? Is there a business making 7,500 bucks a house with the average price of $380,000? I think that's a tough business model, period. Especially with market risk. Like, you know, that can happen and markets go down in value and the rest, $7,500 is not much margin at all. So, yeah, certainly not profitable in and of itself. Can they add on enough extra services? Just kind of the pitch, right? Like, I will make them the mortgage and we'll get the fees on that, and we'll do the title insurance, we'll get the fees on that, we'll do all these other ancillary things, and maybe we get a percentage of the inspections or, you know, whatever, that the whole thing in total starts to make sense. It's possible. Like our big foreclosure investors back in the 09, 13 days, right, some of the biggest ones started to do that vertical integration where they had their own real estate offices, even their own H VAC companies and repair companies. And that allowed them to work on slimmer margins on the actual deal itself. But it's a tough business and it's a crazy valuation. So, you know, here's an example of a house, right? Like, they're repainting the existing cabinets. They're putting in really cheap flooring. This one actually got granite. We see some others where they don't even do that. So we like to look at, like, kind of the after pictures when they get listed. Very little repairs. It feels like. I don't know if you remember the REO rehab companies. It's more like those companies coming in versus the local investors do a much better job rehabbing properties and bringing those values up and increasing the values of neighborhoods. So this one they purchased for 533, and it's listed for 532 in July. I think it's sold for that.

Wow, that's. Yeah, you can't make money on that. That's something. Yeah. Very interesting. All right, well, good stuff, Sean, Wrap it up for us and thank you for being on again. It was great. To have you after all these years. Have you back.

Thanks for having me.

So the website is propertyradar.com definitely.

Please come check us out at propertyradar.com and you can reach me on, you know, LinkedIn, Facebook, Seanropertyradar.com it's that simple. And we'd love to hear from you and companies on all of those as well.

Sean o', Toole, thanks for joining us.

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