“I can’t wait for the

downturn!”

- Patrick Ferry

“These unicorns are not

recession tested.”

- Me

Agenda

▪ 2018 CAR Report

» E.M.B.R.A.C.E – State of the industry

» R.E.A.C.T – State of the Consumer (buyer, seller, homeowner)

» Compare with 2015 data when possible

▪ Tech disruptors

▪ Marketing, ideas, niches, and deep thoughts

The Landscape

Economy Mortgage Construction Prices

Wall Street Media Politics Technology

So many things to stress about…

The Disruptors

Wall Street

▪ Discount brokers &

iBuyers

▪ Pain points addressed

» Speed

» Timing

» Ease

» Privacy

» Cost

» Friction

» Flexibility

Opendoor

2013

$1b (softbank)

New job or life

event

Heavy advertising

Open Listing (50%

refund)

Keller Williams

2019

“no other

choice”

2nd quarter 2019

$1 billion in tech

investment

Offerpad

2015

$410m (2018)

24 hour offer

Free move (50mi)

Bellhop moving

partnership

Zillow Offers

2018

Predictive biz intel

#1 destination

Increased

customization

Fully integrated

CRM

Knock

2015

$35m

Trade-in/Buy 1st

“Dream Home”

Buy new cash

Repair current

Move then sell

Agent friendly

iBuyersCarMax for real estate

Opendoor Purchases since August 2018 (35)

City # Bed Bath SQ-Low SQ-High Price-

Low

Price-

High

List/Sold

Banning 1 3 2 1,092 $221,000 $357,000

Beaumont 2 5 3 2,243 2,625 $350,600 $379,800

Cherry Valley 1 4 2 1,311 $299,000

Hemet 7 2-4 2/3 1,103 2,084 $223,600 $307,100

Lake Elsinore 4 4 3 1,963 2,727 $342,300 $482,500

Menifee 2 3-6 3-5 2,497 3,992 $399,600 $452,400

MoVal 2 3 3 1,520 1,850 $318,000 $352,200

Murrieta 3 3-5 3 1,427 3,306 $342,100 $525,400

Riverside 3 3-4 2-3 2,188 2,617 $414,400 $560,300

San Jacinto 2 3-5 2-3 1,779 2,210 $280,600 $414,400

Temecula 6 3-6 2-4 1,197 4,115 $333,200 $655,600

Winchester 1 5 3 3,109 $436,000

1645 Midnight Sun Dr

Beaumont, CA 92223

▪ 4 beds, 3 baths,

2,243 sqft

▪ Purchased: $343,000

▪ List

» 11/20 “purchase”

» 12/10: $366,000

» 1/3: $365,000

» 1/18: $360,000

» 1/24: $357,000

▪ 5 open housing this

week

40470 Rome Beauty Way

Cherry Valley, CA 92223

▪ 4 beds 2 baths 1,311 sqft

▪ Purchased: $299,000

▪ List

» 11/21: $299,000

» 12/10: $312,000

» 12/27: $309,000

» 1/3: $305,000

» 1/7: pending

▪ “Upgraded features include

fresh interior paint and new

carpet in select rooms.”

Offerpad Purchases since August 2018

City # Bed Bath SQ-Low SQ-High Price-

Low

Price-

High

List/Sold

Corona 2 3-4 3 1,954 2,595 $485,000 $521,500

Norco 1 3 2 1,864 $480,000

Hemet 1 2 2 1,398 $229,000

Winchester 1 5 3 3,109 $436,000

640 VISTA DE LOMA

HEMET, CA 92543

▪ 3 beds 2 baths 1,398 sqft

▪ Purchased: $192,000

▪ List

» 10/09: $48,500

» 8/18: $192,000

» 10/2: $265,000

» 10/27: $260,000

» 12/27: pending

▪ Kitchen cabinets,

countertops, some floors,

new bathrooms

4020 MOUNT TOBIN CT

NORCO, CA 92860

▪ 3 beds 2 baths 1,864 sqft

▪ Purchased: $480,000

▪ List

» 12/6/18: $480,000

» 1/16: $525,000

» 2/4: pending

▪ No rehab done.

iBuyers: What we know?

▪ First-time buyer range

▪ Avoid major rehab/historic areas

▪ No creative transactions

▪ Forced to adjust position on local

Realtors (for now)

» You will enter in all data into mobile app for

offer for tenant

» Think CarMax

▪ Vertical integration entire transaction

▪ Major marketing dollars spent to

drive traffic

Local Investors vs. iBuyers

▪ Be one or get one. Main Street can offer:

» Fast close, all cash, lower fees, flexibility, privacy

▪ What we can’t

» Buy clean houses all cash all the time and not make a profit

▪ Do things Wall Street can’t:

» Heavy rehabs

» HGTV rehabs

» Creative transaction (seller financing)

» Hire local

» Give local

» Sell to owner occupants who cares about house and neighborhood

Purple Bricks

2012 in UK

$4,950 for 92501

No upfront fee

“plumbers”

unqualified to

represent buyers

and sellers

Rex

2015

2% fee

AI and machine

learning

Salaried agents

Customer-first

International

philanthropy

Redfin

2004

$167m pre IPO

1% list fee

Sell for $3,000

more on average

Full service

Matterport

Mortgages

Compass

2012

$1.2 billion

37 to 122

6,000 agents ‘18

51 engineers

Agent focused but

backing of 20/20

eXp Realty

2009

2018 IPO, $1b

Cloud-based real

estate brokerage

Nationwide

network

“Amazon of real

estate”

RE DisruptorsHigh tech, low cost, deep pockets

Predictive Data

Identify potential

sellers

70% accuracy

Territory

subscription

Chatbots

Realtor

Assistants 24/7

Assisted search

Voice search

Predictive

Search

Based on style

Collaboration

Customer

notifications

Enriched CRM

Functionality

Predictive biz intel

Increased

customization

Fully integrated

CRM

Voice Assistance

Mortgage

Docs library

Search

General questions

Data and AIReal Estate Applications

Buyer 4.0 Coffee

Dog

Gym in 37HiCan Bed

€63,404

Web 4.0

$1.2 million

75% ARV

Emailed Sally to 2x-end

Live VR tour with

Zenny @ 2pm

Zenny by Zenplace

Robot is driven by agent on the other end of

the screen. December 2017

Local Realtor vs. Discount Brokers

▪ 1st: Main Street can offer:

» Speed/cash, as-is, ease (because you have an investor in your back pocket)

» Free market analysis

» Lower fees – possibly, time to really think what 3% should get

▪ 2nd: Do things Wall Street can’t/won’t:

» Customization/listen: because you can see the entire picture

» Community/Networked

» Estate planning

» Creative transactions

» Deep local insights (quality vs quantity)

» Hire local

» Give local

» Focus on Main Street owner occupants who care about house and neighborhood

The Buyers

Buyer Highlights

Millennials

(28-38)

Gen X

(39-53)

Boomers

(54-74)

Median Age 29 42 60

Median Income $90,000 $100,000 $90,000

% SFH 67% 71% 77%

% Single Story 63% 63% 69%

Median Bedroom 3 3 3

Median Sq.

Footage

1,500 1,600 1,630

Median Final

Price

$350,000 $400,000 $379,500

Average time

needed to save

for down

payment?

4 yrs 5 yrs 5yrs

Like the city/state

Job/family/friend

Familiarity/hometown

Money/Quality home

Weather

38%

20%

11%

9%

5%

Source: California Association of Realtors.

Buyer Considerations: Reasons for Purchase

0% 10% 20% 30% 40% 50%

Downsizing

Desired stairs

No Stairs

Change in family status

Investment/tax advantages

Cheaper than rent

Favorable financing

Better location

Tired of renting

Affordable price

Desired larger home

Millennials Gen X Boomer

Source: California Association of Realtors.

# of bedrooms

Price range

Central AC

# of bedrooms

Private outdoor space

1

2

3

4

5(23-38) (39-53) (54-74)

1

3

5

2015: #2 Have a place to live (14%)

#4 Changed jobs (8.4%)

Buyer Considerations: Neighborhoods

0% 10% 20% 30% 40% 50% 60% 70%

Has farmer's market

Has walking paths/trials

Preferred school district

Offers parking

In my preferred neighborhood

Close to family/friends

Close to shopping

Close to job/school

In my budget

In safe neighborhood

Millennials Gen X Boomer

Source: California Association of Realtors.

Safety

Budget

Close to job/school

Close to shopping

Close family/friends

1

2

3

4

5(23-38) (39-53) (54-74)

Buyer Considerations: Property

0% 20% 40% 60% 80%

Green home

No stairs

Office

Smart home

Stairs

Private outdoor space

# of bathrooms

Central AC

In price range

# of bedrooms

First-time buyer Repeat

Source: California Association of Realtors.

# of bedrooms

Price range

Central AC

# bathrooms

Private outdoor space

1

2

3

4

5

Reasons for not buying sooner?

• Save for down payment33%

• Wait till financing approved32%

• No urgency to buy24%

• Waited to see if market would stabilize22%

• Couldn’t find dream home20%

• Not stage in life to purchase before18%

• Needed to sell previous home14%

• No urgency to buy22%

• Wait till financing approved21%

• No good options13%

• Waited to see if market would stabilize13%

• Need to save down payment12%

• Needed to sell current home8%

• Difficulty qualifying for mortgage5%

2015 2018

How long was the home search?

(in weeks)

4 4 5 5 5

7

9

10 11

8

910

10

12

8

0

2

4

6

8

10

12

14

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2018

Average Weeks

Number of homes viewed?

1110

910

11

1514 14

15

12

10 10

20

109

0

5

10

15

20

25

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2018

Median homes viewed

Most Useful Websites for Buyers

47%

24%

19%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2018

Zillow realtor.com Brokerage Redfin

Q. What was the single most useful website that you visited during your home buying process?

Source: California Association of Realtors.

You’re Website is Terrible

4 4 4 4

3

4 4 4

3

1 1

00

0.5

1

1.5

2

2.5

3

3.5

4

4.5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Number of Customer Inquiries Realtor Receives on Personal Website (Median)

LeadSource: National Association of Realtors.

Redfin Zillow Realtor Estately Remax YOU

Map x x x x x x

Price x x x x x x

Price trends x x x

Comps x x x x x

Pros/Ads x x

Details x x x x x X

Sales History x x x x x

Taxes x x x x

Activity x x Yelp Yelp

Schools x x x x x

Neighborhood x x x x x

Stats x x Form x

Pics x x 1 x x X

Calculators x

Crime

2017 #1 #2 #5 New New

#1 #2 #3 #4 #52019 ???

Buyer Takeaways

▪ 34% found home through an agent

▪ 83% reported visiting a website during the process

▪ Millennials more likely to use tech disruptors because

» Cheaper

» Faster

» Easier

» Assured move-in date

▪ But, 94% still used an agent during transaction

More Buyer Takeaways

▪ Buyer worked with first agent they spoke to

» 90% of Millennials want to own, are you there first

» ~35, 75% diverse, 50% relationship

» Wall Street has data, you’ve got street smarts

▪ Knowledge about the market/neighborhood most important service

» 50% engaged up front for that purpose

» What can you provide that Wall Street can’t (Qualitative = history, texture, connections)

▪ 50% needed help with negotiations

» When you know the qualitative, makes negotiations far more interesting

Top Realtor Characteristics for Buyers

1. Listen

2. Quick response

3. Worked hard

4. Help

5. Negotiate

Where they find agent?

14%

32% 29% 33% 32% 31%

10% 10% 13%29%

21%28% 28%

61%

20%

37%

31%29%

28% 26% 28%

21% 20%21%

12%

11%9% 7%

12%

39% 38% 43% 39% 42% 41%

70% 69%55% 59%

66%63% 65%

11%

21%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2018

Relationships/Contacts Advertising Internet Other

Source: CAR.

The Seller

Seller Considerations: Reasons for Selling

0% 5% 10% 15% 20% 25% 30%

Job transfer/relocation

Downsizing

Get highest price for home…

Change in family status

Better/other location

Investment advantages

Desired larger home

Millennials Gen X Boomer

Source: California Association of Realtors.

Best price

Find qualified buyer

Quick sell

Selling

Finding new place

1

2

3

4

5(23-38) (39-53) (54-74) 2015: #2 Have a place to live (14%)

#4 Changed jobs (8.4%)

Sellers Needed Most Help with Negotiation

7%

10%

12%

16%

17%

18%

20%

0% 5% 10% 15% 20% 25%

Other

Negotiating the price

Preparing transaction…

Preparing home for sale

Marketing the property

Setting the right price

Negotiating terms of sale

Source: CAR.

1%

28%

31%

33%

40%

49%

51%

0% 10%20%30%40%50%60%

Other

Timing or sequencing of…

Help with legal issues

Home staging

Advice on selling

Determining listing price

Negotiating terms of sale

2015 2018

Realtor Takeaway: Sellers

▪ 85% used an agent

during sales process

» 62% referral driven

» 21% marketing

▪ 50% with 30 minutes

▪ 75% by phone or in

person

15%

1%

3%

9%

9%

16%

20%

26%

0% 5% 10% 15% 20% 25% 30%

Did not use an agent

Other

Internet

Agent brochure, flyers, mailers,…

Agent "For Sale" signs

Previous agent transactions

Referral from friend, relatives, etc.

Personal contact

Reasons for choosing agent?

• Trustworthy#1

• Previous work#2

• Recommended#3

• Personal referral#4

• Good reputation#5

• Fast response#6

2015 2018

• Reputation#1

• Trustworthy#2

• Personal referral#3

• Personal contact#4

• Pervious transaction#5

• Fast response#6

Top Seller Pain Points?

• Buyers/Agents#1

• Price/Financial#2

• Waiting/Timing#3

• House Prep/Paperwork#4

• Selling/Buying#5

• Leaving Location#6

• Stress/Personal #7

• Legal/Inspection/Process#8

Co-Living

Major metros develop “dorms for grown up”

or “Hacker Houses”

Co-Living)

Common, San Francisco, CA

$2,600 month

Co-Living

Micro-Living

Micro-living

Arcade Providence

Providence, Rhode Island

300 sf studios for $1,500

Short-Term Rentals

Podshare.co / Podestrians

$50 per night

“We make decisions based on trust (reviews)

+ value (location) + price point (affordable).”

“The Future is Access NOT ownership”

ADUs

Accessory Dwelling Units

Regs not over yet

Seniors, boomerang

Local Buyer Expectations

Local Expectations

Standing Out as a Buyers Agent

▪ Really awesome network of designers

▪ Reliable and skills contractors

▪ Tech-focused and regulation-minded property managers

▪ Estate planners and attorneys

▪ Relationships with Realtors in hot out-migration states (FL, TX, TN, etc.)

▪ Real estate investors

PRADMARK

Marketing Mix

PAIDAdvertising

EARNEDPublic Relations

OWNEDProperties

SHAREDSocial

AUTHORITYOptimized content

Shareable content

Engaging content

DIGITAL

PROPERTIESWebsite

Podcast

Blog

Email list

CRM

EMBASSIESFacebook

Twitter

Youtube

Instagram

LinkedIn

Google+

Pinterest

SnapChat

ADVERTISINGSEM – Google, Facebook, Bing,

Yelp, etc.

Digital displays

Display

Billboards

Paid Endorsement

Direct Mail

Advertorials

CONTENTBuild trust

Educate

Curate

Reviews

Location-based servicePARTNERSHIPS

Charities

Co-branding

Celebrities

INFLUENCER

ENGAGEMENTResponse

Advocacy

Loyalty

INCENTIVEAffiliate

Brand Ambassador

PUBLICITYMedia relations

Press releases

Blogger relations

Influencer relations

Government relations

Internal communications

Attract

Nurture

Convert

Engage

Funnels

Time Spent Per Day for 18+Mobile

4:10

4:21

4:31

4:34

0:36

0:33

0:33

0:33

1:46

1:52

1:52

1:51

0:39

1:00

0:58

0:48

2:22

2:19

1:39

1:02

0:47

0:33

0:31

0:19

11:06

11:18

10:39

9:39

0:00 1:12 2:24 3:36 4:48 6:00 7:12 8:24 9:36 10:48 12:00

Q1-2018

Q1-2017

Q1-2016

Q1-2015

Live TV Time-Shifted TV Radio

DVD/Blue-Ray Game Console Multimedia Device

Internet on PC App/Web on smartphone App/Web on Tablet

Total Source: Neilsen. Note: Some amount of simultaneous usage may occur across devices

• Double

screening

• Distractions

• All ages

Alexa/Assistant

Shopping

Entertainment

Reviews

Search engine

M/Assistant

Social + search

Shopping

Entertainment

Payments

Google/Assistant

Search Shopping

Entertainment

Maps Social

Home

Cortana

Business

Search (Bing)

Social Shopping

Entertainment

Siri/Assistant

Entertainment

Travel (Maps)

Artificial Intelligence(Deep learning, machine learning)

Kid: “Alexa, play ‘dicker, ‘dicker’.”

Alexa: “You want to hear a station for porno detected…”

Parents: No, no, no!!!!

Artificial IntelligenceHOMEWORK

Grandma: “Goo goo, what is raining today?”

Google: “Yeah”

Artificial IntelligenceHOMEWORK

Real Estate

▪ “Sell my house fast”

▪ “Hoarder house”

▪ “what to do with an inherited house”

▪ “Mold”

▪ “House fire”

▪ How will they find you?

▪ Which AI will they ask?

▪ What services will the use to make decisions?

Top Apps for 2017

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Apps by Penetration

Source: comScore, June 2017.

Top by Age Group

Source: comScore, June 2017.

Adult Social Media Usage

2012 2013 2014 2015 2016 2018

Facebook 67% 71% 71% 72% 79% 68%

Twitter 16% 18% 23% 23% 24% 24%

Pinterest 15% 21% 28% 31% 31% 29%

Instagram 13% 17% 26% 28% 32% 35%

Linkedin 20% 22% 28% 25% 29% 25%

Snapchat 27%

Youtube 73%

WhatsApp 22%

0%

20%

40%

60%

80%

Source: PewResearch Center: Social Media Fact Sheet — 2018.

IE Population vs Facebook 2018

31

9,5

04

21

5,2

13

20

4,9

50

20

2,9

76

17

4,3

05

16

9,0

89

16

1,4

86

12

1,9

01

10

9,4

28

10

8,3

68

10

2,7

41

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Riv

ersi

de

San

Be

rnar

din

o

Fon

tan

a

Mo

ren

o V

alle

y

Ran

cho

Cu

cam

on

ga

On

tari

o

Co

ron

a

Vic

torv

ille

Tem

ecu

la

Mu

rrie

ta

Ria

lto

13-30 31-46 47-64 65+ Population

614,000

432,000

282,000

87,300

1,889,961

100,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

13-30 31-46 47-64 65+ Population Press Enterprise Daily Circ.

Source: Facebook, Echo Media Group, Aaron Norris.

Inland Empire

Marketing To-Do List

▪ Understand where your conversions come from

» Do more of that and spend money wisely

▪ Know what channels work (and don’t)

» Mail

» Phone

» Live meetings

» Referrals

» Emails

▪ Prepare to leverage AI

» Geotargeting – local wins!

» Social clues

» Ratings

What’s Next?

InvestingRipple

SmartREREAL

Caviar Brickblock

AtlantSlice

EscrowSmart Contracts

CPROPSMARTRealty

ZillowPropy

BrickblockShelterZoom

TitleVelox.RE

PropyUbitquityBrickblock

Atlant

RealtorRexMLS

Midasium

CPROPSMARTRealty

PropyCryptoRealty Grp

HousehodlShelterZoom

NotaryTelia

ChromaWayLantmäterietKairos Future

Blockchain & Smart Contracts

Speed Ease Security Global Immutable

Death of the middle man/woman

Nov. 2018

“First American Financial

announced Wednesday that it

is launching a shared

blockchain system to be used

in the title insurance process.

And the first company to sign

on to use First American’s

blockchain system is Old

Republic Title Insurance

Group, the nation’s third

largest title insurance

underwriter..”

Be Human

Interested & Interesting

CustomerRelationships

CareGreat service

CreativeFun

TechLeverage to drive relationshipsTech is last

Good at giving human

TrioRating

Location nicheSocial clues

StoryAuthenticity

Differentiation

InvolvedBe a pro

Be a resourcesBe an expert

Interested & Interesting(Business)

StupidMindless

consumptions

Show UpYourselfFamily

RelationshipsCommunityProfession

TryNew thingsWeird stuff

Make it a gameTrick tech

StoryWhat makes you

interesting?

Interested & Interesting(Personal)

The Trio