A few weeks back I wrote It’s 2018. I Want To Buy A $100 Million Asset. This Is What I Need NOW!
If you didn’t read it (and shame on you) it detailed a multi-dimensional toolbox for asset traders fueled by….data.
After reading the article someone on Twitter mentioned that it would almost or more likely end up being a robo trading bot that would and could use that kind of platform. I have to agree. And why not? It should, it could, and it will work. I think we are in the process of going that way. Don’t think so? Oh, ye of little faith…..
Robo trading commercial real estate…to far fetched or just a realistic way of competing for quality assets?
It is after all just about using quality data. Or more to the point it’s access to that data.
What if that data was just given to you by the owners? Yes, freely given or at least the major parts of it.
How would that work?
Let me create another scenario for you.
Again imagine you are sitting on your deck, in your office or waiting to board a plane.
You pull up your personally branded website with a clean simple landing page that has a box that simply states:
Input your property, click here.
The next page is a form that allows the user/potential seller to input. I say allows the USER to input property information. Information that the site will verify as legitimate in about 5 minutes.
The form will also ask for information beyond the basic property data. How hard is it to determine what that should be? Again verified data as in tax data ownership data and yes a valuation. Yes, those seem to be easy and yet difficult data sets to get. But they are not. How about the valuation part? Is that the most daunting task? I think not. How much value is there in that data alone. What if it was automated. Wait, it already is, is it not?
Once that information is completed the site will ask them how much they want for the property and when they would like to close. After that information is submitted the site will then tell the potential seller that within 48 hours or less they will have a completed offer to buy the property based on market data. Fair and accurate market data. Sensing a theme yet?
After your offer to purchase is sent, the selling party has 24 hours to respond. The offer expires in 24 hours. Period!
Yes or no. No negotiation. Simple.
If it’s no, say thanks to them and tell them you hope to be a company they consider using to BUY their property in the future.
If yes set a closing date on or before 30 days after the execution of the signed contract.
Unless the sellers want to extend that process. Give them 15 days to extend no more.
Should it take 30 days to close? You and I both know it should be about 3 or less, how about one day? Why not?
It should be a day because all you are going to do is execute the entire transaction digitally. You already have all the transactional data. Are you getting the theme so far?
Think about that. If I’m the seller I know how much and when I get paid. Think about that entire experience from the seller side.
How many times do you think they would want to do that? Again and again and again!
What’s that process like for them today? What is that experience like as we sit here NOW?
Ok, let’s step back for a minute and address a couple of obvious issues.
Do you have to be a broker to do this? Answer: No.
Does that make the transaction better or worse? Answer: Do I even need to ask?
What about all the different regulation and compliance issues with each country state municipality etc.etc? Answer: It’s already handled every day.
Why would someone even do this? Is it an act of desperation? Answer: Hell NO!
This can’t be a viable way to trade any type of quality asset, can it? Answer: It may be the only way….now and in the future.
So, this sounds and looks ridiculously simple. And it is, why should it be complicated.
Yes, I know the people reading this understand the transactional process like no other.
But think this through.
What if you populate a property database with every commercial property in let’s say the US for the sake of clarity. How many properties is that? I know that seems like a big task. It’s not as big as you might think. Does that database exist today? Yes, it does.
Then add on additional layers of data that will enable the correct pricing for a specific piece of property that day! That day. A market value that day. Defined by the buyer and seller. A market value determined by real-time updated market data. Also, have most if not all of that data assigned to every property in the database for easy and quick verification.
Streamline the transaction process by the automation of redundant tasks. Have a goal to have the entire due diligence process automated and completed in 24 hours or less. Create all legal docs for e signature and recording. Do all processing and recording. FOR FREE!! What does that do for the seller? Incentivizes the hell out of them that’s what.
Let me go just a bit further. What if you just figured out how to do the transactional process in 24 hours? How much could that company make? How much funding and traction could that generate?
Those questions are being answered today. It’s BILLIONS!
Did I just take the entire asset out of the equation and show the value of the process? I think I did.
Could you charge to just do the transaction? Yes, it’s done today is it not?
Could you do the entire transaction for free and just make money buying the asset? Yes, it’s done today too.
Could you do the entire transaction and take a piece of the deal? Yes, that’s done today also.
So we have in front of us today data sets and processes that are now and will be enabling a marketplace that will function in real time.
That marketplace becomes more transparent and robust because of that ability.
Will there be robo traders? Yes.
Will there be brokers? Yes.
Will there be better buyers? Yes
Will there be better sellers? Yes.
Will there be asset buyers only? Yes.
Will there be transaction only companies? Yes.
Will there be data only companies fueling them all? Yes.
So, What Happens When #CRE Data Becomes Real-Time And Direct? Will You Be Ready To Compete?
It’s about the value chain of the transaction. Do you truly understand what that means?
+1 Don’t worry I’m here to help!