What's going on BiggerPockets? It's Matt Faircloth. So today we're going to talk about
LoopNet. And a lot of people talk about LoopNet. A lot of people think that LoopNet's obviously a
waste of time, not a place to go to find deals. I'm going to talk today about what LoopNet is,
how it works, and how you can leverage it efficiently. Because I have bought deals off of
LoopNet, and I want you guys to use it efficiently for your business. And there's ways to use it,
and ways not to use it. So let's dig in. So LoopNet is simply a listing service,
and it lists pretty much commercial deals. It is viewed by most people on BiggerPockets,
and in a lot of real estate circles, as a place to find apartment buildings, but that's not all
that's on LoopNet. LoopNet, you can find hotels and land and commercial strip centers. You can
find medical office buildings. You can find resort properties, all kinds of stuff on LoopNet.
It's just a listing service for commercial real estate. So it's just a commercial listing.
But it's not really a listing service. They're not a broker. All they are is a place for people,
for brokers, for agents, or people that are selling stuff for sale by owner, whatever it is,
to make people aware of a property they have up for sale. It's not a brokerage house.
LoopNet is not representing them as an agent. They're not representing them as a buyer's rep,
a seller's rep, or anything like that. All it is is a commercial listing service.
And as I said, there's all kinds of stuff on there. Now, a lot of people use LoopNet for
apartment buildings, for finding deals, and for listing deals. That's what a lot of the
conversations that people bring up LoopNet is on, but I want to make clear that's not all LoopNet is
for. It's not an apartment building listing site. It is a commercial property listing site. So if
you're surfing LoopNet for deals, maybe take your blinders off a little bit, and try to looking for
other stuff on LoopNet. Because yes, apartment buildings are competitive,
and they're really competitive on LoopNet, and that's not LoopNet's fault. That's the market.
So look at stuff that's not as competitive, and you might find a little better cap rate,
a little better deal, maybe get educated on a different asset class of real estate. And you
might find better deals on LoopNet in general than just saying, "Oh, LoopNet doesn't have
good deals." So first of all, try other asset classes. Because I've seen mobile home park
stuff on LoopNet. I've seen self-storage stuff on LoopNet. It's all out there. That's number one.
So let's talk about why LoopNet? So it's a place for brokers and people selling stuff for sale by
owner on LoopNet. So people say LoopNet doesn't have good deals. Let's talk about why that is.
So first of all, why bad deals? Why no deals? Well, I wish you guys were here talking to me
because I'd love to hear what you guys say about why LoopNet doesn't have good deals. But here's
my opinion. Again, I'm not the CEO of LoopNet. But this is my opinion of why LoopNet has bad
deals or does not have all kinds of deals. Number one. Forgive me commercial brokers that
are watching this right now because I'm not trying to call you all cheap. But LoopNet does
cost money. There is a fee to list properties on LoopNet. This is not a hobby for them. They do
make money doing what they do, and the way they make money is charging people for listing stuff
on their site. It's not a percentage of the sell price. It's not a commission. It is a listing fee,
and the listing fee goes up the longer you want to leave it there. It goes up if you want to have
it towards the top of the fold and more and more people notice it. If you want to upload all kinds
of different stuff to it. If you want to put more photos or whatever, there's a lot of ways
that LoopNet makes fees for listing properties. But at the end of the day, you're making a lot of
people in the world aware of your property you have for sale. So maybe it's worth the money.
But a lot of brokers don't want to bother with that if they already have a good following of
people that know that they sell properties in Albuquerque or in Michigan or whatever. And for
brokers who are already established, they might not bother with LoopNet, simply because they feel
like they've already got, "Well, I've already got 4,000 people on my email list. So when I list a
property, I just send it out to my 4,000 people on my email list. And that's my buyer pool."
Maybe that's the way they look at the world. Let's get back to that. Let's get back to that
email list in a second because that is something we should talk about. Another reason why there's
no good deals on LoopNet is, let's talk about how brokers list properties. Let's say John
the broker comes up with a... I would draw a picture of John, a little stick figure of John,
but I won't bother. Let's say John the realtor gets a 100-unit apartment building for sale,
and he's in Topeka, Kansas. And John already has a good email list. So what he's going to do is
he's probably going to go through the marketing process this way. He might go and take the listing
as a pocket listing, an off-the-market listing to his top three buyers that he knows are hungry, he
knows are going to pay a good price. He knows that they're his go-to people that he's very loyal to
and everything like that. That's his top three. So the marketing process. Let's just write this
down, process for typically listing apartment building might look like he's going to take it to
his top three. That might be what John does. What John also might do, and this is what happens when
realtors really, really, when brokers really want to get the best price for a property, they'll go
take it out and do a big bid process. And they'll take it and put it out without a price on it,
and you'll do something called best and final. You guys who have bid on apartment buildings, you've
heard of this, where the property goes to best and final round. Whereas you've got to go and offer
your price again, and you got to keep increasing your number. And it's really intended to get the
best price out of a property. And it's a lot of fun. It's very competitive. You have to go on
interviews with the owner and stuff like that. And then, that's called the bid process. And
that's typically what brokers do. A lot of brokers feel like that's part of their
fiduciary responsibility to the owner to get them the best number they can. And they take
it through this bid process. Sometimes LoopNet will come into play here into the bid process.
But at this broker has an already long list of people looking for property in Topeka, Kansas,
LoopNet might not even play in this. Because the broker knows that, "Okay, I've got 2,000 people
on my email list. I don't need LoopNet. I don't want to pay that fee to get my bid process full,
and to get the best number for my seller." They may not need to do that. Now, if the seller
has a number in their head, and the broker puts the bid process done, and it doesn't meet it,
or if the broker realizes that the bid process isn't going to work for putting the property out
for sale, then that might be where LoopNet comes in. Because a lot of brokers look at LoopNet as
a last resort. Like I said, a lot of brokers look at LoopNet as the last resort here. The
reason why that is is LoopNet is a large national net. Anybody in the world can see properties for
sale on LoopNet. It doesn't screen things. It doesn't let the broker filter and say, "Well,
are you serious? Are you really a serious buyer? Have I seen your financials? Do I
know that you can close? Do you have property management lineup in the area?" So it's just
such a wide net that gets cast in the market. That's another reason why brokers avoid it.
So three reasons why brokers avoid LoopNet, or why there's not great deals on LoopNet all the
time is because they've got to pay a fee. It's not a part of the process which has taken to
their top three and then take it out to a bidding process. Or LoopNet is a wide net. And brokers
might not want to deal with a wide net of people, which is everybody and their mama coming out from
the woodwork, talking about how they want to buy properties because they just went to a seminar,
and because they're super excited about multifamily, even though they don't have
any of the relationships in place. The brokers would get inundated by phone
calls if they put it on LoopNet, if it's a really good deal. That's what they think.
I've talked to them. That's what they said. Now, sometimes they do have to put it on LoopNet.
Sometimes, it's a newer broker. They don't have the people on their list to do a full bidding
process. Sometimes, sellers request properties to go on LoopNet because they want absolutely
everybody to know about this property. Especially, I find properties go on LoopNet sometimes when the
broker's intention is to get the market-making number. A number that's higher than anything's
ever sold for. If they're really want to push the market up a bit. And they're willing to play this
bid process game, and they put it on LoopNet. Be careful of that. If you see a property on
LoopNet that's still a bidding process war, understand that's the broker's intention,
to get crazy number for the property. Because they want everybody to be aware of it, and then try and
push it through the funnel to put it through best and final and everything like that.
Now, there are a few diamonds in the rough. This is the good deal that's on LoopNet. Good deal.
Let's talk about a good deal. And I'll talk about how to use it, how to leverage LoopNet,
and then close it out. The good news you might find on LoopNet is the deal with lots of hair
on it. This is the problem child. This is the deal they can't put through the bidding process
because the seller doesn't want a bunch of people tramping through it. And we bought a property
in North Carolina that was in really, really rough shape. It was actually featured in the
documentary Fair and Square on BiggerPockets. So check that out. Check out Fair and Square
on YouTube. And you guys can hear the story of this property, which we bought on LoopNet.
This property had a lot of problems when we bought it, had active drug activity going on and
had low occupancy. It was a really, really rough condition. It was really, really dilapidated. It
took a special buyer to buy that property. And the owner was also not the easiest to deal with. So
he didn't want a bid process, which a bid process, by the way, something to remember,
probably will look like, say, 20 to 30 people touring the property, lots of phone calls to the
site doing their investigative work, doing their due diligence. It shines a big spotlight on the
property for a period of time. And some sellers are not interested in having that go on.
So the good deal that we found that had hair on it, what the broker did was they put it
on LoopNet, and they waited on the right buyer to show up. And they had screened a lot of the
calls that came in, and they made him do a phone review with the broker, made sure that the person
really knew what they were looking at, made them aware of everything upfront. "And listened. Just
so you know, this property is not the cleanest. It's not the prettiest, but it's a good deal. But
you've got to be prepared to deal with this." So they did full disclosure of the hair that
was on it on the phone. And they told us what was going on. And we were still interested. So we went
down to look at it, and we put it under contract. So the good deals that you see on LoopNet are the
ones that, I've heard Brandon say this, that you don't find good deals. You make good deals.
And so if you see a deal on LoopNet that you can turn around and make it a good deal by plucking
a little bit of that hair off and making it more palatable, then that's a good deal.
And a lot of times this, what you see on LoopNet, is stuff where the broker can't quite figure out
what to do with it. And they can't do this. So they have to put it on LoopNet. That's a
good deal you're going to see, is a deal that's got a lot of issues. So it's either going to be
super overpriced thing that's going to try and push you into this, into best and final. Or it's
going to be a deal that has hair on it. And the reason for all this is, if a good
deal does go on LoopNet, it doesn't have hair on it. Think about that. If I've got a good deal,
and I'm going to put it on LoopNet. It's a good price. Doesn't have any hair on it.
Doesn't have any problems. It's a pretty, pretty much get behind the wheel and drive
and make good cash flow, and you can syndicate it if you want. It'll make good money for your
investors. What's going to happen to that deal on LoopNet? Gone. It's going to go.
Let's pretend that happens at a broker that doesn't have a network,
doesn't have his top three, doesn't want to take you through a bidding process to say,
"I don't have the time. Let's go put it on LoopNet." It's going to be gone in days. It's
going to go under contract. Somebody's going to swoop in and pick it up. So that is the third
reason why you don't see good deals on LoopNet, is because they don't stick around for very long.
Bottom line is they're going to get swooped up. If it's a really good deal, it's going to get scooped
up. And it's not because LoopNet doesn't have good deals. It's because LoopNet has a national
reach. And so people that are on LoopNet looking for deals, if they see a good deal,
they're going to scoop it up. Or it's going to be a deal with hair, or it's going to try and
push you into this bidding process where they're trying to push the price way, way, way up.
Now, let's talk about how you guys can use LoopNet efficiently. You guys, if you're new to real
estate, or if you've been doing real estate for a while, use LoopNet as I do. Which I use LoopNet
as a networking tool. LoopNet does not have to be a deal finding tool only. Use it to find the
good deal with hair on it, or let's call this the unicorn. The unicorn is the great deal that
doesn't have any problems. And that's possible. It exists. It's down here somewhere. They do show up
sometimes on LoopNet. So surf LoopNet, and look for the good deal with the hair on it that you
can pluck the hair off and make it work. Take a mediocre deal and make it a great deal? That could
be you. And you can also find the unicorn. But beyond that use LoopNet, so it's 20% of
the time, 20% of the time, and then 60% of the time. This is more like 5% of the time. This is
more like, say, 35% of the time you're going to find the deals with the hair on it. 5% of
the time you're going to look, and you're going to find a unicorn. 60% of the time,
you're going to use it to network. And what does that mean? Using LoopNet to
network, really what you want to do is you want to find this broker that's doing the
best and final bid process. That's doing this, and that's taking a property and putting it on
LoopNet because the owner said, "Hey, I don't care who you have through here. Give me the
best price. Have 50 walkthroughs if you want. Give me the best price for this property."
Broker says, "Okay, no problem. We'll do it." So they put it on LoopNet. The next seller that comes
to sell their property may not be looking for that many people walking through their property.
And they might not be looking for that much of a hassle for a sale. They may be looking for a nice,
clean transaction. And when they do that, that broker is maybe not going to put it on LoopNet
and do the shotgun approach. They're going to just find a few people that they like and trust to do
the deal. You want to work your way here. To be the top three that gets the first look on the deal
before they put it out the best and final, before they do this awful bidding process thing.
You want get that phone call, number one. And the way you get there is by networking with
the broker, get to know them, call them every two to three weeks. If you've got the means,
fly to the market, and go meet them face-to-face. I'll tell you what, you will automatically get in
there. If you just put yourself on an airplane and go down and meet with the top three brokers
in a market that have sold things on LoopNet over the last couple of years,
you'll likely get there. I'm not guaranteeing it. But you'll definitely get on the bidding
list, and you might even work your way into the top three, if you can prove to them that you're
serious, and you have the means to close. So visit them. Look at their deals. If they
send you a deal, don't just take a glance at it and be cocky about it, and say, "Ah,
that's a bad deal." Underwrite it. Look at it. Run the numbers. Send your numbers to them. "Hey,
how did I do? I ran the numbers. What do you think? This is what I think of your deal. I
probably can't close it for the number that you're asking, but I could close it for this. What do
you think?" Then you show them you're serious. You're willing to engage. You're willing to look
at their stuff. So underwrite their deals. Ask them about the market. Ask them for other
introductions. Use these brokers that you meet on LoopNet for other intros. "Do you need a property
manager? Do you have a mortgage broker? Do you have any of those people I can talk to?" Ask
those kinds of questions. But most importantly, what I found far and away made all the difference
in the world, is going out for a visit. So if you can swing it, go out for a two-day visit to
the market. Sit down with everybody that's had properties for sell on LoopNet. They will take
you 10 times more seriously if you do that. So sum it up. This is what LoopNet is,
lots of asset classes. Not just apartment buildings. And it's a commercial listing service,
not a brokerage house. They're just there to put things on the market that people bring to them
to put on the market. So it's not LoopNet's fault that there's no good deals there. It's
just the market and the way that it is. Remember, there's no good deals on LoopNet
because it costs money to put them there. Hate to say that. And a lot of times, it might not abide
by the brokers process. They may want to just take it to their top three and send it out to bid and
abide by the best and final bidding process that they want to use. And they might think
that they've got an email list with enough people on it. Purpose of this is to get on that email
list. Then you will see deals on LoopNet, where the brokers just trying to pull the price up,
and pull you into a best and final bidding process to pull the price into the stratosphere.
You will find good deals with lots of hair on them on LoopNet. That's about 35% of the
times. Sometimes, you're going to find a great deal that doesn't need anything,
that's ready to roll. That's the unicorn. That's 5%. You can look for it. You'll see it. They do
show up. 60% of the time you want to use LoopNet for networking, for opportunities to call brokers,
go visit them, underwrite their deals, and see if they can introduce you to other people.
This is how you utilize the tool. And this is the lesson here. And bottom line, guys,
is there's always a way to make something like LoopNet benefit you. It's real easy to just
scoff and say, "No, there's no good deals on LoopNet." That's easy. The hard thing to do is
to look at LoopNet and find a way to leverage it for yourself to grow your business using something
like LoopNet, even though it's competitive. Yes, even though. I'm sorry to say that. Yes,
there are other people besides you that want to buy real estate right now. And so you'll need to
use things like LoopNet to your benefit. Hopefully, I gave you guys some
value. If you guys have other thoughts on LoopNet, or other things like CoStar or other
listing services that are out there, leave it in the comment box. Let me know what you guys
thought at today's lesson. Appreciate you guys watching. Have a good and profitable week.