The real estate industry stands at a crossroads where technology and traditional practices collide. Matt Miller, founder of Fairtrade Real Estate, joins us to reveal how his company has carved a unique niche as a local iBuyer with actual boots on the ground – a critical distinction that has allowed them to succeed where tech giants like Zillow have stumbled.
Matt explains Fairtrade's powerful three-sided marketplace connecting agents, distressed property sellers, and real estate investors. Unlike algorithm-driven platforms, Fairtrade agents physically inspect properties, understand neighborhood dynamics, and comprehend local economic factors to make accurate offers that benefit everyone involved. This human-centered approach proves especially valuable as market conditions continue to flatten across the country.
As we explore the broader economic impact of distressed property investments, Matt highlights how these transactions create numerous jobs – from contractors to landscapers – while transforming previously uninhabitable homes into opportunities for families. For agents seeking to thrive in challenging markets, the message is clear: develop expertise in "higher-hanging fruit" by mastering specialized transaction types rather than competing for diminishing easy deals. Those who expand their problem-solving toolkits will find themselves equipped to provide value regardless of market conditions.
Whether you're an agent looking to better serve distressed property sellers, an investor seeking reliable inventory sources, or simply interested in understanding how local expertise continues to matter in an increasingly digital world, this conversation offers valuable insights into the future of real estate. Ready to elevate your approach to challenging properties? Listen now and discover why real estate remains fundamentally "a people business that's very personal and very local."
Episode Transcript
I am thrilled today to introduce Matt Miller of
Fairtrade Real Estate.
Hello Matt, how are you?
Speaker 2 (00:10):
I'm doing fantastic.
Thanks for having me.
Speaker 1 (00:13):
Tell us about your organization, because it's
fascinating.
Speaker 2 (00:17):
Absolutely so.
Founded Fairtrade in July of2020 with a couple of very close
friends.
We'd always been in theinvestment and wholesale space
and we founded it as a two-sidedmarketplace.
So we have a group of sellersthat we serve that need to sell
to a local cash investor fromthe individuals to mom and pop,
(00:44):
and even institutional, who wanta consistent inventory source
for distressed assets thatthey're going to renovate, to
resell, renovate, to hold.
Speaker 1 (00:54):
So your key audiences .
Who are you working with andyou touched on it there for a
second so people that youactually get belly to belly with
, rather than the people in thebig group.
Who?
Who are you helping there?
Definitely so we have threeaudiences.
Speaker 2 (01:11):
So it's the real estate agents that work for our
company, the home sellers andthen the real estate investors.
And the agents work with ourcompany, work with a lot of
local real estate operators astheir local iBuyer boots on the
ground, being able to provide avery concise cash offer from an
(01:33):
expert to perform for thatseller.
The real estate investors cometo our marketplace to find
access to exclusive inventorythat's priced under market.
And then we've got say thatagain.
Speaker 1 (01:50):
So you're not 19, which I love.
I mean you're at least in your20s I'm kidding, obviously
You're not 19 like me, and it'svery interesting what's
happening in the iBuymarketplace now and really
what's just happening in realestate.
Oh, Zillow's taking over.
Ai is going to take all ourjobs.
Something you said thenfascinated me.
(02:11):
You said you didn't say bellyto belly, but you said boots on
the ground, Right.
So real estate really isfinding those opportunities and
often in your business, findingsomewhat distressed
opportunities or people thatjust want out right.
Talk about those opportunitiesfor a minute and why it's not
just online.
How are you better than justonline?
(02:32):
Because there's plenty ofiBuyers online.
Speaker 2 (02:36):
Yeah, I'd say the reason you've seen so many
iBuyers exit the space includingvery good operators like Zillow
is that it's incredibly local,it's incredibly difficult and
it's hard to do at scale withoutthe local knowledge.
So when I say boots on theground, I mean we have six
offices in Southern California.
(02:56):
Our agents are physically goingout, walking these properties,
understanding the scope of work,understanding the neighborhood
properties, understanding thescope of work, understanding the
neighborhood, walking in theother competitive active
properties, knowing whatcommercial development's going
on, knowing what's going on withthat local economy, whether
they're bringing in or losingjobs, and able to make a very
(03:17):
accurate offer to the sellerthat we're going to be able to
perform on so that we can bringin more inventory for these fix
and flip investors we serve onour marketplace.
Speaker 1 (03:26):
And.
Speaker 2 (03:26):
I think, especially in today's market, not just the
local knowledge but the localpresence.
And this isn't trading paperlike stocks.
Real estate's more complex in alot of ways and I think that
you really have to understandthat it's a people business
that's very personal and verylocal.
Speaker 1 (03:44):
It's a people business that's very personal
and very local.
I think you know, I thinkagents there's a lot of real
estate agents out there thathaven't been really well.
They may have been involvedwith iBuyers, where you know you
fill in some form online andthat's about it and don't know
very much about it.
And as the market flattens inalmost every area of the country
(04:04):
.
So we're going to see three anda half in my humble opinion
according to Clement Juglar from1860, three and a half to five
and a half years down now.
We crested in most markets twoyears ago.
So as that happens, and asother models are coming in like
Zillow and now doing sellerleads as well, and lots of you
know real estate teams are justhappy to pay that 40.
Well, they're not happy, butyou know it's like great, we'll
(04:24):
pay the 40% or the money upfrontwhich I believe is going away
in that model.
Instead of looking at what Icall higher hanging fruit, every
member on my team I say higherhanging fruit go find out how to
deal with the more trickyproperties, because that will
keep you safe for life whenthings are rocking and rolling
and there, multiple offers andyou put a sign out a lockbox on
the door great, but go find outabout the more tricky stuff.
(04:48):
This morning I was with agentleman who's 59 years old,
lost his mom two years ago, losthis brother a year ago.
Lots of siblings.
The house was built by dad I'msure you've heard lots of these
stories typical and you know hecut all the wood for the wood
burning stove last year and hedoesn't want to do it this
winter to keep the house evensaleable beautiful views, some
(05:09):
young family could come in there, or an investor or someone, and
turn that around and turn itback into something habitable
again where some young familycould get a start in life.
And I think that's the bit wemiss.
This is about people.
Even if we're selling to aninvestor and they can make a
buck, at the end of the dayyou're giving somebody an
opportunity for a roof overtheir head or even an end buyer
(05:32):
to come in and be able to do itthemselves.
What would you say to that,matt, because I know you're a
boots on the ground person withthat philosophy and also
recognizing that, like modelslike ours, is the investor buyer
.
Speaker 2 (05:48):
We provide like an interesting piece of liquidity
to this marketplace because thehouses that we buy, the sellers
have equity and motivation andit's physically distressed,
oftentimes it will not qualifyfor financing so that
owner-occupant buyer, that newfamily, they wouldn't be able to
purchase that house with aconventional loan anyway.
There has to be this segment ofthe market that brings it up to
(06:11):
current standards, providesliquidity and of course they're
all running businesses.
But at the end of the day thatunit turns into something that
people are going to move intoand live in and you know the
neighborhood improves.
All these things happen.
I think one thing with investorsthat it's hard to appreciate is
they create a ton of jobs.
(06:31):
Right, we're not just payinglike local transfer taxes, city
state escrow fees, title fees,but the construction aspect and
the fact that it drives locallabor force and creates this
improved product that then endsup going on the open market
relisting and selling to anowner-occupant.
(06:53):
A loan officer gets paid escrowtitle, everybody.
It's sort of a win-win.
And it really does drive theeconomy, especially around the
existing home sales, which islike the area we play in right.
Older homes, functionallyobsolete, need a ton of work,
aren't ready for the open market, and we come in and provide a
solution that hopefully is greatfor the seller and the real
(07:14):
estate agent that's coming in torepresent them and also ends up
good for that localneighborhood after they have an
updated home that can sell to afamily or whoever's going to be
moving in.
Speaker 1 (07:26):
I love it and it's so heartwarming not to be nothing
wrong with being a big box buyer, right?
Nothing wrong with that's abusiness model.
But it is heartwarming hearingsomebody talk about the human
aspect of it and when we asagents or investors respect
people in a whole different way.
The guy to me said this morninghe's like I can't believe
you're here.
I've been listening to you onthe radio for 13 years.
(07:48):
You know most agents would havecome up here and turned around
on the pothole road and I saidI'm here because this is my job,
this is what I do, and you knowit's fulfilling for me to be
able to help you through this.
And just like you said, matt,it creates so many.
(08:13):
Whether it's the dumpster guysbringing the dumpster to get all
that furniture out, or the guywho mows the lawn each week, or
all those other people that comein, the cleanup crew that come
in, it creates so many jobs anda new home for somebody that's
really been sitting there indisrepair for so long, and I
know what a common story that is.
So I love what you're doing andI love that there's that heart
in there, because I do believewhere you've got that, the money
flows.
What about agents that aren'tin fair trade?
(08:34):
Your brokerage?
I know you work with agentsoutside of that.
So there's the agent that goesout there, like I did this
morning, and they're just like Ihave no clue what to do.
What does that agent do?
Who do they turn to like?
Speaker 2 (08:47):
I have no clue what to do.
What does that agent do?
Who do they turn to?
Well, what I hope is that theagent understands that we are
the local iBuyer that they canrely on.
Normally they'll have one orpotentially two contacts at
Fairtrade and they can go intothat appointment and have a
local performing cash investoroffer not from a big company
like Opendoor, that's veryimpersonal, you can't get
(09:08):
decisions on and they can go infor a solution with that seller
that has.
Maybe they have two or threesolutions for them.
And one could be just.
Here's the simple, as is cashprice from this local investment
company in California,fairtrade Real Estate and the
agents.
We love working with them.
You know we're able to pay thecommission if the seller's not
(09:31):
interested in paying acommission, which you know.
That's a big challenge, even inpivoting markets, for agents to
demand the compensation thatthey deserve for providing
services.
But for us it's very easy toadd it to the math equation and
the underwriting and make surethat their commission is secure,
even if they're justrepresenting us as the buyer's
agent.
Speaker 1 (09:50):
And I want to say you're in California right now
and you're thinking about goingnationwide in the future, but
you're basically in the Bay Areaand Southern California, is
that correct?
Speaker 2 (09:59):
Correct.
So we have six offices inSouthern California, one in the
Bay Area that serves kind of BayArea greater Sacramento Metro.
It's been really important forus over the last five years to
establish a very strongfoundation, including in our
proprietary technology and ourprivate marketplace clarity that
we've built so that when thetime is right to expand
(10:19):
nationally we are set up to beable to do it with the right
systems and processes andsupport for both the agents and
investors that we serve.
Speaker 1 (10:27):
I love it.
And Matt and I have talkedabout putting a program together
to help you agents.
You, as agents, understand whata non-functioning house is.
I mean, obviously you know whata non-functioning house is, but
all the factors of that andwhat it looks like, so you can
have more of that language totalk about with your sellers.
And I really want you to thinkas real estate agents.
(10:48):
We all have these big databases.
Some of you have fellow.
You know where you're gettinghand raisers 40 to 60% in most
markets.
So you build this big database.
You've paid for pay-per-clickleads four years.
Almost all of them are buyers.
When they come in as buyers, 40to 60% of them live elsewhere.
If I looked on my database nowin North Carolina or I'm going
(11:11):
Northern California now,northern Carolina, I love it,
north Carolina I've got 60,000people.
Many of those people,especially through Fellow I'll
give Fellow a shout out here areraising their hands and saying
I need to sell my house inCalifornia.
So that's something that Icould refer over to you or an
agent real estate agent inCalifornia if it's a traditional
(11:31):
resale and help them with CPOor traditional CPO or a cash CPO
or if it's distressed and theyjust want their money out.
That's something where youcould help.
So, agents I want you to thinkabout.
You're handling referrals allthe time in different areas, so
it doesn't matter if you're ingeorgia or new york or new
jersey or wherever you are.
A big portion of your databaseactually is in california,
(11:54):
especially with you know the,the movement from california.
Speaker 2 (11:57):
Sorry, matt, all you people will leave in apparently
we do see a huge opportunitywith, especially around probate
and inherited properties.
Oftentimes these sellers havetheir lives out of state already
and they are dealing withalready a tragic situation.
That's tough, but they needlocal expertise.
(12:18):
They may come into town for aday or two or we've been able to
handle it where they're doingeverything through mobile
notaries and still able todisposition the house while not
disrupting their lives, asthey're serving as the
administrator of an estate,which isn't.
It's kind of a thankless joband really challenging.
So we're definitely here toserve, whether it's local agents
who are having people relocateout of state or properties that
(12:42):
are inherited and you're not inCalifornia.
We experience, you know,situations like that all the
time and have the boots on theground to be able to be the
local buyer for those folks.
Speaker 1 (12:52):
That's amazing.
Thank you so much, Matt.
Do you have any closingthoughts for everybody listening
out there on the app?
Speaker 2 (13:01):
I would say that buckle up.
It's going to be a challengingmarket for the foreseeable
future and the professionalsthat have the most solutions and
are the most creative andsolution oriented professionals
are going to be the ones thatare going to be able to continue
to provide value to everybodyin this marketplace.
Speaker 1 (13:21):
Thank you so much.
You nailed it right there.
The ones who survive and mostCEOs of real estate companies
are saying this all the big onestoo you need solutions and you
need to understand the othersolutions.
That's what I mean by higherhanging fruit.
We've been in a marketplacewhere you could pluck the lower
hanging fruit quite easily.
Now you've got to get your stepladder, you've got to go out,
(13:43):
you've got to learn more.
You've got to learn aboutiBuyer programs.
Where are they coming from?
Are they individuals with bootson the ground?
Are they, you know, homewood?
That isn't in all places now.
Where are they?
Where are they operating?
What does my database look like?
Where are my five feedermarkets?
Know that as an agent.
Where are my people coming from?
You can't say, oh, everybodyjust moves here and you know
(14:06):
moves in my market, not true?
So that's where someone likeMatt could come in in California
.
I love it, matt.
Thank you so much for your helpthere.
Today.
The platform's out there toelevate agents' knowledge about
what's going on in the marketand other solutions.
So thank you, it was awesome.
Speaker 2 (14:21):
Thanks so much for having me.
I'm looking forward to workingwith any agents and recognizing
that we're all going to have toget better and smarter, yeah
that's what we're in it for.
Speaker 1 (14:31):
We're not going to be one of those, those people in
the business I'm not going tosay agent, but those people in
the business who are not aroundanymore, because the smartest
will win, like you know anyother industry.
So it's time to buckle up andstart picking those high hanging
fruit and climb your ladderright.
We'll, just we'll.
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