Podcast | Real Estate Investing
Sean O'Toole with PropertyRadar has been in the public records space, building ForeclosureRadar and then PropertyRadar, for over a decade. PropertyRadar is now national! Lots of effort has gone into building a platform that combines property, mortgage, and people data in a meaningful way that makes public records not only accessible but powerfully actionable. This week, Aaron and Sean celebrate the national launch, what are public records, real estate trends in 2021, different entrepreneurs that use PropertyRadar, and why next year will be the year of off-market real estate.
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00:00 The Data Driven Real Estate Podcast welcomes Sean O'Toole
01:43 PropertyRadar is now national! Sean talks about how he started PropertyRadar and what motivates him to invest in the business
04:00 What is a Public Record?
07:30 The role public records play in trust and freedom
11:15 Are public records free? Where and how to get them.
12:01 What different types of public records exist?
25:31 The democratization of data and how the cost to access has changed the game
27:40 Who sort of business use public records to market?
37:22 What does multi-sourced, baked-off, back tested, backfilled and what does it mean to data quality.
45:11 What new fields and data are available in PropertyRadar National?
45:23 What the addition of judicial foreclosure to PropertyRadar means for commercial real estate investors.
48:12 This mistake marketers and small business make with list building and buying ready-made popular lists
52:19 Aaron's favorite feature of PropertyRadar and how he uses it in the community
54:19 Is direct mail really expensive? (hint: no, not if done correctly)
57:10 What to expect in 2021?
1:02:12 Why public records aren't perfect and how they can vary from state to state and county to county.
Aaron Norris 00:06
Welcome back to the Data Driven Real Estate podcast episode 24. This week we've got Sean O'Toole as we celebrate PropertyRadar going national. This week we also cover what is public records or what are public records, the different kinds of public records and why tools like PropertyRadar are so incredibly valuable, saving you time and money finding very unique opportunities in the realm of public records. You won't want to miss this week. Welcome back to the Data Driven Real Estate podcast, the podcast for real estate professionals dedicated to driving business using data. I'm Aaron Norris, today with Sean O'Toole with PropertyRadar. And November has been a very big month for PropertyRadar, we went national, congratulations.
Sean O'Toole 00:48
Thank you, multiple years in the works probably started the project three years ago and have been actively massaging the data for the last two years to get it to a point where we felt it was ready to go live. And you know, there's still lots of work to do, right? We've got 15 years really, you know, I first started building a public records database in California in 2002. So, you know, 18 years of perfecting that data in California, and two years in these 45 other states, you know, 11 years in Arizona, Nevada, Washington, Oregon. So, you know, it'll be a while before, you know, these other states are as good as what we have in California, but we're still pretty excited about it. And I think the last two years were well spent getting it to a place where we reasonably happy with it.
Aaron Norris 01:43
What keeps you so motivated to keep investing resources in PropertyRadar? I mean, that's a long journey.
Sean O'Toole 01:50
Yeah, um, you know, early on, right, I did see kind of the foreclosure cycle coming. And with the launch of ForeclosureRadar back in 2007, but even before that, you know, I kind of had this vision of creating a Bloomberg terminal for real estate. And, you know, I was a little naïve at that time about how hard or easy that would be, right? The, you know, what Bloomberg really did is, you know, he provided this terminal that gave traders and others in the finance space access to, you know, really up to this millisecond, you know, up to this second, at least information on the financial markets, right. So, stocks, bonds, commodities, money, markets, etc. And I thought that needs to happen for real estate. And then that also put me on just a larger, you know, so that was it, that's where I started, right. And I think we're still a long way for that. And the biggest problem there is, you know, really how public records are set up, you know, in the financial markets, it's, you know, large, you know, entities but they're, they're run with a purpose, right, like the NASDAQ, the New York Stock Exchange, these commodities, markets, etc. right, there, they are financially driven. Public Records, especially around real estate comes from the County Recorder or the county assessor, right? County GIS departments, and there's 3,144 County, your county equivalents in the US. And, you know, you're just never going to get with our current approach, you're never going to get all 3,144 of those to move forward, to modernize, to whatever. So, it's really hit and miss. And it's a much, much harder problem than, you know, what Bloomberg saw so long ago.
Aaron Norris 04:00
Yeah. And, you know, for those who don't know, what is a public record?
Sean O'Toole 04:06
Yeah, so, you know, the general idea behind a public records was to provide transparency, right, and, you know, it helps kind of, it's kind of the bedrock of, of democracy in my mind, and, you know, a transparency and rule of law. So, just imagine, right, if we didn't have, if the assessed value of your home wasn't public record, right, then it would be very easy and who the owner of the home, that would be very easy for say, your county tax collector, which is an elected official, to give all of his buddies or her buddies, you know, a big discount on their property taxes, right?
Aaron Norris 04:52
Sean O'Toole 04:52
And themselves, right and how would we know we couldn't possibly know um, you know, we require lenders to record a deed of trust, the actual note, you know, that is the, is the, the loan doesn't get recorded, but they are required to record this deed of trust that lets everybody know that, 'hey, Bank of America has a loan on this property', right? And there's a benefit to Bank of America in that, you know, Bank of America gets to secure their position in that property, right? by recording that loan at that date and time, everybody knows that that's when their secured interest in that property happens. And if somebody else comes in and says, 'Well, I also have a loan on that property'. Well, you look at those dates and times in the recorder's office, and the person with the earlier one gets priority. You know, same thing for, but in exchange for that, we also get some data from Bank of America, right? Bank of America has to tell us the loan amount and details about the loan. There's an adjustable-rate mortgage rider that says, 'Oh, this is an adjustable-rate mortgage', here's the thing, the thing that it's tied to and the rest. And, um, you know, so, it kind of keeps it you know, it keeps everybody honest, right? Or think about if you're a contractor, and somebody says, 'Hey, I'd like you to make these repairs to the, you know, these changes to the house', how does that contractor know whether or not that person is actually the owner and authorized? Right?
Aaron Norris 05:04
Sean O'Toole 05:06
Modify this house, like, 'hey, I'd really like you to tear down this house over here', right? And here's 50 grand to tear down this house, right? They roll up with the bulldozers and you know, that person didn't own the house, they just really didn't like the person who owned it. Oops. You know, so, you know, all of these things, right? And the same thing with with court records and the rest, right? They are what differentiate us from Banana Republic? And, yeah, and they're important, and, you know, unfortunately, a lot of people go, you know, worried about the privacy side.
Aaron Norris 07:05
Right. So, there's a, there's a trade-off here. But that's a pretty big trade-off. I mean, all the things that you've just discussed are pretty important. And I've, I've heard you say that before, and doing research for this podcast, there's a Harvard Business Review article I linked to that really talked about public records being tied to the first, fourth, six, the 14th amendment like this is by right, we should have some transparency and its freedom. And that's all really important stuff. How do we compare to other countries? Are we sort of a leader in that space?
Sean O'Toole 07:36
Um, you know, again, it's it's kind of what differentiates, you know, kind of first world country since some of the ones where you have see huge corruption problems and the rest, you know, I was down in, in Mexico, and on the, in Baja, and met a guy who's staying at a, I was staying at a really nice house, and that a friend of mine has, and I met a guy that said, he used to own the house next door. And I said,' Well, did you sell it?' He's like, 'No, I'm trying to get it back'. And I said, 'What happened?' He's like, 'my Dad died. I went to the US for three months. I came back, and somebody had moved in, right? You know, and there were armed guards at the gate. And I couldn't get back into my own house'. And he's like, so, 'I went to the police. And the police said, No, he always owned it. And I went to the judge, and he says, No, there's no record of you ever owning that house'. That person has always owned that house. You're crazy.
Aaron Norris 08:39
Wow. That cements that concept real easily.
Sean O'Toole 08:45
And that can't happen really, at our, our county recorder, right? Um, you know, one of the things that really surprises people about public records, you know, is mistakes do happen, right, like so, there were lots of stories about people that didn't even have a mortgage having their house foreclosed on, right? And when you dialed into that, what usually happened was like, somebody made a typo, right? So, there's like an assessor's parcel number, and they reversed two digits, and it tied it to the wrong property. And there was really no legal risk for this person or anything else. Because down in the legal description, and the rest, it wasn't their house, it was this other house, and only the legal description matters, whatever, right? It made for great terrifying headlines that the banks are stealing homes from people that don't even have a mortgage, right? But it was a typo, right? Somebody typed, you know, two, one instead of one, two, at the end of an 11 digit number, right? Um, and, you know, what's great, or what's a little crazy, right, so, that document gets recorded at the county. Well, once it's recorded, there's really no way to unrecorded, right? So, a release will get, you know, recorded, but it's kind of a bummer for that person who has the wrong APN because there's no way for them to go down and say,'Hey, remove this', right? And so, then they're kind of half stop just explaining it, you know, know that we didn't have a loan that wasn't on our property, look at the legal description. And, but that's kind of how permanent these things are. Now, there is some, you know, there have been records removed under court order. You know, a lot of states, a lot of these records require a social security number. And of course, then your social security number was public record, and anybody could go down. And I don't know, probably 10, 10, 15 years ago, the counties like in California went under a big project, to go through and redact all the social security numbers out of the public view of the public records. But so, you know, but it's very hard to remove something out of the public record, once it's in.
Aaron Norris 11:04
I think people don't appreciate all the work that goes into something like PropertyRadar, because you know, our public record's free?
Sean O'Toole 11:15
Absolutely, right? Like, well, actually, technically, they're not even completely free, right, you have a right to access them. However, you know, like the County Recorder, Assessor, etc, does have the right to charge you for reasonable costs, so, or for costs of fulfilling your request. So, for example, if you go down to the County Recorder, and you want to get a copy of your mortgage, right, you can go view it online, typically for free in most counties, right. But if you want a copy, and they're going to print it for you, they might charge you $2 for the first page and $1 for each additional page. So, a mortgage document that's 40 pages long right can cost you 41 bucks.
Aaron Norris 12:01
It's a really short document, but that's what not attorneys like to do. So, chances are it's probably 40 pages. Wow. And what kinds of different public records are there? You mentioned in the recorder's office, there's court records, property records, there's so many things.
Sean O'Toole 12:17
Yeah, there really are, you know, the ones that we focus on are really the county recorder's office that you mean, that's where deeds, deeds of trust, foreclosures, you know, or nonjudicial foreclosures, anyways, and most things dealing with real property, you know, almost all transactions involving real property have to be in writing. And, and really have to be, you don't have to record your deed. But if somebody else, you know, it's not really, you know, recognized until it's recorded, so, or a deed of trust, right. So,if you're, if you have a deed of trust, you don't go down and record it, somebody else goes down and records there as well guess what they're in first position, and you record yours after you're in second position. So, so, the county recorder's office is big. The county assessor's office is the other really important one for us, in, that would have, you know, they're responsible, right for taxing the setting the property taxes, right, your assessed value on which property taxes are based. And in order to do that, they need to assess the value of your home. And so, typically, they have a fair bit of information like square footage, bedrooms, bathrooms, type of construction. And so, most of that kind of what we call characteristic data comes from there, as well as the information about the taxes as well as the information about who the owner is we ownership, you can kind of get off of the deeds from the recorder. And you can also get, you know, who the current tax bill is going to from the assessor right? So, those are kind of your two, two places for owner information. And the third one that's really important is courts, right. So, and that would be your judicial foreclosures. You know, other things, there would be evictions, probate, divorce, you know, quite a few, quite a few things that are of interest to, to folks there. And then there's others, right, like, you know, we don't necessarily get all of these, but, you know, you can go down to the code enforcement office and use a Freedom of Information Act to get a list of all properties that currently have a code enforcement actions pending against them, right, so, that that would be still considered public record, too. So, then there's lots and lots of other things in the public record, but those are the ones in the real estate space that we focus on.
Aaron Norris 14:56
If you've never just for fun, down to the recorder's office or visited the website to see the process. County by counties can be such a very different experience and cost and it can take a lot of time. So, not only may it cost you out of pocket some money, but it's it can be time-consuming. And I think that's when you really start to appreciate something like PropertyRadar that has put it in a very beautiful format that makes it actionable.
Sean O'Toole 15:25
We always, we always recommend to anybody who wants to be serious, especially in the investor side, right, like our HomeServices, folks that are just using public records to find, you know, folks who need their services, you know, I don't think they need to go spend a lot of time at the assessor and recorder and really understand it. If you're a real estate investor, and I'd say some degree, a realtor, and you're going to be an expert in real estate. If you haven't been down, you only put it this way, you should go down. And you should sit in your county recorder's office and try to look up all the documents on your property on a friend's property right on your client's property and go through that process. And you know, some initial really big surprises is nothing really at the county recorder's office is indexed by property right? You can't go down there and say show me all the documents for 123 Main Street, we do that for you. But you can't go do that really, at any County Recorder in the nation, there's a few where you can put in APN. And we'll find some of the documents. But really, the only thing you can reliably search on is by name. So, you start with the name of the current owner, right? And then you find where the prior owner gave it to them, and then you search that owner, and then you look for the name before that, then you search that owner, right? And you, you have to go through kind of by name, and put this whole story together. And if you do that for a couple of hours, right? Um, you'll definitely much better understand the value of third-party services that do that for you. Same thing with going to the county assessor's office, you know, requesting information on a property, I also really recommend you go spend some time at like in the county maps, GIS and maps and how each county organizes that and where that lives is a little different. But going down and looking at the old subdivision maps, and the historical maps that underlie the property that you're on, you can find really interesting things. I had a property that I saw come up for sale, it was for 10,000 square foot industrial buildings. And the, the asking price was very low, like half of what it should have been. Had they been individual 10,000 square foot buildings for sale, because 40,000 square feet, righ? You don't get very many owner users who need that many square feet. And it wasn't really of the quality and stuff that and it was four separate buildings. So, somebody who really needs 40,000 square feet wants a larger, you know, single building, they wouldn't want this project. And so, I called the broker and I said, Hey, you know, can I subdivide this and sell these for separately, the listing broker and he says, you know, the owner has been down to the county, we've been down to the county, you know, such a bomber, because this would be a tremendous project, right? We would sell this no problem for double the price if we could sell these for separately. And so, you know, never taking no for an answer, right? I go down to the county and I talked to the folks at the county and they're like, there's no chance, you're no way you could ever subdivide this parcel. And so, still not taking no for an answer. I go down to the map room. And guess what I find in the map room?
Aaron Norris 19:11
Sean O'Toole 19:13
An old subdivision map, and there were actually six parcels. Now the lines weren't exactly where I needed them. The county can't stop me from doing a lot line adjustment. The same way they can stop me from doing a split I already had the parcels the property already had the parcels. So, all I had to do was move the lines, which is like 1500 bucks. And you know, I have to have to hire an engineer to draw up the new things. So, for less than five grand I took bought this project, divided into four separate properties and sold them off individually for more than double the price. I have a quite, you know, the broker and I have stayed friends ever since, I haven't talked to him a little while now. But we've stayed friends ever since. Because he's just so amazed I could do that. And I can't imagine what the prior owners thinking
Aaron Norris 20:10
Just by going down there, I wouldn't have never, I've had to deal with the building department like that we had hired an engineer for a number of years. And they were going back and forth with the building department. And they finally put together a group of people together, I'm like, the new rules that you put in place, since I've owned this lot is you want $500,000 worth of infrastructure? What would you do? Because none of that's going to make sense. They're like, Oh, just changed a lot line to go this way and have the exit on this side of the street. And it doesn't trigger any of that. And it was 20 minutes. And it was just by having a conversation. So, when you get no, it's such a great. That's cool. I never would have thought about going to the GIS department, though. And looking at that. And that means that the county, yeah, that they aren't doing that. That's crazy. Wow, I have never been here.
Sean O'Toole 20:59
It's not their job to you know, go do deep research for you right? Like, based on what they see in the current map, there's one parcel, and their rules don't allow for a lot split, right? So, it just was that it was that simple. And, but when I, you know, this was another thing we used to do in, like, in, in a lot of towns, you'll see these maps, right, and you'll see a parcel. And you'll see these dotted lines, right? Because originally that subdivision was you say 25 foot by 100 foot lots, right was how it was all subdivided, right? And of course, that's not how any of us live, we're not living in row homes, right. So, you know, most of these lots have been, you know, people would buy three or four. And you'll see this on the map, because it's really obvious because you'll see these blocks that are, you know, of divisions, like you'll see ones it's a two wide, then a three wide than a four wide. And you can just physically, physically tell that though, that one's half the size of that one, that one's you know, three quarters the size of this one. And, um, and so when you see that, you know that there's these underlying 25 foot lots. So, we would buy properties that had a house, and then had vacant land, right? So, they basically did the yard off the side of the house, right? And you know, somebody, they were wealthier, so they bought more of these original lots, right? And, but we could come in and when you found that you would just buy the property and then you would just simply deed by deed, you just change the legal description to be this side or that side, right? There's no APN. Right? And so, in, on the deed, you put a portion of APN. You know, if you go down and you ask the county, can I split this lot? They'll say no. But all you have to do is do the deed that way, and then they will even go check the rules in your state your jurisdiction. But where we were all we had to do is go record a deed. And they had to create a new APN and had to split it into two parcels because it the legal description was correct. And there's no law against it.
Aaron Norris 23:17
I think this is such a cool strategy. And a lot of people don't even know, especially in markets like this where off-market deals, I mean, are just so important right now, like if we talked to a decade ago, you and I would be talking about short sales, and trustee sales, and foreclosures, and markets just really shifted. And that's likely foreclosures aren't going to be a huge thing next year. So, this is solid gold. How did you get curious about this stuff? I mean, I don't think anybody wakes up and goes, You know what, I need to learn public records. That sounds really interesting.
Sean O'Toole 23:50
Ah, well, I am I do have a curious mind. Right, like, so that that does help. And I did have a background in tech. And so, having been in three tech startups, where we're trying to use technology to solve problems, you know, other people's problems, what's what I was doing when I was in Silicon Valley, that when I happen into real estate investing after the dot-com crash, you know, it was only natural for me to use my tech skills to try to solve, you know, my own problems. And because I had a natural curious mind, you know, I started taking title officers, not the escrow officers, not that they're not nice people, and you can't take them to lunch, but go take title officer lunch, right? I would learn about title and I would learn about the issues that come up and the challenges they face and you know, because the title officer is who writes basically the insurance policy, that this person that's selling you the home actually owns it, that there aren't any, you know, there aren't any claims against that property when you buy it other than the ones that are in their title exceptions, right? And so, you can look at this property and go 'Okay, this is a safe thing for me to purchase', the stuff that they deal with, right, from fraudulent signatures, to you know, unclear legal descriptions, to all kinds of crazy stuff. I mean, if you're a real estate investor and you don't have a good friend who's a title officer, you're making a mistake, in my humble opinion, and, and realtors too, right? Like, it's something you, the more you know about that stuff, the more valuable you will be to your clients.
Aaron Norris 25:31
I remember growing up with dad in where he was paying several thousand dollars a month for every county that he was interested in buying foreclosures and the data about the courthouse steps, so, when ,when you came on the scene and all sudden it was under $100 a month. I mean, you really disrupted the data, the real estate game. I mean, it's.
Sean O'Toole 25:54
You could easily argue that I made a huge mistake there, right? So, even like, in Texas, Roddy's foreclosures, which is really good, and kind of did what we did in California, there in Texas. You know, their prices are significant, right? It's more like hundreds of dollars per County, or, you know, I don't know exactly, so, don't get mad at me. Roddy's real estate, but you know, very expensive. And, you know, so, for our trustee sale investor customers, I remember early on I had a customer say look, I, I let two people go that used to track, you know, four counties for me and replace it with your $50 a month service, I'm like, well, that's not necessarily what I was going for, you know, so, he cut his cost from like, $4,000 a month to $50 a month. And so, clearly, I was leaving way too much money on the table, as it were. And honestly, you know, I think that was probably a mistake, we probably should have charged a lot more, but I just had the one application and I also wanted to make it affordable for realtors. And you know, realtors are still like, 'Oh my gosh, $50 a month, that's as much as I paid for the MLS'. And I'm like, you put all the data you're into the MLS yourself. Like it's just a piece of software, like it's terrible software, like it should cost you $5 a month the MLS should, right? The actual software,
Aaron Norris 27:24
Right? Oh my gosh, well.
Sean O'Toole 27:26
The MLS organizations do provide more other value in services, I see where it gets to be 50 bucks, but from a software and all the data that we put in and all the work we do, yeah, we should be 10x what your MLS software costs.
Aaron Norris 27:40
And there's so many different use cases in people using the software. So, let's definitely cover that. Because I think there's a misconception that sometimes we only work with real estate investors, but you have a lot of different categories in the real estate, not even the real estate space. So, let's let's cover that. Who uses PropertyRradar?
Sean O'Toole 27:56
Yeah, you know, it was I really was only targeting investors and realtors when I first launched it. And after we were on 60 minutes with ForeclosureRadar. Suddenly, I realized like I had school CFOs using us to try to figure out how badly foreclosures were going to hit enrollment next year, so that they could do their budget planning, right?
Aaron Norris 28:21
Wow, I didn't know that?
Sean O'Toole 28:23
Yeah, I had analysts on the, the Oh, shoot the, the bonds that are on, you know, analysts looking at bonds. I'm thinking I can't for whatever reason I can't think of the word of the type of bonds right
Aaron Norris 28:41
Sean O'Toole 28:41
And just. What? Muni bonds. Yes, thank you. And, you know, so Muni Bond analysts using us to try to figure out where there might be, you know, delayment and property taxes and collection on those bonds, and just so many different things, a lot of government agencies, right? The Department of Justice and law enforcement looking for real estate fraud, the code enforcement departments, you know, and the big thing was there, you know, back early in the foreclosure required crisis, they passed a law that said, um, there was $1,000 a day fine for lenders who were taking these properties back and not securing them and taking care of them. And but they had no, there's no, it's the code enforcement departments had no way to find out who the lender was, right? So, you think it's county data? This is a county department, right? But they don't, there's, again, they can't go search by address at the county recorder's office.
Aaron Norris 29:46
Sean O'Toole 29:46
So, they had no way to find out, right? Like the amount of work that it would take to go find the owner search by the owner name, find the deeds of trust, figure out which deed of trust was still open on the property and the rest like, go do that yourself at the county, you're going to spend a half hour per property, right? Where for 50 bucks, we do it for you for all the properties, right? So, so a lot, a lot of different users. That's not where we focus, I just bring those up, just kind of say, like, I, it's really surprised me like none of those things I had in mind. But where we do primarily focus is real estate investors, realtors, mortgage brokers, and I'll talk about each one of these. Yeah, commercial agents as well as residential, and the HomeServices folks. So, with investors, right, you're, it's hard to cross these things, because some people are looking to buy a property and other people are looking to gain a customer. And for investors, they really have a hard time when we talk about the seller as a customer, right. But if you think about it, and what you're selling, you are selling, you know, an opportunity for your customer to easily and quickly sell their home, right? And so, I'd encourage investors to think about those sellers as their customer, and they're marketing to those customers, everybody's thinking about marketing deals, marketing to properties. And it's a bad mindset, because then they're not thinking about who that person is on the other side and what they want, they're thinking about what the property is, and what I want, that's not how you're going to buy properties, you're gonna buy properties by thinking about the seller or what their needs are, and how you can meet those needs. So, anyways, um, so, one is for, you know, on the real on the real estate investor side, it's figuring out who those people are that might want to sell their home, right? That I can go off and buy to meet my investing needs. And then the other side for investors is the due diligence, right? Of, okay, you know, is there enough equity in this home for the offer amount? Are they going to be able to sell it? Who? Who, you know, who are the owners of the home, right? Okay. So, you know, oh, it's inherited, and there's three siblings, right? And this sibling, like, wants cash tomorrow, you know, and they're a junkie, and this siblings over here going, I'm never going to sell that home, that's where I grew up. And you know, that my first boyfriend and I'm never gonna let it sell, right? It's like, you got to figure some of that stuff out. So, there's a due diligence piece there. So, that's, that's the real estate investor's, primary things is finding deals, and doing the due diligence on those for realtors, right? Realtors, at the end of the day listings is really the name of the game, right? You can be a buyer's agent, but listings, listings, get your sign in the in the yard, they get hit, you know, all the rest of that will bring you buyers and bring you the buyer activity, right. So, listings is really the name of the game. And especially right now, even for buyer's agents, right, there's not much listed inventories never been lower. So, you might have to go reach out to homeowners to find a property. And it's pretty awesome if you do because if you start saying hey, buyer, what are you looking for, you can then put those things in his criteria search for those homes, right? And then reach out just to those folks and say, Hey, any chance you'd be looking to sell, I've got a buyer, you know, they're young family, whatever, you got to be a little careful on saying who they are. So, it doesn't get you don't get into discrimination things but you know, you can reach out on behalf of buyers to homeowners, or you can just market yourself to homeowners that you think are most likely to sell. And there's kind of a couple different strategies that are like we always talk about farming, which is like everybody in your market should hear from you on a regular basis even if they just moved in last week and used another realtor, there's no reason not to start now with farming to get them to use you when they make their next decision, right? So, and then there's kind of the lead based stuff of Oh, you know, these folks just moved out and houses vacant you know, non owner occupied, in foreclosure they need help with a short sale you know, there's kind of this more immediate thing and as a realtor, you should really have programs for both where you're doing long term farming and the immediate side and then a little bit on the due diligence and stuff right, no reason to get surprised by the, by the preliminary title report by the second mortgage that the, you know, folks didn't tell you about and you know, is going to keep them from having a big enough down payment for the other house you just put into escrow that they want to buy. So, you know, it doesn't hurt to to look at some of that stuff to. Commercial broker is very similar to residential. You know, again, finding those folks that want to buy or finding deals for your clients, you know, you get a client has specific needs, you can go find the properties that meet those needs. The HomeServices side is really just about finding a marketing audience for the most part. You know, you're a roofer, and wildfires are all over in the news in California, you're in a wildfire prone area, you hop in and you see, wow, there's 2500 homes in my market area with shake roofs. Like, if you can't make that sale, you know, shake being wood, you know, a wood roof. So, lots of different uses. But, but big picture. It's, it's about finding a group of people you want to market to, and or doing due diligence on a property. And also just sometimes finding contact, contact information, right? You can look up a property a person, you're driving down the road, you see a boarded up property, right? You're like, gosh, why's that boarded up? while you're sitting right there? You just click on your phone, and we pull up the property and all the information about it and who owns it? Oh, okay, they live, they moved to the east coast and, you know.
Aaron Norris 36:23
Neighbors give you the skinny, because they're probably really upset that it's boarded up, and they just can't wait to spill the dirt on everything that they have to know.
Sean O'Toole 36:31
Right, like, so if you run into a dead end, or knocking on neighbors doors is a really good idea. So, but yeah, you know, so, or you're at a dinner party and one of your friends goes, 'Oh, did you know Jill is going to be selling their house and they're looking for a realtor', right? And then you call your friend and they're busy, and they don't introduce you to Jill, you know, like, what the heck, I need to talk to Jill, she's about to list their house. And so, you go look up Jill, and her last day you find her and reach out and say, 'Hey Jill, I was talking to Jan, at the at a dinner party the other night. And she mentioned you're thinking about selling and us wanted to see if I could offer any assistance'? Right?
Aaron Norris 37:09
Always be closing.
Sean O'Toole 37:12
Always be looking for those opportunities. And, you know, ideally, Jan introduces you, but if she's not, if she doesn't, what are you gonna do? Just walk away? I make it happen.
Aaron Norris 37:22
One of the things that I've always been so impressed with PropertyRadar, and you specifically as you, you set it up front, it took you two years, the data was really important to you. And on the website, it says multi-source, baked-off, back tested and backfilled. Lots of B's, and maybe people don't know how important it is to you. And I had this conversation with another investment club this week. And I was like this is for investors, you know, built by an investor. So, every data piece sort of has a reason why it's there. But let's talk about the the B's what what does that mean? All those different words?
Sean O'Toole 37:58
Yeah, well, prompt with each one.
Aaron Norris 38:01
Sean O'Toole 38:03
So, multi-source, like, with 3144 counties, there is no company in the US that directly collects, or in the world, in existence, that directly collects data themselves from every single county, right? There are some very big companies in this space, right? And you'll find that it's kind of a incestuous group, like these guys do really good over here. So, they sell that to these guys, these guys do really good over here. So, they sell that to these guys. And so, but even in a lot of counties, though, you do get some of the big guys that say, you know, I don't like the way they're collecting it, I'm not gonna buy it from them. And so, we're gonna, because LA County, right, like, most folks collect LA County themselves, because they want to do it better. They have their unique things, right, whatever. LA County is the largest county in the United States, it's larger than some states, it's probably larger than, you know, we could probably find two states that if you put together those two states, there's more property and more property value, maybe even three or four states you could put together and there's more property value in LA County. So, you know, in important counties, you'll find that there's multiple sources, right? And there's also issues were from all of the sources, nobody gets it in a timely manner. Alameda County, I'm just picking on California counties here because those are the ones I know the best is, is notoriously hard to get data in a timely basis from and so, if we bought data from one of the big providers for Alameda County, we would get the data after the foreclosure occurs, right? Because from a notice of trustee sale to the first auction date it's only 21 days. And there's almost nobody that reliably gets data for Alameda County in less than 21 days. So, we have to go there and collect that data ourselves. But then we also buy data, you know, so that later on, we get that second look. And we can compare the two and go, Oh, shoot, we missed a document or whatever, right? It's human processes, things happen. So, we multi-source. Keep going.
Aaron Norris 40:23
Okay, what is baked off?
Sean O'Toole 40:26
Baked-off means that we, when we're looking at sources, we bake them off against each other. So, we go through and we say, Okay, let's take 1000 records, 5000 records and compare them, right, and look at how the data compares between these two sources. And make sure that that, you know, and we'll we'll bake it off against when we go collect data and accounting ourselves, will bake ourselves off against another, another person who's collecting that data. And with learn from that, and sometimes, you know, that learning will be okay. But this is so much less expensive over here, it still makes sense. But let's put in some rules in place to fix these things that we learned, right? So, or, you know, sometimes maybe leverage artificial intelligence, here's what it should look like, here's how it's coming in, okay, we can fix some of this stuff, you know, automatically, so, right, like, so you're constantly looking for those, those opportunities to get the best cost, right, and get the best quality. And sometimes the best quality cost more. Sometimes though, you can get the best cost and apply systems to get as good or better quality at a lower cost. And we're constantly trying to figure out how to do that.
Aaron Norris 41:55
This might be a good point in time to talk about, you talked about how many counties...
Sean O'Toole 41:58
I do want to get to back tested, because it fits right into this.
Aaron Norris 42:02
Sean O'Toole 42:03
And back testing is where we compare that source back to the county and back to the original document, right? So, So, now we've looked at these two sources, and we can see who does a better job, but what really matters is how does it look back against the actual document at the county. And so, that's, that's kind of completes that whole circle. And we have a whole research team that does nothing but that all day. And, you know, customers will come in and say, 'Hey, this, this, this is wrong'. And then we'll they'll go look at it and go, Oh, yeah, that is wrong. And then they'll correct the record. But then be, keep track of those things. So, that over time, we can improve our rules and improve these, this data ingestion process and collection process to hopefully one day have the best data out there.
Aaron Norris 42:52
You mentioned briefly the number of counties there's over 3100, how many documents and notices are we talking about?
Sean O'Toole 43:00
Oh, you know, the county recorder's offices, you know, we have over a billion in our database. And there's a lot more than that out there, right? We only go back so far, you know, and we've got at propertyradar.com/coverage, you can go see kind of our start date, we're still filling some of that in for some of the, the counties it's a little hard, right? Because inevitably, as we're collecting data from all these sources, maybe we'll get a, well, we've got we've got records in our database that are from the 1800s, does it mean that I've got every record from that year through today. So, what we try to do on our coverage page, and it's more art than science, is try to say, here's where, here's the date from which we start having complete records for the thing that we're tracking, right? We may have records earlier than that date. And because they usually ramp up right over a period of time where you go from nothing and suddenly you're getting something but it's, it's clearly not every sale, you know, or every mortgage that happened in that county that, that month, that year, and then you'll see it ramp up to our 'Okay, now we've got pretty full coverage'.
Aaron Norris 44:14
Wow. And the finally, what is backfilled.
Sean O'Toole 44:19
Backfilled means that if we get a source that is missing data or missing records, we'll go out and manually backfill it, right? So, we're constantly trying to test against the county. And then if we see that there's a hole or something missing, we'll try to go backfill it and add it back in. Again, 3144 counties each is different. Some we can go online, like Maricopa County in Arizona, I can go online not only can I really easily search for documents, but I can actually get the document image right? In California there's not a county that has their document images online at least not for free, right? So, it, you know, all of these things, I'm talking in generalities right? It comes down to, to a plan or a methodology for each of those 3144 counties.
Aaron Norris 45:11
Well, congratulations, that is a huge feat and knowing how seriously you take data, that it's I know how much work went into that. What are some of the new things in national that? What's new?
Sean O'Toole 45:23
What's new? Well, we added quite a few criteria. You know, a lot of stuff like, you know, construction type, and, you know, roof type and, you know, stuff like that there was there was, there was some fields that, you know, I've been around and that we just hadn't yet made available. So, I don't remember exactly how many we added. But we added quite a few new fields, both in the display and in our search criteria. The biggest new thing, though, probably just because of our history in foreclosures is judicial foreclosures. We've always just tracked really the trustee sales, which is non judicial foreclosures. And you know, so, adding judicial foreclosures, even a state like California, that doesn't have very many judicial foreclosures, right, has mostly trustee sale foreclosures, there's still judicial foreclosures are allowed here. And they are used, and we now have them in our national, on our national servers, which is really cool. Something I've wanted to do for a long time. And then, of course, states like Florida that are pretty much judicial foreclosure only, right? We now have the notices for those states. And I mean, obviously, the biggest thing that new is 45 new states, right? So.
Aaron Norris 46:38
That's sort of a big deal. Yeah, I've already ...
Sean O'Toole 46:40
That's the biggest piece. Um, but you know, it was interesting, like I just did analysis last night on a judicial versus commercial, actually, you and I did this together, I guess it wasn't last night, a day before. Where we said, geez, I wonder what type of foreclosure is used by property type. And I, and I told you instinctively, I said, we probably really only see judicial foreclosures on commercial properties. And the reason is, when you do a non judicial foreclosure in California, there's a one action rule that says, you can't also sue the person and get a judgment and come after them if you lose money, when you take that property to sale. So, on a commercial property, you know, especially they may go through the judicial foreclosure process, which takes a long time, but that allows them to go after that business persons other assets to try to collect the full debt. And and then we ran the analysis. And sure enough, it was like the majority of judicial foreclosures were commercial, you know, industrial, AG, etc. properties? And what was it like 97% of residential properties were for non judicial trustee sales.
Aaron Norris 48:02
What are your favorite data points out of the 200 plus criteria that we have, that you think people miss that they might not see the opportunity in?
Sean O'Toole 48:12
Oh, boy, you know, it's so use case-specific, right? Like, I love, you know, we talk a lot now about like cooking with data, and like, how these criteria are your spices that allow you to make a great list. And, you know, our quick lists are, like recipes that you can follow. And, and the rest. And I would say that, you know, one of the things I am probably most proud of is those quick lists, right? And I would encourage everybody to be careful about just using them as they stand. We do see this a lot in products. And with gurus, they're like, you have to buy this XYZ list, say vacant, right? You have to buy vacant and, you know, and it goes sell vacant to everybody, right? And it's $100 for a vacant list in your county, like this is one of our 200 criteria, right? And so, they go, you know, promote the heck out of this thing. And like, you know, I see it comes up in my Facebook feed, I see Google ads, it's like, it gets the hot new list. Well, what happens every time with that is as soon as you do that, everybody in any kind of reasonable market starts getting 10, 15, 20 people calling them on every vacant list, right? And so, when we do these quick lists, historically, they're good, you know, non owner occupied. If you're in an area that doesn't have very many you know, absentee owners, if you're in an area that doesn't have very many other investors, doesn't have a lot of people out there hustling looking for deals, you can probably use a standard absentee owner list and do really well, right? But if you're in the other 85% of the country, right, where there is some competition and stuff, there's probably five people mailing to that list already. And they're all saying the same thing with the same yellow postcard, you know, you know, we buy houses, right, and blah, blah, blah. And they're not focused on solving the person's problem, other than just maybe we'll buy your house, right. And so, I love these quick lists that we put together, because they're a great training thing. If you go through each of those quick lists for your industry, whether it's HomeServices, or investing or whatever, you're going to get a bunch of ideas about criteria that can be used and how to use them. And you can even combine the quick lists, right, and this is the, you know, a company came out and they said, 'Oh, we do list stacking', right? And so, I buy a list over here, I buy a list over here, and then I put them together, and I look for people that are on both lists, we just call that criteria, right? You add this criteria, you add that criteria, you have a, you have a list that does both right? Like, you don't need to, like get in the import export business and data munging business to like, add two criteria. Oh, I'm looking for people who are in foreclosure and where the house is vacant, right? Like, that's just two criteria, just add them. And but that's a unique story, right? That's a different problem, a different thing that somebody needs, then, you know, something else, somebody who's in foreclosure with equity is very different than somebody who's in foreclosure and underwater, right? Somebody is in foreclosure on a rental absentee owner, versus somebody who's in foreclosure, on their primary residence is a very different thing. And to be sending the same postcard to all of those folks makes no sense. You know, that doesn't have to be foreclosure, right? It could just even be, you know, we talked about for realtors, you know, you can look ,one thing that we have that's pretty unique is we have demographics search capability. So, things like age, presence of children, interests, etc. So, you know.
Aaron Norris 52:19
That's my favorite, I think that's such a cool way to really target your messaging to try to make it stickier. That's special.
Sean O'Toole 52:27
Yeah. So, you know, you're a realtor, and you have your target market, right? And so, many realtors do Every Door Direct Mail, or they get a farm from their title company. That's every address in there. And they send the same thing to everybody. But let me ask you, should you be sending the same postcard with the same message to somebody who's lived there for six months, as somebody who's lived there for 20 years, somebody who has equity and who doesn't have equity, somebody who is retired versus a young family, right, so, so like, those people all have different needs, right? The person who's in their retirement ages, right, maybe thinking about selling and downsizing, somebody with young children, maybe thinking about school districts, right, like so, you know, different messaging based, you know, around that we call that segmenting. And so you should segment your farm, we make that super easy, you can't do that with Every Door Direct Mail, you can't do that with your title company,
Aaron Norris 53:32
And the amount of money you can save and being able to market to the same people more than one time, instead of blowing your entire marketing budget on a general farm list is just have to do it data is not just for Wall Street anymore. I think that's what's really fun about going out. And speaking at these different organizations get it sounds cheesy, but getting them to dream with data. Because in my experience, a lot of times, they just don't understand what data sets are available, and ideas on how to put them together that make their marketing more sticky. Or get them really excited about just speaking to, if somebody really specializes in a senior market, maybe they're a realtor that's part of a team. And they really own a specific market or type of property, or a seniors, veterans, you just never know. But just being able to find some of that in the data is really cool.
Sean O'Toole 54:19
You know, and cost is one of these really interesting things to like, people go, oh, direct mail is really expensive, you know, it's 50 cents a postcard or whatever, right? And, you know, yeah, if you start hitting every single door with a non targeted message, right, it's really expensive. You know, there's kind of three, there's three parts to the deal, right? One is your list, who you're going to send it to, right? And by narrowing down that list, right, and being more targeted, you're going to get a better return on your investment. So, list is really important, right? Number two is message right? If you've got a really good message for the people that are on that list, and I usually like to start with the message first, figure out some really compelling message then find the list that matches that message right? Of the people that you think need to hear that message. And you put those two things together, and boy, you're going to get a huge response. And now, that 50 cent postcard is cheap, you start doing Every Door Direct Mail, or you're just, you're just wasting, you know, probably three quarters of your spend, and the spam there, the 50 cents for the postcard is much more expensive than the pennies for each record, you know, that you're going to buy, you know, for the addresses the list of what you're going to spend with us to make the list. And versus you know, what you're going to spend, you know, thinking in the shower about what a good message is?
Aaron Norris 55:45
Well, there's so much to explore it, I would just recommend that people leverage the community if you have any questions community propertyradar.com, Sean and I watched those unanswered questions all the time. If you get stuck, one of my favorite things about PropertyRadar is the ability to share criteria that I build. So, every once while I have somebody on Facebook, they're like I'm stuck here. So, I just created a an accessory dwelling unit, three ways to identify accessory dwelling unit opportunities based on property data. And then design ideas, just three different ways is really easy to do. So, if you get stuck use a community would love to help out. But...
Sean O'Toole 56:24
Then you've got a link there with the criteria used in a big click that link opens in the app and applies that criteria, then all they have to do is add their location, right? And it will show you, show them all those opportunities, right, and their location.
Aaron Norris 56:39
If you're in the community, you'll see where I put those because I use them religiously, and I'll even post them, you know what, I'm gonna post a few, if you're on YouTube, I'm gonna post a few of these. So, if you sign up for the three day trial, and you click on that, I will, I'll link the one that I did on the accessory dwelling unit. So, you can see and what's fun is that once you open it, it's the cooking with the criteria, then you start layering on the demographic data, you change the location, it's so cool. That's, that's my favorite. Well, 2021 what's next?
Sean O'Toole 57:10
2021, looking forward to a vaccine. And, you know, hopefully this next year, we get to a point where we get to, you know, return to more normal, daily life. I'm expecting we're gonna see more stimulus that seeming more likely here, I would say right now, and this is kind of reflected in the in the recent jobs report, right? We're still, we're still very at risk of deflation. And, you know, an economic recession. And, but I believe Republicans Democrats, the Fed, I think at the end of the day, they will, they will print whatever is required to keep that from, from happening. And, you know, I think Republicans, you know, thought maybe less was required, and democrats maybe thought more was required, and, you know, they'll probably meet somewhere in the middle. But what I am confident in is if they shoot too low, and we start to see that the economy, there will be more. And, you know, in, in that kind of reflationary scenario where the government's putting stimulus into the market, government's not very good at this. So, there's going to be winners and losers. And you want to pay a lot of attention to, you know, things like the CARES Act, and PPP back, you know, earlier this year, and whatever this new one is. Because unfortunately, you know, government's just not very good at getting that money out to where it needs to be. And so, we're going to see losers, we're going to see businesses that don't make it. That should have probably gotten our support to get through this. And we're going to see companies that didn't need it, get support, as well. So, you know, and that will have impacts on your local economy, that'll have impacts on your local markets, that will have impacts on your business and your opportunity. So, by paying a lot of attention to that, you will know, you know, where, where to go and what to invest in. So, I think, you know, we saw a lot of movement in housing, and it was really funny. I had so many large, large funds contact me when COVID was kind of first coming to fruition, saying we, 'hey, we're raising 100 billion dollars to go buy foreclosures', and I said, 'that's great, but I don't think you're going to get to spend any of it'. And they're like, 'What are you talking about?' And, you know, looks like at least so far I'm right. But you know, it's still there's a lot of people in distress, a lot of people can't make their, their payments with the, with the jump in cases that we have right now. The coming lockdowns, we may see a pretty big lockdown here in California here just in a couple of days. That could get, that could get worse again. And you know, there's a lot of people in distress. So, it's a, you know, watch the stimulus, is what I'd say, because that'll tell you how much distress we'll really see on the backside. And when we print this much money and devalue it, asset prices tend to go up. So, and also in these kinds of situations, interest rates tend to go down, those things are pretty bullish for real estate. So, if you see fear in your market, and people dumping things out of fear, right? Well, Buffett said, be greedy when others are fearful and fearful when others are greedy, I think was Buffett or maybe it was Monger is his second command.
Aaron Norris 1:01:16
Sean O'Toole 1:01:16
I can't remember?
Aaron Norris 1:01:17
Well, that is good advice for 2021. I am excited. Congratulations, I know, this has been a huge list, your, your team is just so talented, and I'm happy to be here. So, congrats, you must be relieved.
Sean O'Toole 1:01:32
More work to do. It's not a, it's a never ending, you know, I would love to say, 'Oh, we're national, and I'm done now'. But it's, it's just, it's just the start, right? Like, we have, you know, almost 20 years into our algorithms and work for our data in California. And we've got two years and these other states, but you know, I expect we'll still be finding places to improve, you know, 10 years from now. And, you know, really, our customers are a big part of that. You know, we want you to let us know, when you see things, you know, public records are never going to be perfect. So, actually, this is something we didn't talk about in any we should take a minute to explain it right? Is we get people to come in, and they go look up their house and they go, 'Oh, the bedrooms are wrong', or 'Oh, you know, it's showing my home equity line of credit as part of my debt'. Well, we don't have access to credit data, we don't know what the balance on your home equity line is. So, it might be zero. But we're going to take that worst case scenario and assume you've used your entire home equity line of credit. That's not a bug, right? That's just, that's just the methodology that we take and, and public records, there's typos on APNs, there's data entry issues, there's lots of stuff, it's never going to be perfect, right? You, this doesn't replace title insurance, if you want to go get a title insurance policy, where they're going to go do that investigation and get you back a perfect report on the property that's $350, not as many as you want for $100 a year, I mean, hundred dollars a month, right? So, you got to be realistic about that expectation. So, what is it we're trying to do, we're trying to give you this great, amazing starting point that does 80, 90% of the work for you and gives you this huge jumpstart. And like if you're in the marketing side, you know, let's say you want properties between this price and this price, well, those prices are estimates and they can be off. But if you put between this price and this price, right, we're going to miss a few properties that should have been included, right? And we're going to include a few properties that shouldn't. But if there's 20,000 properties in your market, right, and you can narrow that down to the 500 most likely, right? And we include 20, or even 50 that are wrong and we miss 50 right, you're still, that's 450 people that you're marketing to instead of 20,000. And that still makes you so much more efficient than marketing to everybody that you know, it doesn't you know, public records aren't perfect. If you're looking for perfect, you're not going to find it, there is not a vendor, a product, anything in the market that is perfect when it comes to public records. So, that's that's a really important thing to to understand. And if you come in with that right mindset, we can make you so much more efficient and help you grow your business so much faster. It's especially for everybody in the home in real estate services related businesses. Public Records give you the opportunity to know every potential customer by name, right? And to focus on those that most need what you have to offer? That is such a gift for our industry that other industries don't have, they have to rely on a radio broadcast to everybody where 90%, 95% of their dollars are wasted on people that don't care. We...
Aaron Norris 1:05:19
That's a very expensive channel.
Sean O'Toole 1:05:22
Yeah, I mean, we don't have to do that we can be very targeted on just the folks that are the right fit that where we offer real value and real service to those folks, and they need us whether they know they need us or not yet. So, it's a huge benefit to this, this industry. And I encourage everybody, whether they use PropertyRadar or something else, or go down to the county and do it themselves, to take advantage of it.
Aaron Norris 1:05:48
Yes, and there's a free three day trial. If you've not played please give it a try. So, she's, we go national, please use support. Kim and the support team is really great and a great way to plug in and not get lost and use the quick list and the community. If you have any questions. Sean, thanks for being here today. Congratulations. Big, big move in 2020. A bright spot of 2020.
Sean O'Toole 1:06:13
Great to have you with us, Aaron and appreciate all your support. So.
Aaron Norris 1:06:19
All right. Thank you for listening to the Data Driven Real Estate Podcast, you can find show notes and links to some of the resources mentioned in the show at datadrivenrealestate.com. Click that join the community, and you'll be forwarded to the PropertyRadar community where you can ask questions about the current show and even see upcoming guests and ask questions there. We'd love to engage with you in the community. So check it out. Please don't forget to like, favorite, subscribe and share on your favorite platform where you're listening to the show. It helps us out a great deal. Thanks for listening, and we'll see you next week.