How the Roofstock Select Program Works and Where It's Going

In this episode, Roofstock's Director of Local Market Growth, Mark Woodling explains the new developments with the Roofstock Select program, how it works, how to make the most of it, and where it's available.  --- Transcript Tom: Greetings, and welcome to the remote real estate investor. On this episode, I'm joined by   Michael: Michael Albaum,   Mark: Mark Woodling.   Tom: And today, we got a fun topic. So we're actually going to be talking about the Roofstock select program. And this is a really neat program that Roofstock has that merges our technology, as well as our awesome local broker and agent network. And today we're going to talk about that with Mark who leads the program.   Mark: Thanks for having me on guys, this is really a cool opportunity because Roofstock is growing. And we're growing in many different directions. But one of the things that most buyers are starting to see on our website is that there's more properties that are coming from MLS. And so we really want to make sure buyers understand, Hey, where are the properties coming up? Number one, what markets then number two, how are those properties coming to roof stock, right Roofstock doesn't go on the market and cherry pick these off of MLS, we actually have what we call our certified agent network. And those agents are the ones that we work very closely with, by vetting them, number one to make sure that they know what they're doing that they're you're really top agents in their industry. But secondly, that they have the experience really understand the investment side of the world. So these agents are the ones going to MLS and identifying quality investment properties, underwriting them using Roofstock tools, and then posting them to Roofstock.com. So buyers can sift through properties that are also on market.   Michael: So if I'm a buyer market, I'm on the website and I see a roof stock select property, does that mean that somebody or investor from the agent has already put eyes on it and identified it as a potentially great investment opportunity?   Mark: Exactly. So roof stock has provided these agents with underwriting tools where they can go in and identify properties on MLS and look at the pictures, you know, really get into what the estimated market rents are because many of these properties are vacant. So they'll come up with a market rents. And then they'll actually have an idea of what the cap rates look like, and can study our neighborhood scores. So they understand what Roofstock buyers are looking for, because we've done a lot of coaching to give them that direction. And so anything that makes it to the site has been touched by the agent, and then they have the authority to push those directly to Roofstock.   So we go in QC and make sure that you know, these are some quality properties. But with all the training that we're doing for him, the ones that are hitting the market, they know as a local expert that these are good buys.   Tom: This is great. So just to paraphrase a little bit, so you know, within Roofstock properties for sale, they have these exclusive properties that you're not going to find anywhere else. But they also have these properties that are listed in the MLS that these local experts using Roofstock technology have identified for people to be able to acquire through roof stock. And I understand that correct Mark?   Mark: Absolutely. As you know, buyers like to look through the roof stock lens and see all the analytics and the details from our neighborhood score to cap rates and just long term equity opportunities. So this is a place to be able to identify properties using the Roofstock lens. But what's cool is that when a buyer makes an offer, they're always going to get the inspection contingency. So they can make an offer.   In fact, Roofstock is going to pay for that inspection. And we're going to help them with a certain part of the transaction. But they're going to have the local agent that understands what is absolutely necessary to compete in that market to make sure their offers are competitive. But also you really need to make sure that the buyer is handheld when that inspection comes back, you know maybe how to renegotiate if there's a few things that need to be fixed up. But mostly it's about really interpreting what's local and customary in that market. Because all markets from Austin, Texas, the Dallas area is hyper hyper competitive. But now you have the ability to have an agent may help make that offer, and then walk you through all the steps all the way through the closing process.   Michael: So Mark, something I hear constantly from Roofstock Academy and Roofstock users are how great the guarantees are that come with Roofstock property. So the lease guarantee on vacant properties that 30 day money back guarantee. Are those applicable to Roofstock select properties as well. Are those only for the exclusive?   Mark: Yeah, absolutely. Because when you look at the Select Properties, you're going to see about 90% of the properties are actually vacant. Unlike Roofstock exclusive about 90% are tenant occupied, right. So the guarantees absolutely apply. In fact, it's almost better when you purchase vacant because you know that's where the roof stock guarantee applies when if there's any missed rents after the 45 days.   So those are absolutely in place. In fact, that's really the reason why buyers like to come back through Roofstock and continue to purchase even if they could go directly to the agent. They know that the guarantees are in place Roofstock is going to cover the inspection and then we also helping keep those agents really, you know, communicating with us. So we know, their friend center, they're very present with especially the roof stock buyers, and we just have a good partner relationship. So we can be very influential and making sure that Yeah, they are delivering the best customer service.   Michael: That's great.   Tom: For any agents or brokers that are listening that are interested in applying and going through the application process, I'd love to hear kind of just talking over some of the benefits and why it would make sense for an agent or broker to apply to this program.   Mark: Part of Roofstock magic is really working with the buyers, right? It's doing what you guys do every single day with a Roofstock podcast to webinars. And we have our buyer advisor team that's helping helping buyers really come up with their plan, right, it's about getting comfortable with investing step one, and then really narrowing down and getting to what markets are available, what inventory is available, and so forth. So agents love that we are doing so much of the vetting and qualifying an education piece of on the investment side.   So when a buyer is ready to make an offer, they've been through the education and they really are ready, willing and able buyers. And we do require when an offer is made, that there's a pre qual or proof of funds letter. So when the offer comes through, agents love it, because Roofstock has done so much work on just making sure that these are really quality buyers, and that they're actually ready to make an offer. And that the lead that we send to these agents being this, the buyer has all those documents, but more importantly, they found a property that they're really interested in making an offer on. So when it comes to a buyer being ready, and an agent ready to intercept that there's a deal ready to be done. So agents just love that, you know, we go through all those steps get the buyers ready,   Michael: That makes total sense. So what should agents do or brokers do if they are interested in becoming Roofstock? Agent partners?   Mark: Absolutely. So we have a website, it's joined dot roof stock.com/certified-agent. And you can actually fill out an application there and provide us with a little more detail. But you know, going back to why this program is so important to us is that we want to make sure that we're working with the best of the best agents out there. So we do want to take an application and know that agents who have five or more years as a full service real estate agent and have done 50 or more transactions would be the minimal qualifying factors, you know, to really bring on some of these agents and even begin the conversations. And just so everybody knows as well, you know, we're only picking two agents per market and we may grow to three, we want to make sure that these are really agents that we have relationships with that we have done hands on training, and that they really have committed to understanding Roofstock, and just have a better idea overall of what's happening in the investment community.   So the reason why it's small as you get better quality versus the quantity, otherwise, it becomes quite difficult to chase down that many agents because they are busy. And they're independent contractors, and they don't work for Roofstock. Right. It's just a partnership that we have. So I think just having fewer is going to bring more equality to the buyers.   Michael: I'm curious mark, from a buyer perspective, or from a transaction flow standpoint, if I go to make an offer on a property that's either a select or an exclusive on the website. From my perspective, it's all the same same. But from a transaction flow standpoint, what actually happens after I hit that make my offer button on a select property?   Mark: Great question. So when you make the offer, the buyer is going to fill out the basic details that you need to really populate a purchase and sale agreement right. In these cases, we're we have to use the local purchase and sale agreement. So if you've bought a property on Roofstock, that's an exclusive property, you use a different contract that's very direct just for tenant occupied homes more than likely.   So using the local state promulgated forms is important. So we collect the basic information, you upload that proof of funds or your pre qualification letter. And then we're going to send not only an email confirming that that's been received, but we're going to send an email with a DocuSign, which is a contract to the agent. And the agents actually get to have the ability to intercept that review the terms and then reach out to the buyer directly to make sure that they can quickly fill out the rest of the details and get that offer back in the buyers hands for signature.   So maybe a buyer made an offer for $100,000. And the list price was 100,000. Well, there could be multiple offers, but a Roofstock buyer doesn't know that it could be a multiple offer situation. So the agents going to have first hand knowledge based on their MLS access, and they can coach the buyer on Hey, what are the next best steps To make your offer the most competitive. So really working with that agent for these on market deals is super critical. And they know how quickly they need to act. So the agents are gonna really coach the buyer at that point. But having that contract in hand, they're ready to go. So they have pretty much all the information from the buyer, ready to fill out that contract and submit that offer.   Michael: So just to paraphrase, after I hit that button that says make my offer, it goes into really a review phase by the agent who's then going to turn around and bring it back to me for final signature before it ever gets submitted as a official offer. Is that correct?   Mark: That's correct. That's correct.   Michael: I was gonna ask a question, but I think that kind of answers it for me, I was gonna ask him, folks reach out to the local partner agents ahead of making their offer to be coached in how to make a competitive offer. But it sounds like that's already going to happen, once they, quote unquote, make their offer, because then it's going to get reviewed and get sent back.   Mark: Exactly. If they found a property, you know, go ahead and enter in the offer information. But you're always going to have that ability to really get coached in that final step before it gets submitted. So we always suggest talking to the buyer advisor team that works at Roofstock, to really, you know, find the markets really get coached up and make sure that you're ready. And when you do make that offer, by the time it gets to the agent, they know that you're ready to go, because we all know properties are moving less than 24 hours being on market these days for on MLS properties and a lot of Roofstock properties too. But to be able to move this quickly. It's an advantage to the buyers to be able to identify the property and say, hey, what questions do you need for me? Otherwise, let's rock and roll.   Michael: It makes total sense. And I'm curious Mark geographically? Where is this program going? I know we're in a bunch of different markets right now. But where are we setting our sights for future growth?   Mark: That's a great question. We have really taken a lot of the information from Roofstock’s exclusive program and said, Where do buyers purchase today based on the data that we can collect and analyze. So we're opening up in St. Louis, Kansas City, just as of recently, even like Augusta, Georgia, in markets where we know there's a lot, there's quality cash flow, right, we know there's appreciation opportunities in those markets as well.   So we have the ability to open up in any market where we can find an agent, and we have a property manager partner. So we really just need to be able to get the MLS data to put you know, to really connect to our systems. And we do that through the local real estate certified agents.   So you know, the sky's the limit, you know, if somebody is interested in buying an Anchorage, Alaska, hey, we get enough interest, we can absolutely do it for probably steer people back towards the mainland, but we absolutely have grown tremendously. And we have. So we're in 24 markets today, in a lot of those markets are just coming on board today, because we're training up the agents and like the Tulsa, Oklahoma's we just brought on, like I said, Augusta, Georgia, we're bringing on a second agent in Jackson, Mississippi, because we're getting so much interest right now, we just signed up in Gary, Indiana. And I can put together a full list to make that available. But you know, just check back to Roofstock. If you go into the filter section, you can actually filter under the More button just for just roof stock select properties.   So we'll be doing a lot of these announcements, you know, as we go forward, and really making sure that we give a shout out to the agents who are participating and, you know, who are really trying to bring as much inventory to Roofstock knowing that we have so much demand right now. So overall short answer is we can go anywhere, but we're really focused on the markets that we've seen success, but we're ready to go into new markets. Like, you know, Colorado Springs is one that we're trying right now, we did open in Austin, Texas, cap rates are, you know, 2-3-4 percent, you know, there's some in the fives. But that's just how competitive it is because prices have have really jumped. But at the same time, you know, property taxes out there tend to kill the cap rates a little bit. So it's good for buyers to see real properties on the site and those markets and really understand what is available on the market, especially as properties are getting snapped up so quickly.   Tom: This is awesome. I like learning about this for a few reasons. One, you know, one of the things that I've always seen in Roofstock that I've wanted to see more is more listings available. And now by tapping into these local experts I mean that solves that problem where we're getting basically any listing that's listed anywhere you're able to layer on Rootstock’s technology and services that they provide and certifications and warranties, all that good stuff and just opening it up to to the world of any market. Right?   Mark: That's right   Tom: Fantastic. And then also like kind of a win win both for the broker agent side and at the end of the funnel that you know where they're meeting where they're connecting with these buyers. It's at the point of making that you know that final push on the you know, either price setting or final property selection and on the buyer side, you're getting This sort of certified agent that's that's been through the wringer that Roofstock’s done and getting them on board. So yeah, really a triple win or quadruple, I don't know, anyways, I fired up about it. I'm excited about this program mark that you're working on.   Mark: The one thing I want to say about these agents are, you know, I'm hand selecting these agents and making sure that they really understand technology and companies like roof stock that they believe in us. So last month, we had one of the agents. His name is Matt Crawford, we hope to have him on one of these podcasts. It really just talked about what's happening in Columbia, South Carolina. But he posted 275 properties in one month from MLS to Roofstock. And he's just hustling and making sure that he can put new builds up, right, something that buyers are accustomed to seeing, but they may not be able to see it through the roof stock lens that often because a lot of properties you see on Roofstock are exclusive listings, right.   So now we're starting to open up and get into higher price points where you know, there's gonna be less overall maintenance, right, but you're gonna have higher appreciation in some of these kind of trending school districts, let's say that they're building. And so it's a great way to see a variety of properties, and really dabble without Roofstock having to do this extensive business development to go find those listings. But again, give that taste to the buyers.   Michael: I'm curious Mark, how this will play with the bring your own property program that Roofstock has, as well with getting now agents and property management partners in these new markets, does that then allow for the ability for folks to submit by BYOB submissions as well?   Mark: The two overlap perfectly right. And that's really where the certified agents are the ones that a buyer will work with if they submit a BYOB property, because really, the markets that we're working on BYOB are the markets that we have certified agents in. So if you submit a property Roofstock is actually kicking those over to the certified agent and saying, Hey, we do have a property, please underwrite this in our broker portal. That's the technology that we use that really analyzes the deal, and kicks those over to the buyer. So the buyer now has a private link, right? Nobody else is going to see this besides the person that submitted through the BYOP program.   And then they're going to have the ability to go through the same process, they would for any other select property. But it's the fact that the buyer found that property, and now they're the ones that say, Hey, I can still take advantage of all the roof stock guarantees, get the free inspection. And as long as it really, you know, fits the condition criteria that we're looking for Roofstock, well apply all those guarantees, right, it's not guaranteed to have the guarantee, I guess you would say, but at the same time, we want to make sure the property is in good condition or that seller or the buyer may fix up that property in order to get that guarantee. your Roofstock just doesn't have the confidence if a property's falling apart, or, you know, there's a foundation issue that you know, somebody is going to want to rent that property out. So we do have those conditions in place for that. But yeah, the BYOB program has been a great success. And again, it just folds right into this master plan of how we're growing out this certified agent network.   Michael: Oh, man, that's so exciting. Because I hear all the time of you know, folks ask, you know, I found this market, you know, when can we open it up. So this is really exciting stuff.   Mark: And one thing on that I'll just note is off market deals are still an opportunity as well, we actually have our system set up. So if a buyer wants to make an off market offer, because maybe they were playing around on a Facebook group, or they found a lead that just came from a different source, but it is not on MLS, you can still submit through the BYOB program. And the agent will still underwrite that property send the same link that you would see the BYOB or select link. And then you can transact from there. We want the buyers to know that it has to be on market, you can't just make blind offers on your next door neighbor's property because it may be poor judgment call may as well just go knock on his door.   Michael: Right. Oh, interesting. But there's a true listing for an off market property. Those are fair game on BYOP?   Mark: Fair game, absolutely. So hey, that's the type of market we're in. Right, you have to look far and wide. And what other people don't know is available could give you that edge. So something definitely to consider. And again, if you see a property that's on our website that's in a select program, those are the markets we're open in. But we'll work on really making a select web page in the very near future. So a buyer will know where they can shop. And maybe maybe they want to start shopping just for select. That's going to be an opportunity,   Michael: Man, this is great.   Tom: Awesome, Mark. Awesome. Thank you so much for jumping in any final…?   Mark: So the markets that were opening in no particular order, actually by alphabetical order, so let's just start there. Atlanta, Georgia, Augusta, Georgia, Austin, Texas. Birmingham, Alabama, Cleveland, Ohio, Columbia, South Carolina, soon to come Detroit, Michigan, Greenville, South Carolina, Houston, Texas, Huntsville, Alabama, Indianapolis, Indiana. Jackson, Mississippi, Jacksonville, Florida, Kansas City, Missouri, Las Vegas, Nevada coming soon. Memphis, Tennessee, Montgomery, Alabama, Orlando, Florida, Pittsburgh, San Antonio, St. Louis, Tampa, Tulsa, waco. So I could go quicker if you wanted me to. But that's those are the markets.   Michael: That's awesome.   Tom: Great, great coverage. Hey, Mark, what are some of the words of wisdom to maximize this opportunity?   Mark: Sure. It's a great question, because it does make sense for a buyer to say wow, I can just reach out to these agents and you know, go to Rootstock’s website and see who they are. But working through the Roofstock process is actually really important, because you're going to have a Roofstock on your side, especially in the event, something may happen afterwards, you say, Hey, Mark, I have a few questions or, you know, is this the right property manager, or do I need to exercise my Roofstock guarantee?   In summary, I would say it's really important that a buyer continues to work through roof stock, where we can send the lead to these agents, because that really shows that you are ready to make an offer, the buyer agent or the certified agents are really ready to engage with you knowing that you've done your homework. And then of course, you're going to have the Roofstock guarantees. And the Roofstock guarantee doesn't just end, if you're collecting missed rents, but it continues Roofstock wants to stay involved, keep the relationship with with our buyers, and just working through us is gonna give you a lot more value, especially when it comes to education and, and other things that we're able to do for buyers. So yeah, stick stick with us stick with the process. And these buyer agents will be in contact with you, especially once you make that offer, you know, they're going to be ready to take you to the next steps.   Michael: Mark, this was great. And I guess my final question is for the BYOB and the Rootstock select, for Roofstock Academy members, do those properties also qualify for their cash back? intentive?   Mark: Absolutely, we treat it all the same. So you know, I think it's a Roofstock select shouldn't feel too different to the buyer, which is important because we put the safeguards of the inspection contingency in there. And you know, the Roofstock certified agents are going to step in as well. So there's actually a lot of value. So yeah, we want to treat these all the same. So Academy members should definitely kick around and get to know the agents. We're going to be coming out with agent website soon. So you can see, you know, a 15 minute interview to learn about their market, just learn about who they are and get more comfortable with them. So we see there being a lot of engagement with the academy members with the the certified agents.   Michael: Fantastic, man, I am just super pumped. I'm super pumped.   Mark: Yeah, thanks for having me on guys. And yeah, we'll do this, again, we'll highlight some of the agents in the markets that are really producing. We call them the hustlers, right, the ones that are just putting in the effort and they want to see Roofstock really thrive. So we'll get them on and let them really walk us through their their markets and what's happening because the market dynamics are changing every single week. It's getting crazy out there. So let's hear from the local experts.   Michael: Awesome. We're very much looking forward to having them and you back on the show as always. great seeing you man.   Tom: Mark, thank you so much for jumping on. This is an excellent episode learning about the Roofstock select program. As always, if you enjoyed the episode, please rate us please subscribe. Tell your friends about us. We appreciate that greatly. And as always, happy investing