Norris Bruce
Jun 09, 2017

Rob Hahn of 7DS Associates Joins Aaron Norris on the Norris Group Real Estate Radio Show #542

Rob Hahn




Managing Partner of 7DS Associates

(Full Bio)



Aaron Norris is joined again this week by Rob Hahn, the founder and managing partner of 7DS Associates. He has done everything from working in finance corporate law technology, product development, media and entertainment, startups, fashion, and even a professional card player. You will catch him on his blog The Notorious R.O.B, where he opines on real estate topics, technology, marketing, and strategy. You will find him at numerous industry events, including the Inman Connect, T3 Summit, and local state and national association events.

Episode Highlights

      • Who are the main real estate technology companies, and what cities are they testing their products?
      • How are Realtors responding to the technology changing so fast and in so many channels?
      • What is the best and most important way for realtors to generate leads in their business?
      • What is a sub-text currently being debated right now in regards to instant offers?
      • What is a big role investors are playing right now in real estate?
      • What is, and how are they involved in the real estate world?
      • What do Rob and Aaron both see happening in the future, especially with the co-living situation?

Our community tends to be behind the 8 ball when it comes to technology, especially in this market. In California, we have gone through the cycle of short sales and REOs, and this is a very small portion of what is occurring. A lot of the Norris Group’s network is getting leads directly from equity sellers. This comes from people going through a death in the family, divorce, job change, anything where they have to get out quickly. It could also come from a landlord who is looking to retire and does not want to deal with kicking out tenants. It is not like you are buying an REO with free and clear title, it is more complex than this. If they were to open this up and somehow pre-qualify the investor and know they had funding behind them, this becomes another avenue of leads. It is very competitive, and a lot of the mom and pop real estate investors will not be able to buy at some of the numbers where these hedge funds are buying. It is a little disappointing since there is the sense that some of these hedge funds do not necessarily care anything about the local market. It is all about numbers where mom and pops are going to be located in the jurisdiction. Unfortunately, you still have your politicians who hate landlords, so what are you going to do?

Rob said they are running tests in only two markets, and it is not clear whether this will become a full-blown product. He suspects it will since Inman put up a post within a day saying that one of the agents participating in this got 48 listing leads off of Instant Offers. When Rob thinks about how desperately the realtor on the ground wants listings, it is sick. There will be a line of people around Zillow’s office yelling for them to take their money. He suspects it will become a product, but we will have to see what the full product looks like when they come out with it. It could be one of those things that is open to all investors as long as you qualify and can prove you have the money.

Aaron said it will also depend on what markets they choose. Right now, Instant Offers is only in Orlando and Las Vegas, while Open Door is in Phoenix, Dallas/Fort Worth, and Las Vegas. He read that they were hoping to also get into Atlanta, Georgia and Portland, Oregon. They were hoping to be in 15 markets by this year and 30 by next year, so it’s interesting how it did not go as quickly as they had hoped. Rob said considering the amount of capital they have behind them, some of the people involved with it, and the amount of capital that Open Door and its people can tap, he is not worried about them and is interested to see what they do next.

Open Door has a very interesting inside gateway to 1031 Exchanges. That exchange market could really be facilitated in a lot more thoughtful ways than what is currently available. As a realtor right now in this market, long gone are the days where access to the MLS really means much of anything. Rob said they should have a conversation with the people from Realty Alliance, who make a huge deal about the whole participant versus non-participant distinction and access to the MLS. Maybe access to the MLS is not meaningful at the surface level, but maybe it is if you are in a transaction and need to get down to the nitty-gritty.

Aaron thinks in itself, it is not the end all be all. It is very difficult for traditional realtors who have been around a long time. It was only fifteen years ago we were still doing faxes and transacting a lot in paper. Bruce Norris was a flipper at the time, and in the back of his car was always a Thomas Guide map. Aaron has not seen one of these in 20 years, so things have changed a lot. The technology is moving so quickly and in so many channels, so Aaron asked Rob what it feels like at the events he speaks at from the realtor’s perspective. Rob says the feeling really is anger motivated by fear. He wrote about this a few years back when he was writing on syndication. The issue is when you have been doing things a certain way for 30 years and the rug gets pulled out from under you. Just when you got used to one thing, another comes along.

A lot of people have a difficult time adjusting to the pace of change. Rob does not think they are any different from doctors or laywers. When you think about what things like outsourcing or AI does to the legal industry, somebody who has been a lawyer for 30 years will not be able to adjust fast enough. Rob thinks this is what is driving a lot of this emotion. A lot of this is emotion, and a lot of number folks are just plain scared. They don’t know what to do and know that they cannot do it or what it even means for them.

Aaron teaches a lot on marketing and technology, especially in the real estate space. Whenever he speaks in front of realtor groups, he always asks them where they are getting most their leads. Without fail, it is relationship-driven. A huge majority of buyers and sellers use the people within their network or get a referral from, and they used them over again. Aaron says to just go with what works and not worry so much about being on Snapchat and other social media. It’s noise, so building that relationship is really important. Unfortunately, this seems to be getting lost in the fear of the technology. Rob agreed, and he did not know who to blame for this.

The thought occurred to Rob that the problem may be that the real estate vendor community and consulting community are using a sales tactic that is scaring the living pants out of realtors. A lot of the older realtors believe the millennials have more an advantage, having access to things like Snapchat and mobile devices. However, since this has been going on for ten years, Rob does not know if this is partially to blame. It is like the way to sell a product in the industry today is to scare people and say if you do not buy a particular product, you are out of date.

There may be some truth to this because if you look at all the data and numbers, most of the business comes from referrals. He saw a statistic from last year that said 11% of buyer leads come from online. The associations, MLS, and brokers are obsessed with Zillow with online, apps, and technology. Meanwhile, the agent on the street who is doing business is probably getting it from relationships they built over the years, whether from their church or community organizations. However, nobody is talking about this.

When Aaron talks about this, he says he transacts with people he knows and trusts. He is very involved in a lot of non-profits locally, and there are specific realtors who own specific areas in his head. This could mean a specific inventory type, whether it be commercial or historic homes. It could also mean a geographic area, whether it is in his city. Or, it could mean specific transactions. There is so much opportunity to make it human where the real fear is in the technology piece, and maybe we just need to get away from this. Aaron beats them up with a lot of charts, showing them why that is the case.

Aaron asked Rob the thing he would focus on the most, which he said it would be to make sure his sphere, neighborhood, and farm knows who he is. There are two things with this. Number one is he needs them to know that he cares about them. Zillow can out tech you, but they cannot out human you since they do not have any human beings on the ground. The thing about the human part of the relationship ultimately comes down to the person caring about them. The person might be paid to care about them, and it could be a sales tactic, yet Rob said he if knows they truly care about him then he is happy to send them money and do business with them. The second thing they need to know is that he is knowledgeable in this area because he is a local expert and has worked with it for a long time. He is on top of local development efforts or changes in the zoning law. It can’t just be that you’re really nice and have a nice smile, but you need to show you care about them. If you do these two things, you should not have to worry about the rest.

Aaron agreed and said it is the same with real estate investors. It is a very relationship-driven business. The last couple weeks on the radio show they had Andrea Jennings, a local realtor who does flips on the side. She and Bruce started working together 20 years ago, and she was the agent representing him. It was interesting because they were doing a show on first-day listing MLS and investors being able to buy the properties and being first to the market. This has changed because once you get outside of paper, you have thousands of people getting instant updates when something gets listed. It is so interesting how the relationship piece was so important, so maybe it is almost practically impossible to sometimes get that deal because you are the first to write the offer. This is not the intent of that transaction and that meeting, but rather it is to build the relationship to get the next one or the difficult ones that are not selling.

Rob said one of the sub-texts of the current debate and the hoopla around instant offers is the verification of the investor. There is this notion that the investor is being characterized as some Wall Street fat cat with his hair slicked back and coming in and taking advantage of homeowners. They buy out their family home for pennies on the dollar and cheating them. Rob told Aaron he should do a series on what the role of the investor is in a real estate market. Are they a force for good, for evil, or are they just out to cheat people? Aaron said they have been advocates for the investor space for years. The real estate investment community does not have a national association, and Wall Street is very disconnected. The Wall Street lenders came out and were speaking a different language in the hard and private money lending space, and people were confused. It was Wall Street speak, and they are working with people who get their hands dirty and are in the communities doing flipping.

Aaron was almost surprised to see some of the things come up because he thought they had moved on to different markets. He thought they would go after lending opportunities since lending is such a problem right now to a non-QM kind of product. We will see what happens with some of these new technologies if they end up deciding to still be in the ownership seat and if their goal is to build REITs with these single-family homes.

Rob told Aaron he should do a show on the role of the investor in real estate. There is something happening, and the rhetoric right now is something along the lines of the realtor being the only defense of the poor, helpless consumer against this evil predatory investor class. Aaron agreed with this, especially out here in California where markets have gotten really hot. There was a conversation about affordability and homelessness that sometimes take the same track. Aaron had just written an article for Bigger Pockets that talked about this. As affordability gets tighter, it is the landlords who are driving up the rents and prices. Wall Street did play an important role in this in 2013 because they were buying at more than full-market value with things like trustee sales driving up prices quickly. A lot of would-be owners could not compete or were looking in the ruins on the sidelines. Now, we are at where we are now to where we are almost at peak prices not seen since 2005/2006. The conversation is starting where the real estate investor is the bad guy. What will be interesting to see is if people really bifurcate the traffic between Wall Street and the mom and pop real estate investor. Rob disagreed. If you think about one market where the real estate investment activity really created that kind of dynamic, it was Vancouver, British Columbia. When you look at what happened there politically as a result of the affordability crisis, he does not think they will make a distinction between large institutions and individual rich people. This is especially the case when you talk about foreign money getting involved.

Aaron next went on to cover He had not read about this until Rob talked about it on his blog, and Aaron asked him to describe it and why it can be scary for realtors. Rob said there was a gentleman out in Illinois about three years ago who developed a platform for people to do the negotiation themselves. Aaron wondered what happened to it, which Rob said they did not go anywhere. One of the interesting things about it is the real estate space is one where the middle man adds value. Rob has been in the industry forever and is a lawyer by training. He said if he wanted to sell his house and negotiate certain things in it, he could but does not want to do this.

Aaron asked Rob if he was signing all the right paperwork and recording everything correctly, which he said he just does not want to deal with it and feels like there is a place for these do it yourself tool kits. There are some homeowners and homebuyers who want to do it themselves, and that is great. Home Depot sells all kinds of things if you want to do something like create your own bathroom. Rob does not want to do this and would rather hire somebody and have them do it for him. He does not think there is a whole lot of traction behind something like this. Aaron did not realize it was three years old and had not gone anywhere. Rob said he has not seen much of it either, although there are a number of companies where it has gone out there trying to make it smoother and easier.
Rob said he just does not see this happening. Fundamentally, the homebuying process is not painful and annoying because of lack of technology, but rather because mortgage is painful and annoying as well as regulations. Those are not technological problems; they are really more policy, regulatory, and financial problems. This is something an app will not solve.

Aaron and Rob went on to discuss what they see happening in the future. He asked Rob if he had been following the co-living situation, which he said no. Aaron said they are calling it a dormitory for adults, something which fascinates him. He lived in New York City and on a cruise ship for 6 months, so he has lived in these situations. He said it was great. He does not need 5,000 square; he could live in a 100 square foot box and be completely happy. Rob thinks this will get a lot of traction with the CBDs for younger people.

What is funny about the co-living thing is Rob had this idea back in 1993. He had just graduated college, had a job and a hedge fund. He was renting an apartment in Manhattan and thought to himself how all he ever did there was take a shower, sleep roughly four hours, put on clothes, and then go back to the office. He said they might as well buy out two or three floors of the office building, charge him rent, and give him a room there. He literally did nothing in his apartment that was costing him $1,000 a month in 1993 other than shower and sleep. Aaron found this funny because when he lived in New York City, he lived in Harlem and Washington Heights. When he left for the day, the size of his backpack was hilarious. If he had to go home to get something he forgot, he might as well just buy it while he was out of his home.

Rob also wrote an article about driverless cars and how he thought this might change some real estate activity. He said the biggest impact is that the suburbs die. The central business district and downtown living is not affected because it is so easy to walk out the front door and down to a bar or restaurant. He said if he could be doing work, sleeping, or eating breakfast during a 2-hour commute into work from the country, he would do it all day long. For the price, especially if he had children, why would he not want a farm on 10 acres that is 100 miles out of town and have his car drive itself. He thinks this will be the preferred living arrangement for a lot of people. He thinks it will be at either ends of the spectrum, and there will be a lot more value and space out in the countryside as well as the central business districts.

Rob said the suburbs exist because of the car, and the limitations is the whole commuting and sitting in traffic. If that commute time is something where you can actually be productive, or if not to sleep or read your newspaper, then this changes everything. He thinks this will completely change everything we think of as a city. It changes and kills off suburbia, and it means we see much more of a dispersion of population. For those with rentals, this is something to keep in mind as technology improves where people decide to live.

Aaron asked if he had any thoughts on how virtual reality will change the game, if anything. However, Rob said he does not see that changing things so much. However, it depends on how real virtual reality is. Rob is a freak about demographics, and when he looks at places like San Francisco he looks at how millennial family formation rates are way down. They are getting married later and later in life, and he just does not know what happens to family formation as technology continues to advance. If you combine things like driverless cars with virtual reality, which could mean something like telepresence and working remotely, as well as the levels of education required, family formation, and dating habits, it is really hard to see what this future will look like.

The birth rate in San Francisco is below replacement. It got to a point a couple years back where the city of San Francisco has to start closing schools because there are not enough kids to attend those schools. He asked Aaron what happens to real estate in that type of environment, which Aaron said it has gotten crazy up there. They have flown past their peak price. In the last peak it was in the $900,000 range, and they are well beyond that at this point. It makes it almost impossible to have a normal life up there.

Thank you for joining us for our interview with Rob Hahn. To find his blog, you can Google Notorious R.O.B. You can also find him on Facebook and Twitter or find him speaking at one of many events if you are in the industry.

For more information about The Norris Group’s California hard money loans or our California Trust Deed investments, visit the website or call our office at 951-780-5856 for more information. For upcoming California real estate investor training and events, visit The Norris Group website and our California investor calendar. You’ll also find our award-winning real estate radio show on KTIE 590am at 6pm on Saturdays or you can listen to over 170 podcasts in our free investor radio archive.

Hard Money Loans
Real Estate Radio Show and Podcast
Real Estate News Blog
Real Estate Investor Training

The Norris Group

Phone: (951) 780-5856

Fax: (951) 780-9827

1845 Chicago Avenue, Ste C,
Riverside, CA 92507

members of