The inventory problem isn’t going away. It’s a powerful, pressing force sitting squarely on the market’s chest. Like gravity, it’s ever-present and not easily overcome.
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There are now arguments to be made that it’s no longer a temporary market condition, that no sudden solution can remedy it. Maybe, the lack of affordable single-family homes merely “is the market.”
Inman’s Daniel Houston has been reporting on the inventory issue for Inman Intel, using Inman’s Market Explorer to show how a recent small acceleration in inventory “has started to sputter.” Redfin numbers echoed what Houston found, according to Inman reporting by Lillian Dickerson on Dec. 11.
Shant Banosian, a president at mortgage company Rate, formerly Guaranteed Rate, told the audience at Inman Connect New York in January that the problem is here to stay.
Luke Babich, CEO of Clever Real Estate, advised Inman readers on a number of strategies to cope with the low number of sellers, recommending tactics like following-up with previous clients, emphasizing the realizations of the market, and going after FSBOs.
One tactic Babich didn’t bring up is working the “off-market,” or grey market — that is, homes not for sale. It’s been a fixation for many and a route tried a number of times.
Like Everest or Mars, there are always people formulating ways to conquer what appears insurmountable. Some succeed, most don’t. But the odds aren’t stopping Katie Hill, founder of Unlisted.
Hill’s solution is simple: create an organized system for consumers to contact homeowners with a notice of actual interest in their home. It’s a tactic agents use every day to market their services, although it’s typically a way to earn future business, materializing as “just listed” or “just sold” direct mail campaigns, most commonly.
Grey market advocates, however, work under the presumption an owner will be compelled to enter the market if they only have a ready and able buyer. And if enough people are out there willing to do that, the market can shift.
The concept is so much easier advertised than executed, however. It’s been done by a company called Remzy, which would send formal letters of interest in FedEx envelopes, and a few years ago DropOffer launched, marketing a solution to “Turn the off-market on.”
Katie Hill agreed to chat with me about her motivation for trying something that’s already been tried and what the company offers real estate agents, among other things.
Inman: Inventory is the real problem in the real estate market, right? Not rates. Is that what led you to launch Unlisted?
Katie Hill: That’s not the problem I was tackling in the moment. I think it’s a problem that we end up helping with. But the way that I launched Unlisted was a personal experience I had, which was during the pandemic, and the swimming pools were closed, and my girls and I kind of lived for the pool in the summer.
I noticed that the house across the street had a little pool in the side yard, behind a big fence and a bunch of bushes, which I had not noticed for the five years previous living here. But at this moment in time, it struck me, ‘Oh my gosh, there’s a pool over there.’
So one day, when my neighbor was out cutting his grass, I walked over there and said, ‘You have a pool back there? Well, just so you know, if you ever want to sell your house, I would buy it.’ And he kind of lit up and was like, ‘Really? Because we’re just at work talking about my retirement, and it’s going to be a minute before we find the replacement and get them trained and all that kind of stuff. But my wife is packing up the car because we know we want to retire to South Carolina by her sister, and I’m thrilled to know somebody wants the house.’
I remember looking down my block and being like, ‘I wonder how many other people on this block are thinking about retiring in the next couple of years.’ And this feels like this should be a thing. We should be able to communicate, signal our plans a little bit better, line things up in advance, and that feels like an opportunity in the market.
What is it you hope to accomplish with the company?
It sort of dawned on me that we tend to think about real estate in black and white terms: A home is either for sale or not for sale. But the experience that I had with my neighbor illustrated that, like in my own personal experience, we sit in a grey space. A lot of us, it feels like, we’re not for sale, but we’re not not for sale.
So we surveyed people, and we continue to survey people, and got these fairly staggering numbers: Around two-thirds of homeowners, 66 percent, are sitting in this gray space. And then when I started talking to real estate agents about it, they’re like, yeah, we know that.
But I was kind of struck by [the idea that] nobody is really paying attention to that 66 percent; the whole industry is sort of aligned towards the, we’ll call it 2 percent, right now that are listed for sale, right? Almost our entire industry is focused on that segment.
And so this idea of, if we can reduce the unknown and reduce the friction, we can move people out of the gray, out of the ‘not for sale’, into the ‘for sale’ faster, which then starts to increase the entire pie for everybody.
That was what I was setting out to solve.
So this has been tried a few times. What are you doing to become the outlier in this off-market space?
I think the key difference — because I studied those, you know, the ones that had come before — and I think one misconception I have to clear up right away, about the name Unlisted, is that people assumed right away that I was trying to cut out real estate agents. And I think some of these models I have, that’s what they’ve been out to do, is to get rid of commissions, or whatever they’re trying to do.
That was never a piece of my play. As a matter of fact, we actively engage with real estate agents. We’re actively trying to cut them in, not cut them out, so that is not my model.
The other thing I think is different about my model is that I’m not a brokerage and have no plans to be a brokerage. So we would like to stay out of the transaction. We would like to move people into the transaction faster, to this entire industry that’s designed to handle this.
It’s incredibly competitive. We have no interest in throwing our hat in that ring, because I think there’s plenty of opportunity and service to be done in this gray space before the transaction, sort of focused more on readiness rather than transacting.
Let’s say someone is interested in a particular home. How does Unlisted help them get the attention of that homeowner?
The way that the platform is designed to work is that we’ve pre-populated the supply side using public record data AI and Google, so there’s a property profile for 121 million properties in the U.S. that can be fully controlled by the homeowner. And then we just launched a new product, like two weeks ago, that also allows the owner to designate a collaborator, which is what we call an agent, to help them manage their profile on their behalf between transactions.
So what I think is cool about that is it becomes this opportunity for agents to stay engaged with their clients the whole time that they’re in their home between transactions and add value directly related to the property, instead of just being there during the transaction. There’s this ongoing connection opportunity.
In June, we launched the Waitlist. It’s just a button, so the buyer clicks the button, then we notify the homeowner via direct mail. They’re actually wedding invitations that are repurposed for this, like sort of lovely, high-touch notification that, ‘Hey, you have a Waitlist.’
And the call to action on that is that then they get a code in that mailer that goes to Unlistedhomes.com/invitations, they enter that code, their property profile comes up, they confirm they own it, and then they can see their wait list.
You now know that this site exists. You can enhance the way that your profile looks. The better your profile looks, the more attention you’re likely to attract. And you know you can continue to build the waitlist the whole time you’re in the house.
Let’s talk about claiming the home profile. It looks as if you’re using a lot of Google Street View images for the profiles. I’m making the assumption that the AI is going out and capturing all those Street View images and then populating it against public records and tax information. Is that how all those pages are getting built out?
Yeah, that’s right. And I mean, technically, Google [Street View] is an API.
The compilation and the drafting of the description of the home from just the data, you know, it’s raw data that then becomes a natural language description. It’s Open AI; it’s ChatGPT. Then [there is] formulating the different components, because the data is not entirely consistent, because we’re using county assessor data, so just sort of making sure that the profiles are built in the way that looks appropriate for the data that’s available in that county.
In terms of claiming the profiles and updating it, the idea here is that you need to reach enough consumers for them to log in, create an account and manage their home profile. Now that makes it like you are marketing directly to consumers, every homeowner in the country. That is a massive undertaking, right? It seems to me like that might be your biggest challenge, getting Unlisted and what it offers under the noses of millions of homeowners, right? That sounds very difficult.
Yes, I don’t disagree that what we are doing is a big undertaking. I think if we got even a small portion of the population and we’re able to demonstrate some reduction in friction and moving some people through faster, that would be a win.
And we’re kind of working right now on determining where to focus our efforts. And so we’re actually in the process of doing some analysis, with the help of some broker advisors and agent advisors about parts of the country that maybe make the most sense for this. We’ve gotten feedback: areas that are landlocked, strong school districts, [etc.]
Phoenix? Raleigh? Las Vegas? Those are very common places for a lot of startups to focus because it’s so homogeneous, right? So many of the houses are the same.
That’s a piece of it, but we’re also experimenting where the houses are particularly unique and special and there’s only one and people want to get into it, you know …
Like mountain towns, like where I live?
There’s an element of that here … where it’s that one special house, and you’re just refreshing Zillow, hoping. I liken it to pulling the lever on a slot machine, hoping that your dream home pops up. That’s one option. The homogeneity is interesting from a data standpoint, in terms of making it a little bit easier, but I think in terms of our value proposition, the uniqueness of a home plays into this as well.
It sounds like the revenue model is essentially advertising. You’re getting agents to buy ZIP codes. You provide them with all the homes that you’ve accumulated in that market, and if someone says they want to sell or they want to buy, that agent has the opportunity to pitch them on representing them. Is that how it works?
It’s more the advertising thing. We actually explicitly tell agents that we’re not a lead generation solution, and we stand by that in terms of not collecting consumer information to then give to an agent. Rather, we’re putting the agent’s information in front of the consumer and allowing the consumer to contact them directly.
For now, I think we’re going to create a form that would allow a consumer to raise their hand and say, please have an agent contact me. But we are not doing the thing where, if somebody puts in their email address on our site, suddenly they hear from real estate agents.
Okay, so here’s what I want to chat about. That’s essentially Zillow’s model, right? Premier Agent. We get people to come to our website to browse homes, and an agent can advertise. So, I mean, that’s what you may run into: You’re kind of coming up against some big players in the space with that model, right?
Maybe the difference is that those homes are for sale and ours aren’t, so it is kind of a different consumer. Like we always say, if you have a client who wants to buy a house, start on Zillow or start on an MLS site. It’s only if you want a specific house, or you have a longer timeline, or you’re not happy with what’s on the MLS, and you’re asking for more creative solutions, then you come to us.
So it’s a different phase, it’s a different consideration set, which is why I see it as expansive and not competitive. But if I mean, feel free to challenge me on that.
If someone’s looking for a house, they’re going to go to Zillow or Homes.com, maybe. How do you pull them to your site? Don’t you want that buyer, too?
Not really. I mean, we want people to buy and get into houses. So those houses are the most available, and we want people to get into the right houses. Put it that way: We want the seller to find the best buyer and the buyer to find the best home for them. But if that match isn’t happening, it feels like there should be a place where that aperture could be opened a little bit more, which is what I was struck by with the conversation with my neighbor.
I’ve been looking at technology products and analyzing new models for a long time, and despite all that, there is still a break in the consumer experience. So, any new model that’s out there, I want to give attention to. I can’t say if it’s going to work or not.
My only challenge to the industry might be that I think it’s interesting to focus outside of the transaction. All the money is in the transaction, and to your point, from a consumer standpoint, there’s more service to be done beyond that, that could then help the transaction side. And that’s what I think is really interesting.
And what I will say too is that I definitely come up against some initial resistance, but give me 10 minutes. That’s what I found with real estate agents, who have been my main audience so far, once they see that I’m not trying to replace them.
I’m trying to help. You know, I’m trying to make this bigger and easier for everybody.
