Real estate investors, like all hungry entrepreneurs these days, must battle against the ticking clock. So many facets of our businesses have spread out in so many directions. And now they are extending more and more into the digital space. All this means, of course, there is a greater demand on our time and attention.
Savvy investors must be prudent not only about where they invest their capital but also where they invest their time to find deals.
So, for real estate investors, this question begs an answer: Is LoopNet worth our time?
You’ve probably heard some negative banter about LoopNet here and there. If you frequent real estate discussions, you may have heard complaints like “don’t waste your time with LoopNet” or “there are no good deals on LoopNet.”
But let’s not be too hasty to join in the chorus of scoffers. Let me first proffer an opinion: I think LoopNet deserves a closer look.
What Is LoopNet–Really?
The best place to start is by clearly defining what LoopNet is. LoopNet is simply an online listing service for commercial real estate—nothing more, nothing less. It’s not a brokerage house, nor is it an extension of some larger real estate entity. It’s a standalone business: an online service for listing commercial properties that are for sale or lease.
The only small crux of the matter is that the service is fee-based. And the more you want to do to market your property on the site (like pushing it to the top of the fold or uploading additional information), the more your fee is going to increase.
So, to be crystal clear on the matter, LoopNet does not in any way function as a brokerage house or the arm of some larger real estate business. It’s just a fee-based listing service for brokers and commercial property owners to sell or lease commercial real estate.
Is LoopNet Worth It? Weighing the Pros and Cons
Next, let’s consider whether LoopNet is worth our valuable time by examining the complaints—the cons—against it.
Con #1: LoopNet is fee-based
The very fact that it’s a fee-based service leads us to the first and most obvious reason many people believe there are no good deals on it. Brokers and others who have commercial real estate for sale simply do not want to pay the necessary fees to get their listing uploaded onto the site.
Many folks out there with commercial real estate are going to try to avoid paying that listing fee and other fees required for additional “upgrades” to their listing.
Con #2: LoopNet is often not a part of the broker’s process
A second and significant reason some good deals never make it to LoopNet is they simply are not part of a broker’s process for marketing a property. Many brokers have a method in place, one that includes giving first looks to their top three investors, who they know and trust to bring a fair price, have the means to close, etc.
If one of their top three doesn’t bite, then they put it into a bidding process and place it on their rather lengthy email lists as they push it toward a best and final bid. If a broker has an email list of three, four, or more thousand, they may feel perfectly confident they have a large enough buying pool to not pay the fee they would need to jump onto LoopNet.
So, bottom line, LoopNet is not going to be part of the marketing structure some brokers use to get their properties out there and sold. Therefore, a considerable amount of good deals will never make it to the site.
Con #3: LoopNet casts a net that is too wide
A third reason many good deals don’t make it to LoopNet is that it casts such a wide net. By wide net, I don’t just mean anybody in the nation with wifi can access the properties on LoopNet—although that’s part of it. But I also mean there are no filters or other mechanisms on LoopNet by which brokers can discover if someone who expresses interest in a property is really a credible buyer.
Not knowing if a buyer has the financial, legal, and other resources necessary to close a deal without a hitch keeps some brokers away from LoopNet.
Alright, those are three pretty hefty reasons some good deals are not going to make it onto LoopNet. Does that mean we should throw in the towel and take the bypass around the loop (the LoopNet, that is)?
My answer to that question is a resounding no.
Why LoopNet Is Worth a Look
Let’s look at it this way. Yes, LoopNet has limitations. It’s not going to be the place you find every good deal out there. But all tools have limitations.
Just because you can’t hammer a nail with a screwdriver or turn a screw with a hammer doesn’t mean said tools are useless and should be discarded.
So, the next step of our inquiry into LoopNet is to continue to look under the hood of this thing and see if despite its limitations it can be effectively leveraged for the good of your real estate business. Now that we’ve looked at its drawbacks, let’s explore its possibilities (the pros).
Pro #1: Great deals do exist
First, in spite of the complaints, there are occasionally great deals on LoopNet. A great deal is a property that has a great price and comes with no real issues. It’s driver-ready; all you have to do is get behind the wheel and the cash flow will follow.
This is rare. These properties are unicorns, but they do exist. Stay vigilant in your search, and you’ll eventually come across one.
The thing is, great deals don’t stay there for long.
We bought a 198-unit apartment complex that we saw on LoopNet. It was listed on the site for only a few days. It was a great deal, and we had to act quickly. That said, if we weren’t surfing on LoopNet, we would’t have seen it!
Pro #2: Diamonds in the rough or good deals hiding in plain sight
Second, consider this maxim, “You don’t find good deals. You make good deals.”
This is one of the fundamental keys to making LoopNet work for you. There are going to be many deals that get dumped onto LoopNet for one reason or another. Many of them will have hair on them. That is to say, the properties will have problems of one type or another.
Some of these deals are going to be ones you can make work for you. If you have the means to pluck some of the hair off, the price will be worth the grab. And that’s how you take an OK deal and “make it” a good one.
Pro #3: Networking potential
Finally, and perhaps most importantly, LoopNet can be implemented as an effective networking tool. Start by connecting with brokers through the site. It doesn’t matter if their current listing is a good deal. The goal you want to keep in mind while networking is: first, getting added to a broker’s email list, and second, working your way up to be one of their top three.
This is key. If you become top-three for a broker, they will likely throw any tasty bones they acquire your way before putting them out into a larger bidding process.
In order to rise through the ranks and get into a broker’s top-three circle, you need to show them you are serious. A great concept to keep in mind in this regard is “hit the wall over and over until it falls.”
By that, I mean you can’t be afraid to show brokers over and over again how serious you are about becoming one of their go-to guys. You must implement a multi-faceted strategy to reveal this to them.
Here are some suggestions: Make sure you call them every two to three weeks, ask them for other introductions, underwrite their deals, run the numbers, and pitch them a price you could make work. But far and away the most important thing you can do is visit these brokers’ markets.
Hop on a plane, and go visit the top three brokers in a specific market. When you make this type of commitment, a broker’s regard for your level of seriousness is going to go through the roof. This will likely fast-track you to top-three status.
There you have it. Despite its flaws, LoopNet can be an effective, useful, and valuable tool for growing your real estate business.
You must be willing to look past the fog of sneers and jeers sometimes leveled against the listing site. But if you do, you will find a fantastic instrument for upping your game.
Make sure to keep in mind the handy, valuable uses of LoopNet:
- First, you can acquire unicorns. (This will be about 5 percent of your use.)
- Second, you can make good deals out of hairy properties if you know how to pluck well. (This will be about 35 percent of your use.)
- And finally, it is a great networking apparatus, especially if you follow a strategy for getting into a broker’s top-three.
Happy hunting and connecting, LoopNet aficionados!
Be sure to watch my video for even more thoughts on the subject of LoopNet.
What are your thoughts on LoopNet?