What do these properties have in common — a five star luxury hotel in Beirut, Lebanon, a fully entitled development site in Oakland, a 26-unit multi-family building on the beach in Miami? The answer is that they are all for sale, but only if you know someone who knows someone, or if you’re a registered user of a new off-market real estate platform called Brevitas.
San Francisco-based Brevitas, which launched its beta platform last month, is the latest service promising to disrupt the way so-called “off-market” listings are acquired and disposed of. The platform allows qualified buyers to access a pool of private real estate assets that they wouldn’t have access to otherwise.
Real Estate Investment Trusts (REIT), and other institutional buyers will often consider any property that fits their investment criteria, however a large percentage of these transactions are happening off-market. That doesn’t mean that brokers aren’t involved, because they usually are. The reasons for keeping the listings off-market are varied but often include: 1.) buyers and sellers do not want anyone to speculate as to why they are buying or disposing of an asset; 2.) sellers have a particular price in mind and if it sits on the market, it could drop in value; and 3.) Buyers don’t want to compete with the open market.
Other new services are vying for a similar private listing niche including Los Angeles-based OffMarket.com, a platform exclusively focused on the needs of the commercial real estate principal. OffMarket claims that their feature set supports the entire purchase and sale process, including property marketing, campaign management and offer submission — the things traditionally handled by a broker. But, unlike Brevitas, OffMarket eliminates the broker, potentially saving the buyer and seller money on commissions.
Finding buyers and sellers who prefer to remain anonymous comes with a multitude of challenges. Usually confidentiality agreement needs to be reviewed by attorneys and signed before sensitive information like appraisals, operating statements, rent rolls and proof of funds are exchanged. Because this process can take a significant amount of time and effort, this makes the off-market ecosystem ripe for technological disruption.
We anticipated serious trepidation from sellers regarding posting their listings. But within a matter of weeks billions of dollars in assets have found their way onto the platform.
Until recently, off-market assets rarely – if ever – made it onto any listing platform. “We’re breaking into a huge portion of the real estate market that really hasn’t found its way online,” said Brevitas’ chief marketing officer Jesse Feldman, who joined the company after working at one of the Bay Area’s top public affairs firms as a communications consultant. “We anticipated serious trepidation from sellers regarding posting their listings. But within a matter of weeks billions of dollars in assets have found their way onto the platform.”
Brevitas’ three founders are Ardian Zagari, Raymond Pressley and Max Kaplan. While working at a real estate investment firm, Pressley said he would consistently see deals fall through the cracks because of inefficiencies in the off-market deal process. He shared his frustrations with his friend Zagari, who was running his own marketing agency at the time.
“Off-market asset sales are too important, frankly, to get held up by the various inefficiencies that currently exist,” Zagari said. “We knew that we could offer a better, faster technological solution to improve prospecting and deal flow processes.”
To help develop the framework for the Brevitas platform, Zagari recruited Kaplan, who he had met in a technology class their senior year at the University of San Francisco. The team sought to streamline the complex steps that take place when a buyer and seller initiate a deal while ensuring privacy and the buyer’s ability to pay. “Every single member on Brevitas has been individually vetted. From international REITs, to independently wealthy investors, our buyers are very different,” said Zagari. “The one trait that they universally share: an ability to close large real estate transactions.”
While that may sound like hyperbole, Feldman points out that listings must meet strict criteria to be considered for the platform. First of all, the property cannot be found on other commercial real estate listing websites (off-market, pocket, or open listings, direct to principal or owner are acceptable), and the property must be for sale above $5 million.
The platform’s user process is pretty straightforward. First, the potential buyer browses vague listing descriptions that match their criteria. When a buyer is interested, the seller is notified and has an opportunity to review the buyer’s profile, including proof of identity and proof of funds. After both parties execute an online confidentiality agreement, the full property listing and all associated due diligence documents are unlocked and the parties can proceed to chat or schedule meetings.
Brevitas has assembled an impressive team of advisors and investors including Bangalore property magnate and billionaire Jitu Virwani; Vivek Seth, head of Raymond James’ Real Estate Investment Banking group; John Durham, CEO and Managing Partner for Catalyst S+F; and Sachin Duggal, a serial entrepreneur who notably co-founded Nivio, a service that enables subscribers to have their own Windows desktop in the cloud.
It’s probably too soon to say whether or not buyers will embrace the platform but according to Feldman, sellers have listed over $1.5 billion worth of properties on the site. He declined to disclose any of the users other than to say that the listings are coming from brokers associated with some very large firms as well as smaller boutique firms.
With off-market deals accounting for a large (although difficult to estimate) share of commercial real estate transactions, Brevitas and other platforms like it have a huge opportunity. The challenge, like every other new CRE technology, is going to be convincing an industry rooted in traditional processes to trust the platform. Zagari thinks he has the solution. “How do you market something and keep it confidential? How do you share a secret? That’s what Brevitas does,” he declared.