Maybe you’ve heard of a little website called Zillow?

Yes, the real estate selling, buying and data giant that makes most Realtors kinda roll their eyes, most real estate investors pretty much overlook, and most appraisers cringe as homeowners increasingly insist on using their “Zestimate” value, no matter what their dang appraisal says!

Love ‘em or don’t, Zillow’s the 800… 8,000 pound real estate gorilla on the internet that just can’t be discounted anymore.

In their mission to swallow the whole real estate world, you may have also heard rumors that Zillow is now getting into the business of actually buying and selling houses. Well, it’s a fact, and it’ll be interesting to see how that goes.

Personally I’m not so sure how that could work out well, and apparently I’m not the only one who thinks so. But that’s a whole ‘nother conversation really.

Let’s talk about REI + Zillow

Personally, I’ve not spent much time with Zillow in my various real estate endeavors over the years. Not that I’ve been a Big Z hater, but just didn’t see much use for it myself—I mean, besides a curiosity check here and there.

I’ve never trusted their data much, nor tried buying or selling any real estate through Zillow. I’ve even read articles urging real estate investors to please stop searching for real estate on Zillow and Trulia.

But here’s what’s interesting…

Doing just that—using Zillow for real estate leads and deals—is one of my good friend’s favorite secret weapons in the world.

I’m talking about Joe McCall, who I’ve enjoyed being pals with since around 2006 or 2007 (neither of us knows for sure).

Anyone who knows Joe, knows he’s never treading water in his real estate operations. He’s constantly experimenting with interesting, new things in real estate. I think of him as kind of a Magical Money Machine of Real Estate Deals in markets all over the U.S. world —a guy who’s always on the bleeding edge of what’s new, exciting and often very profitable in REI.

And to our point here, Joe’s way of steadily extracting money (REI leads/deals) from Zillow has been so strong for him, he’s been sharing it with his inner circles for some time now, albeit mostly behind closed doors.

Until now actually…

A Peek Inside Joe’s Magical Money Machine

You may or may not be aware of a series of videos where I got Joe to walk us step-by-step through his personal process for his Zillow leads-getting exploits. We dove pretty deeply into how he extracts real estate deals from Zillow that aren’t really on anyone else’s radar.

If you’re interested in the deep-dive with us, you can check that out here if you want.

But to give you a little more insight first, I want to share an actual transcription of our very first conversation about this—our 2-way chat where Joe first shared his Zillow Ninjery… which I happened to be recording at the time. 😉

To be clear, this actually predates the step-by-step Z-Code training videos we got him to do—it’s the initial ‘light bulb moment' when I first realized he was quietly extracting real estate deals “hidden in plain sight” from Zillow, and began prying into it more with him. He covers at a high level, much of what we dove deeper into with our videos recently.

So, think of it like a superhero’s origin story—it all started here, folks. 🙂

Take a look-see…

Begin Original Convo with Joe…

Joe McCall: My new favorite source of leads that I go after is on Zillow.

Now, it's important to understand your market. You need to know where all of the demand is. There's 2 types of demand, and the first I look at is demand from active investors…

So, I'll pull a list of all of the recent cash transactions in the past 6 months and look at the 10–15 most active zip codes. Then I go to Google and search for “St. Louis County heat map”—that’s my county here in St. Louis.

And it'll bring up a Zillow link to the heat map, which shows you the most popular counties, color-coded. It also shows the median price, so you can sort the list of all the zip codes in that county by median price and find the ones that are in the middle. Those are the ones that sell most frequently.

JP Moses: So, it’s telling you where the sales are?

Joe: The heat map shows every property that has sold—you’ll sort it by “low to high,” and then take the median price.

Think of it like a bell curve—you look at all the properties that have sold, and in the middle of that bell curve is where 75% of all the homes that sold were in that median price range. That's your sweet spot. That's the first-time homebuyers. That's where the most active properties are being bought and sold in those zip codes.

So, you can see on the heat map all of the zip codes with houses that are in that median price range—and that tells you that it’s a very active, hot zip code.

To find this, you can just Google your county name + heat map.

I’m looking for 2 different kinds of data:

1. The zip codes where the cash buyers are buying homes.
2. And the median priced homes in my county.

See, I want to know is where all of the activity is—where most of the houses are being bought and sold. And you can tell by looking at the median priced homes, which are color-coded in the heat map.

JP: So, you're not getting the cash buyers intel from Zillow?

Joe: I'm getting my cash buyers list from sources like ListSource or RealQuest.

JP: So you may be about to get to this, but the question that pops into my head is: If you're using those two things, a heat map to see where the action is, where the buzz is, what's hot on the retail side… and then you're using ListSource or RealQuest to get a cash buyers list to see where the concentrations of cash buyers are…

How are you relating those two things together? What are you doing with those two lists together?

Joe: So, I'm getting a list of my favorite zip codes.

JP: So any zip codes where you have a concentration of both in the same zip code is now your opportunity market?

Joe: Well, kinda… the way I look at it is I combine both lists… and now I have a list of the 20 best zip codes I want to focus on. I'm ignoring the really expensive zip codes entirely, though.

The key is you want to be really targeted with the next type of marketing I'm going to show you…

So, to come up with a list of the best zip codes to market to, you want to go where the demand is, right? This is a really simple concept, but a lot of people don't get it:

You can only sell homes people want to buy.

And what's the easiest way to make money in real estate? Do what's easy! So, when you find out where the demand is, it becomes easy to sell a house if you have a house in that zip code.

Okay, I want to know where the demand is for these properties… so, what I do now is take my list of 15–20 zip codes and I go into Zillow (well, my VA does this, usually)… and I look up all of the properties on Zillow that are listed “For Rent” in those zip codes.

And, FYI, a lot of times the properties on Zillow are the ones that are listed with Realtors or property managers or on the MLS.

And think about it:

The gold standard of a seller lead is a vacant house, right?

Well, these “For Rent” properties are vacant properties! And a lot of them have already been fixed up and are already rentable. I love vacant properties that don't need any work.

Okay, now I do a couple of things…

Every day, I have my VA look up all of the new properties that came online “For Rent” in Zillow in my favorite zip codes—I like 3+ bedrooms—and then, she goes to the county website.

In Saint Louis County where I am, you can pull up the owner’s information for free from public records. (In other markets I’m in, I signed up for a super cheap account with RealQuest Express to get the owner's information on certain properties.)

Then, I have her put into a Google spreadsheet:

1. The address of the property
2. The mailing address of the owner
3. The last day it sold
4. The sale price that it sold for

My VA can get all that information from public records for free on the county website or the RealQuest Express account that I have.

Now here’s the really cool ninja part…

Then we send yellow letters to those homeowners. And our yellow letter is really simple. It just says:

“Hey, John Smith, we want to buy your house at 123 Main Street. If you're interested in selling it, call me at XXX-XXX-XXXX. Thanks, Joe.”

That's it. Just a yellow handwritten letter. If you just search on Google Images for yellow letters, you can see bunches of yellow letters that people put on Google. Just pick a super simple one that you like.

Okay, JP, you ready for this? So, we're sending these out, and get this…

We're getting a 20% response rate with these letters.

JP: Whoa!

Joe: What's a good response rate for yellow letters, normally? I'd say 8%.

But I'm not blowing smoke. I'm not kidding… we're getting a 20% response rate with these letters, on average.

JP: And again, this is data your VA pulled from Zillow?

Joe: Yeah. They're looking at the properties that are “For Rent.” And they are looking up the owner's information. (And if the property was purchased in the past year, I tell them to ignore those properties.)

JP: So, how are these properties that are actively “For Rent” getting into Zillow? Are their owners inputting them into Zillow or is Zillow scraping it from Rent.com or what?

Joe: Well, when you put a property into certain websites, they'll distribute it out to a bunch of different sites.

JP: Postlets used to do that.

Joe: Well, Postlets is owned by Zillow now. But, vFlyer, FreedomSoft, REI BlackBook and Realeflow… all of those real estate investor websites—and Realtors have a ton of them as well.

Usually, when most brokers get a new property from a client, they’ll distribute that property out to the entire world. And Zillow is the #1 most visited real estate website next to Realtor.com.

So, Zillow has a pretty good database list of rental properties. And Craigslist has more rental properties than any other site, but Zillow is a close second.

But the cool thing about Zillow is that you can get so much information about the property… so, my VA goes into county records and pulls up the owner's information.

We send a letter to the owner—NOT to the property.

And it basically says, “Hey, do you want to sell your house?”

Now, a lot of these guys do want to sell and some of them don't. Or, they just won't call. And sometimes, they’ll call but they don't want to sell their house… so, we'll add them to our buyers list, and they become investors who we start selling properties to in the future.

But here's the thing—everybody we talk to… we get their phone number and email address, and we follow up with them. Because in real estate investing, “no” usually means “not now.” So, it may be somebody who doesn't want to sell now… but maybe they will in 6 months or 12 months.

And, I make an offer to them on the phone. If they say no, we'll send them a letter with an actual contract anyway.

But let me tell you… this Zillow trick is working really, really well for me.

</zillow awesomeness origins>

So, party people, there you have it. You’ve just seen where Joe’s Zillow leads ninjery was born. Pretty cool stuff, yeah?

Even cooler, like Joe said, this strategy is working for him. He’s getting great returns and doing tons of deals this way.

NOTE: Want to better look at Joe’s awesome sauce? Take a look at our “deep dive” sessions with Joe (only 4 videos really) and learn exactly how he does it.