With the proliferation of online tools in the traditionally offline real estate industry, startups are increasingly making it so that anyone involved in a real estate transaction can say “there’s an app for that.” There are tools like 42Floors that help businesses find office space; apartment search tools like Lovely; and property management tools like RentPost for landlords. There are international startups like Germany’s search tool Loftville and the UK’s rent-without-landlords company Rentlord. But while the online tools are increasing, there are still challenges in terms of localizing online real estate tools, and getting industry players on board. There are 401 startups in total listed in the real estate category on AngelList - here’s how they’re trying to make the home buying purchase easier.
The Big Players
Zillow is one of the best-known online real estate tools. Launched in 2006 and focused on the U.S. market, Zillow has over 100 million homes listed in its database for sale or rent, and provides tools for purchasers, real estate agents, and mortgage professionals. It also provides mortgage advice and just introduced a neighborhood advice tool that links users’ home searches with their Facebook friends. The company offers apps for several smartphones and tablets, and debuted its initial public offering in July 2011.
Traditional real estate agencies are also increasingly moving online, with microsites for individual realtors featuring pictures and info available for listed properties. But it’s a fragmented process – because each agent is responsible for their own listings, it’s often up to the realtor whether they want to make a name for themselves online.
Some real estate entrepreneurs jumped on the social media bandwagon early. Toronto-based BuzzBuzzHome is an online listing of over 4,500 new residential construction products. Co-founder Matthew Slutsky got the idea while working as the VP of development for a luxury condo builder, when he realized that although there was a centralized database of resale homes, Multiple Listing Service (MLS), nothing existed for new construction. “Purchasers looking to buy new construction condos, townhomes and houses were out of luck when it came to an online list of current projects,” Slutsky said in an interview. “They had meager online tools and support to help with due diligence.”
The company launched in 2009, and Slutsky said that at that time only a handful of agents and builders were using social media tools to promote. That has changed now though, as Slutsky says there has been a rapid influx of builders, developers and realtors using social media to market. “The way people buy new construction homes is changing,” Slutsky said. “Gone are the days when a full-page ad featuring a pretty girl was enough to get purchasers into a sales centre. Buyers are becoming better informed and demanding more information about what’s available and what the details are.” He says it’s not just purchasers and real estate agents who are using social media tools though – builders are using tools like BuzzBuzzHome to offer info on new projects and answer questions.
Slutsky is planning to expand to New York City and Seattle, and since new construction projects aren’t as strictly governed by industry associations as real estate listings, they don’t face as many major hurdles to international growth. “We rely on our own team of researchers, supplemented by the online community, to populate a proprietary database of new construction listings,” he said.
Location, Location, Location
Tools like Foursquare have pioneered the location-based services trend, but real estate tools are increasingly leveraging geographic data – after all, home buying is all about location. German pre-launch startup Locature allows users to visualize neighborhood geodata on a map, similar to many other online tools that show location-based neighborhood data. Locature filters real estate searches by neighbourhood requests, for example making sure all properties listed in search results are within a five minute walk of the grocery store. Even location-based tools that aren’t focused on real estate, like Google Maps with Street View, can be of value to a potential buyer who wants an accurate picture of the property they’re considering.
Startup Clikbrix is trying to take advantage of home buyers who drive around neighbourhoods looking for For Sale signs, rather than helping people start their search online. The mobile website tool allows potential buyers to scan a QR code on an agent’s sign, which is connected to a mobile website with details about the property. The tool also introduced a “mobile open houses” feature through Google+, one of the first examples we’ve seen of real estate professionals taking advantage of the new social networking tool.
But sometimes location can be a hindrance to online real estate tools. Every country has different regulations around their Multiple Listing Services data, so a tool that works in one country won’t always work internationally. Zillow is a perfect example – the company hasn’t been able to launch in countries like Canada due to MLS data restrictions. The amount and nature of MLS data available for public access often lags significantly behind what licensed realtors can see, making it hard to populate consumer-facing tools with any kind of useful information.
“Most real-estate search engines/websites rely on data provided by Realtor-operated Multiple Listing Services (MLSs) to populate their site content,” BuzzBuzzHome’s Slutsky said. “This is an obstacle for companies like Zillow contemplating an entry into the Canadian market – where access to listings is particularly restricted.” Navigating the fractured landscape of rules, customs and regulations surrounding home buying and rental will also continue to make it difficult for real estate startups to expand and scale internationally.
Slutsky believes that the biggest trends in real estate will involve the continued virtualization of the home buying process. He says completing real estate transactions online will become common. “No longer will people stand in line for days to purchase a hot new condo. No longer will it be necessary to physically enter a sales centre, or even a house in some cases. The entire home purchasing process will be conducted online, including the actual transaction,” he said. He also says that more advanced data will be made available to purchasers.
With faxes still commonplace in the real estate industry and renters/buyers still looking to resources like Craigslist to find their next home, not to mention the international differences in customs, practices and expectations surrounding the rental, buying and selling of homes, the course ahead isn’t at all clear. Though it’s trending towards online, the day when augmented reality apps allow house hunters to walk down the street and immediately see listing info pop up on their smartphone still seems far off.