Editor’s note: A new wave of online real estate innovators is gathering force, offering consumers more interactive and comprehensive online home searches and more transparency in property data and transactions. In this three-part report, we explore how newcomers like Zillow, Trulia, HomeThinking, PropertyShark, Redfin and others are bringing a new focus to the online consumer. (See Part 2 and Part 3.)
When Matthew Haines, founder of real estate data site PropertyShark, tried to buy a brownstone in New York City’s Harlem neighborhood a few years ago, he found himself adrift in a sea of frustration.
“I would look at a brownstone and the real estate agent would say, ‘That’s $800,000,’ and I’d say, ‘My friend just bought one for $450,000,’ and I’d ask the broker for some comparable sales and he’d look at me like I was crazy,” Haines said.
“I was so pissed off by the experience that I said, ‘Not only am I going to get that data myself, I am going to share it with the world,'” Haines said.
PropertyShark is part of a new wave of online real estate innovators that is gathering force, offering consumers more interactive and comprehensive online home searches and more transparency in property data and transactions.
The first Web generation of real estate companies – Homestore, LendingTree and others – served consumers as well, supplying such things as house values, information about what homes are for sale, and the opportunity to compare and shop around for a lender or real estate agent.
Now, a panoply of newcomers – Zillow, Trulia, HomeThinking, PropertyShark, Redfin and others – brings a new focus to the online consumer.
“PropertyShark site started as MatthewHaines.com,” said Haines. “I built a tool for myself and allowed friends to use it.”
Now, the PropertyShark Web site has about 100,000 registered users and boasts one of the most expansive collections of free online real estate data for the New York City area. Registration is free to access most of the site’s features, and its advanced users — among them are real estate investors, developers, brokers and other professionals — purchase annual subscriptions for about $500.
PropertyShark mines data from a variety of public and other sources, and presents it with richly layered maps and statistics. There’s a mind-boggling amount of information, including for-sale property listings and reports, foreclosure listings, comparable sales data, and maps that include building outlines, zoning types, air rights, flood maps, house numbers and much more.
“In one sense, you might say the real estate industry shot itself in the foot by creating this problem, this lack of transparency I felt I had to go out and solve,” Haines said. In his eyes, Haines said, fellow innovator Zillow is responding to that same lack of transparency.
Zillow offers free home-value estimates and data on more than 60 million houses in the United States. After a year of speculation and buzz, Zillow.com launched in beta in February – and promptly crashed thanks to the hordes of curious consumers and industry professionals checking it out.
Site users can go to Zillow.com and enter their address to get their home’s “Zestimate,” the term the company is using for home-valuation estimates calculated through Zillow. The “Zestimates” are updated daily using the company’s compiled public data and an algorithm created by its statisticians to reflect the current market value.
A look at Zillow’s pedigree reveals much about its philosophy.
“All of our experience is on consumer-focused ideas,” said Jorrit Van der Meulen, vice president of Zillow.
He was referring to the fact that Zillow’s founder and CEO Richard Barton is well known for creating online travel giant Expedia, which transformed the traditional travel industry by using the Internet to offer travel information directly to consumers. Many of Zillow’s team members worked at Expedia.
Like many of Zillow’s employees, the CEO of Homethinking.com is an outsider entering the real estate industry with the goal of adding transparency. Niki Scevak, whose real estate agent-rating site launched in December, is a former analyst at research firm Jupitermedia.
Homethinking allows homeowners to view lists of real estate agents in a given area, along with information on properties currently listed by those agents and consumer reviews of those agents. The site currently tracks 998,764 Realtors across 230,759 home-sale transactions.
Scevak says, “It’s akin to Google or Yahoo. When someone searches for “Palo Alto, California” on Homethinking, results – lists of agents – will appear. Agents can bid to appear in a special area where paid results show up, as they do on Google.”
According to Scevak, “Our goal is to help the better real estate agents become more easily recognized and, by the same token, to warn homeowners of less desirable agents so they don’t make a mistake with such a financially significant transaction.”
The CEO said, “I think it’s important to remember that in this age of transparency, the role of the real estate agents doesn’t go away. This trend is only sorting the landscape rather than destroying it.”
Like Scevak, Pete Flint, the CEO of Trulia.com, an online home-search site for consumers, says “it isn’t an either-or” between the new generation of innovators and real estate agents. “The role of the broker and the agent will not change,” Flint said. “We really want to stress that by serving the consumer you don’t necessarily not serve the agent or broker.”
Trulia, which launched in September, grabs property listings from about 100,000 real estate Web sites in California and New York and displays basic property information while mapping property locations. Trulia’s founders plan to go national.
Trulia’s maps are interactive and property lists can be customized based on price, number of bedrooms and bathrooms, and size. The site also offers information on average house prices, days on market, prices per square foot, average sale to list price, and individual homes that recently sold in the search area.
Glenn Kelman, CEO of Redfin, agreed with Trulia’s CEO about not having “an axe to grind with agents,” saying, “All we’re doing is offering a choice.”
Redfin is a real estate brokerage, employing agents who process direct electronic offers from a call-center at a discount. These agents are paid on salary, with a bonus for customer satisfaction, not commission. The company recently added a feature that allows prospective buyers (so far, only in Seattle) to submit home purchase offers online.
“We are going to offer customers a choice. Either they work directly with us or with a traditional agent,” he said. “For many people the best choice is working with a traditional agent.”
Craig Newmark, founder of craigslist, the national classified ad and discussion board site, said of the new innovators, “They do accelerate change in the industry, and will lead to increasing disintermediation, so I’m concerned for brokerage jobs.”
That said, however, in general Newmark seemed to feel positively about the second wave of innovation. “We’re seeing a number of new sites online that really do help consumers out with useful info and some genuinely innovative technology,” Newmark said. “I’ve even used them to figure out current value on my home, and my mom’s place.”
The services “really helped me out,” Newmark said.
“These tools let people have a better grasp of what is going on in their neighborhoods and with this giant investment they own which is often their most important investment,” said Lockhart Steele, publisher of Curbed.com, a real estate blog that launched in New York in 2004. “Let’s face it, some of these things are downright fun. Zillow is a fun thing to play with even if at the end of the day you’re not searching for your own house. There’s an enjoyment factor.”
Steele also spotlighted maps as one of the innovators’ most useful tools.
“People love looking at maps. Mapping makes looking at data – which is one of the most boring things in the world – more fun. The explosion in mapping has made it easier to deal with the data,” Steels said.
“For example, Property Shark has a map they came up with of all the toxic waste sites in New York. If you’re just reading about it, the fact that there are 20,000 toxic waste sites in New York is important, but kind of boring. But when you’re looking at it, it’s interesting,” Steele said.
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