Real estate tech’s excellent adventure in 2013

The issues, trends and companies that will keep sending shockwaves through the industry in the year ahead

The real estate tech scene heated up in 2013 as a recovering housing market and the soaring valuations of publicly traded companies like Realogy, Zillow, Trulia and Move Inc. helped coax entrepreneurs and investors into betting on more services that could shake up the industry.

Real estate crowdfunders, in particular, seemed to sprout left and right in anticipation of regulations that may pollinate the practice of pooling investors’ money to buy property. In September, the Securities and Exchange Commission lifted the ban on “general solicitation” of investments by companies that rely on a widely used regulatory exemption to issue securities.

Bright future image via Shutterstock.
Bright future image via Shutterstock.

That made it possible for crowdfunders to court investors across public communication platforms, including social media sites. Many crowdfunders still don’t publicly display their investments because the new regulations allowing advertising also require companies to verify that investors are accredited if they choose to advertise.

But some crowdfunders are likely to test the waters. Fundrise already has.

The fledgling industry could really take off in 2014. The SEC next year is expected to implement regulations that could make it easier for companies to raise money from average-joe investors. Current regulations make it cost-prohibitive for most crowdfunders to raise money from “unaccredited investors,” so they have concentrated on “accredited investors” — people who make more than $200,000 a year, or have a high net worth.

Realty Mogul and Fundrise have led the charge in real estate crowdfunding. RealtyShares, iFunding, PassiveFlow.com and Prodigy Network are also carving out footholds in the space.

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One subset of real estate crowdfunders to emerge in the past year is attempting to pioneer a form of finance that could have wider ramifications for the housing market beyond the purchase of rental properties or home flips.

Weiss Residential Real Estate and PRIMARQ are among crowdfunders that aim to help investors acquire partial ownership of owner-occupied single-family properties. Though it’s far from clear if lenders would underwrite loans that rely partly on funds raised by investors, PRIMARQ is even attempting to crowdfund down payment assistance for borrowers.

Crowdfunders were far from the only startups to make waves in the real estate tech space this year. Some of the young guns to stoke the most buzz in 2013 were high-tech broker Urban Compass, valued at $150 million by its latest funding round; interactive 3-D model provider Floored; and RealScout, a service that doubles as a listing portal and agent site.

New York City has served as the incubator for what seemed to be a disproportionate share of budding real estate companies in 2013. Startups there formed a tight-knit community that convened at a monthly “NYC Real Estate Tech Startups Meetup.”

The Meetup often attracted more than 50 real estate tech insiders keen on bouncing ideas off like-minded go-getters and getting the scoop on the latest products in development. A number of the startups that are regulars at the Meetups offer rental-oriented solutions that seek to capitalize on New York’s chaotic rental environment.

Blocksy, KeyMe and NextLanding are just a few of many real estate startups blossoming in the Big Apple. To learn about more New York-based real estate tech startups, view some of Inman News’ Startup Spotlight video profiles.

Also seeking to nurture growth in the real estate tech space, Inman News rolled out the Inman Incubator program, a startup accelerator that offers mentorship and promotion to up to 25 young companies. Contactually and RentShare, both NYC-based startups, were among members of the program’s inaugural class.

A number of other initiatives launched in 2013 also sought to cultivate innovation in real estate, including the National Association of Realtors’ tech accelerator, REach, and tech contests for startups hosted by Realogy and the Asian Real Estate Association of America.

Many of the more ambitious startups, like Urban Compass and Suitey, seem to draw inspiration from Redfin. The high-tech broker made significant strides in 2013 expanding to new markets, debuting an array of innovative services, and closing what looks to be a pre-IPO funding round that valued Redfin at $500 million.

New granular data and features also percolated through the online real estate world this year, illustrating the industry’s relentless march towards more precise listing and neighborhood information, and suggesting that more sophisticated online search capabilities may be just around the corner.

Onboard Informatics began offering school attendance zone data, becoming the only other commercial firm to do so besides Maponics. The increased availability of that data may fuel the spread of search tools on real estate sites that let users filter by school attendance zones. Trulia, Estately, Redfin, Zillow and Century 21’s listing site have all recently debuted that capability.

Travel time data also appeared to surface on more real estate sites in 2013. INRIX Inc. began powering real estate search tools that let users search by commute times, while Walk Score honed its travel time feature — which is used on tens of thousands of sites — to offer users the ability to estimate travel times during rush hour.

Agent transaction data also featured prominently among the hottest trends of 2013. A crop of startups that use it to match consumers with agents popped up, rankling many real estate professionals who argue that it can be tricky for consumers to evaluate the services provided by real estate agents based on data alone.

Many agents reacted with hostility toward AgentMatch, a discontinued realtor.com experiment that allowed consumers to search for agents using statistics like the number of listings represented in a given area, properties sold, and list-to-sales-price ratio.

But such services aren’t going away. With HomeLight leading the pack, Agent Ace, BrokurLessThan6Percent and other similar agent-consumer matchmaking services are determined to forge ahead.


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