People might come to Zoocasa’s website to search for real estate, to compare prices, to dream. The strategy, CEO Lauren Haw says, is to link internet customers with full-service real estate agents
The series: We look at decision makers among Canada’s mid-sized companies who took successful action in a competitive global digital economy.
Initial impressions are huge in real estate: the street a house is on, the feel of the front entrance, the lure of a real-estate listings website.
When real-estate agent and entrepreneur Lauren Haw led the purchase of Zoocasa in 2015 from Rogers Communications, she took the company’s listings site and made it effectively the technological front door of the new full-service brokerage that she is building.
Zoocasa had been primarily in the business of generating leads. Buyers and sellers would sign up to use the various online search functions that filter the multiple listing system (MLS), and those leads of potential customers would be sold to real-estate agents.
Ms. Haw changed the model. Instead of being a real-estate website business, Zoocasa is now a brokerage, encouraging online users to then use the company’s own agents and brokerage services. Users might come to the website to filter their online searches, to look for homes according to, say, the provincial ranking of school districts. But the idea is then to marry those customers with Zoocasa agents familiar with those kinds of homes.
She believes that the more traditional skills of real estate agents, working on a commission basis, are still essential to the buying and selling process, but that they need to be backed by a robust online presence.
From an initial online search to “getting your keys on moving day, we want to make sure we control the quality of that experience from start to finish,” said Ms. Haw, Zoocasa’s chief executive officer, who is based in Toronto. As it grows, the brokerage is still focusing its services mainly on Toronto and Southern Ontario, although the website has listings from across the country.
Yet, real estate as a business is rarely that straightforward. Zoocasa is not only competing with other brokerages for leads and customers, it’s also competing with other brokerages to hire agents.
To illustrate this business model, Ms. Haw noted the way in which people now approach listings and home buying. There’s a high degree of autonomy that people want to preserve. Serious and semi-serious buyers all want to be able to snoop a little. They want discretion. They don’t want agents descending on them immediately, even as they search more and more for the kind of detailed information agents provide.
“They are going online to do research, and they want to be anonymous during that time,” Ms. Haw said. “They want to empower themselves with data and analytics in order to make better decisions. And then, once they are educated and able to make decisions, they are looking for advisors to help them through that process, who have more experience on the ground."
She added, “What we’ve done is connect the two. Instead of being just an online site that is a provider of information, or just the advisor, we’re looking to smooth that transition from the research phase to the actual selling and negotiations, so that the quality of the experience is seamless."
However, full service is nothing new. In fact, most brokerages will say they offer full service and, if anything, it requires yet more research on the part of home buyers to truly learn what different firms offer.
“Unfortunately I believe every brokerage in Toronto right now calls itself full service. So, it’s almost a phrase that’s been tarnished by overuse. So, we have to really elaborate on what full service means. That’s where we look to be that end-to-end solution,” Ms. Haw said, noting the less glamorous administrative and back-end services that are also so critical to the process.
The decision by the company to expand into a full-service brokerage is also partly due to the fact that the listing services and filters of competitors may inevitably match Zoocasa’s. Other companies might be only a few lines of computer code away from offering much the same search tools.
Zoocasa (whose name riffs off the Spanish mi casa es su casa) made the move to have agents experienced in the kind of criteria people search for online, such as looking for homes in good school districts or homes with basement apartments. “We have agents specifically trained for each of those client types,” she said.
Zoocasa is also among those that argued in favour of posting the sale price of homes. This is a point of controversy. Before, one would have to ask the real-estate agent involved in the deal or get the information from city hall. “What we believe is not to make it difficult. Let’s just give the information to people who are looking for it, to help them make better decisions,” Ms. Haw said. The Toronto Real Estate Board had argued that listings sites that post sold prices invade the privacy of home buyers and sellers. In August last year, the Supreme Court of Canada refused to hear an appeal to prevent this, thereby allowing sold data to be posted.
Just as the website attracts potential leads with this kind of data, the idea is then to attract agents drawn by that stream of leads. The agents, said Ms. Haw, don’t need to advertise themselves or line people’s mailboxes with flyers showing their smiling faces, as many agents typically need to. Zoocasa handles the advertising, allowing the agents to focus on the customers, Ms. Haw said. Her sales pitch, in so many words, is that Zoocasa is offering agents full service, too.
Real-estate agents usually "spend most of their time trying to find clients and find leads. Our agents only work in client services, working to buy and sell homes,” she said. In other words, competition for good agents is fierce.
The difference between brokerages is in the way they compensate and offer administrative support to agents. Ms. Haw describes Zoocasa’s agents as independent, although that requires a nuanced definition. According to the company, Zoocasa agents have the flexibility to set their commission rates with their clients.
“They effectively run micro-businesses within our umbrella. They are independent contractors. They work from home. They have access to the office. But as a real-estate agent, you work in your car," she said.
“It would be similar to the mortgage world," an industry in which Ms. Haw once worked. Mortgage brokers "can only work exclusively with one banner. You can only be at one brokerage shop from a legal standpoint,” she said.
Regulators define it this way: “Under Ontario law, all brokers and salespeople are considered employees of their brokerage; they must have an employing brokerage in order to trade in real estate. Brokerages have various compensation arrangements for their employees, given the multiplicity of business models and employment arrangements,” said Joseph Richer in an e-mail response. He is the registrar of the Real Estate Council of Ontario, the provincial regulatory body.
The key then is the business model, and agents have a lot of choice to pick companies with a model that suits them. For Zoocasa, this has also entailed quick expansion despite the relative downturn in Toronto’s real-estate market.
“We are already national online, and we have great partner agents,” at other brokerages across the country. The idea is to have this lead to opening offices in other cities, but there isn’t a immediate timeline. “We are still focused on Southern Ontario," she said. The company is currently hiring about 10 agents a month.
About 50 per cent of Zoocasa’s business comes from the site, and the other 50 per cent comes from repeat customers and referrals, the latter being the more traditional way brokerages would drum up business. Online lead generation is a newer way, but Zoocasa doesn’t want to solely be in the lead-generation business.
“And everybody in the industry defines leads differently. There are different qualities. There’s a whole industry – many, many companies based in Canada and throughout North America and the world – that focuses solely on lead generation,” she said. And despite Zoocasa expanding its full-service brokerage, the lure of the website remains part of the business model. “Part of the job in real estate, regardless of where you’re working is generating future clients.”
Zoocasa, (https://www.zoocasa.com/) the online real estate brokerage owned by Rogers Communications Inc., has become the latest to bow to renewed pressure to stop publishing highly coveted data on home sales.
The web-based brokerage, which acts as a referral service for roughly 500 agents across the country, announced on Friday that as of March 4 it will stop sending out a popular daily e-mail detailing the price of recently sold homes.
The Toronto Real Estate Board sent a letter to all members this month warning that those who violate strict rules on sharing sales data could lose access to the Multiple Listings Service, the lifeblood of most realtors. The letter also prompted Bosley Real Estate to strip data on sales from a mobile app it offers to prospective home buyers.
The warning by the real estate board is the latest development in a battle that has been raging for years over how much data real estate brokers can make public, particularly online. While Canada's largest local real estate board allows traditional bricks and mortar brokerages to hand out data on recent sale prices to clients, it has been cracking down on the growing number of online-only real estate brokerages, known in the industry as "virtual office websites," that have been offering the same data in bulk to the public.
Under current rules, online brokerages can only provide data to subscribers, not on publicly accessible websites, and only with the permission of the buyer and seller. The real estate board warned that some virtual brokers have recently been pushing the limits.
"TREB has agreements and rules in place," the board said in a statement e-mailed to The Globe and Mail. "But more importantly, there are laws and regulations, including privacy, contractual and [regulatory] rules that apply with which TREB and realtor members must comply."
Industry players, however, say the recent crackdown is a sign that the real estate board is trying to reaffirm its position on the issue ahead of an upcoming hearing in front of the federal Competition Tribunal in May.
Last year, the Supreme Court of Canada refused to hear an appeal of the case between the board and Canada's Competition Bureau, setting the stage for yet another round of tribunal hearings. The case is being closely watched across the country and will have major implications for all of Canada's real estate boards and brokers when it's finally settled.
Darryl Mitchell, Zoocasa's broker of record, said the company is confident that its daily newsletter, which had thousands of subscribers, met the TREB guidelines. But it didn't want to risk straining its relationship with the board. "I suppose there's two distinct ways of doing business and that's just waiting until somebody sends you a legal letter and shuts you down, or trying to co-operate with what they're trying to do," he said. "We felt we should try and work with them instead of against them."
A thorny issue for the industry is the fact that sales data is usually posted to TREB's database right after a deal has been finalized, but before the transaction has actually closed, meaning subscribers to sales lists are able to access information on deals that are technically still in progress. That has left the board in the awkward position of trying to comply with privacy laws, while also facing pressure from the Competition Bureau to make information more publicly available.
"They're caught in this middle ground," Mr. Mitchell said. "We said we really don't want to be on the opposite side of the battle with TREB."
Toronto real estate broker Fraser Beach, whose past legal battles with the real estate board helped land the issue on the radar of the Competition Bureau, said he has no plans to shut down his own daily newsletter which links roughly 30,000 subscribers with the real estate board's sales data.
"I'm taking it day by day," said Mr. Beach, who received the same warning letter as all other brokers, but hasn't been sanctioned. "I really don't think that there's any legal or more problem with this," he said. "But that's not to say that, basically with impunity, the Toronto Real Estate Board could sever my access to the MLS information, which would virtually put you out of business."
Online real estate site Zoocasa has relaunched under new ownership, with plans to add in-house services and wider search functionalities.
Previously owned by Rogers Communications Inc., the site was shut down last month, with Rogers citing lack of fit with the company's overall plans.
A group of real estate and technology investors has swooped in to save the site, which will be headed by Lauren Haw, a Toronto-based broker with Keller Williams Referred Realty and sales director at scholarhood.ca, a site that helps families find homes in desirable school districts.
Zoocasa originally launched in 2008 with startup funding from Rogers, aiming to be a site where real estate agents would pay to advertise their services to buyers. It then expanded into its referral service, which vetted real estate agents and let prospective buyers and sellers search for a real estate agent using detailed criteria, such as by language or type of property.
It modelled itself after U.S. websites such as Trulia or Zillow, which attract customers by offering data on house sales and detailed demographic information about neighbourhoods and prices.
Ms. Haw did not disclose the purchase price or the identities of the other investors. However, she said the buyers had been exploring a purchase for some time.
"There's been a lot of industry chatter and we were excited about the traffic the site was getting. This was not a spontaneous decision," she said in an interview Thursday.
While Ms. Haw said the site will retain the same search technology and tools that users are familiar with, there will be several big changes.
"Our mission is to give home buyers access to the best possible real estate tools and information while providing a premium level of in-house customer service," she said.
This will be achieved in part by hiring a group of in-house agents to work with clients and ridding the referral service Zoocasa was known for altogether.
"[Zoocasa] sold leads to agents who registered on the site and collected referrals, but we think it's better for us to have control over the entire experience," said Ms. Haw. "The only agents serving clients who visit the site now will be those on our team who have the training and experience."
This in turn means Zoocasa will no longer offer rebates for buyers and sellers on the commissions they paid to agents they found on the site.
"We won't be offering rebates to clients to work with Zoocasa agents. It's hard to offer a discount on a premium service and nearly impossible to hire great agents at a discounted rate," insisted Ms. Haw.
The site plans to hire the in-house agents on an as-needed-basis, beginning in the Greater Toronto Area. The agents will be "experts within their regions and experienced at serving both buyers and sellers," and earn a negotiated commission on the sales they make, as is the practice in the industry.
Along with maintaining services such as its home appraisal tool Zoopraisal and the exisiting mobile app, the site will also look to add new functionalities such as tighter search parameters, more frequent data updates and a school neighbourhood search ability imported from scholarhood.ca.
"Scholarhood has been very successful and we will be keeping it up while allowing Zoocasa to provide the same information," said Ms. Haw. For now, she sees the two sites as operating in parallel with no plans to fold one into the other.
Keller Williams Realty will be providing the administrative and back-end support for the site. While newly hired agents will come from any number of brokerages, they will be technically considered Keller Williams agents once on the Zoocasa team, Ms. Haw said.
Technology has overhauled multiple industries, but for various reasons real estate is late to the game
Zoocasa, resurrected last year by Lauren Haw after it failed against the real estate establishment, now aspires to be the Uber of the Canadian housing market.
Haw, now CEO of Toronto-based Zoocasa, contends her team can disrupt the real estate industry by infusing technology into a multibillion-dollar agent-dependent model, with big-name players who have succeeded on the same formula for decades.
“(With Uber), there is still a body getting into a car driven by a human. That car goes from point A to point B. The technology to offer that offline service to get from point A to B was broken. Uber simply fixed the connection – they didn’t create teleporters,” she said in an interview.
“There is a need for someone to move — they need to get those keys, which means they need to research, they need to negotiate, they need to transact. There are opportunities within this process to link technology to make it a smoother.” Zoocasa aims to bridge the gap between technology and tradition.
“You still need to open the condo door and go see the view, feel the textures. But it’s important that process is supported through technology. At the end of the day, consumers want a hyper-intuitive online experience along with an experienced, informative agent,” she added.
Most Canadian companies don’t take advantage of digital innovation, said Sheila Botting, Deloitte Canada’s national real estate leader. Only one in 10 companies are ready for technological disruption, regardless of sector or size, a Deloitte survey last year found. The online players that seek to “dis-intermediate the residential real estate brokerage market will gain traction,” but only if they complement the technology with a personal connection, she added.
At the end of the day, consumers want a hyper-intuitive online experience along with an experienced, informative agentBotting noted, however, that a qualified agent is still indispensable at the moment, to guide clients through complex real estate transactions. Technology has overhauled multiple industries, but real estate is late to the game, she said.
Brokerages with a strong online presence that offer search tools to enable people to understand Multiple Listing System offerings will “drive outstanding performance for their business,” Botting said.
With more than 250,000 Canadians going online every month to search for real estate, Zoocasa’s growing tech team is focused on search functionality. Using Google Analytics, this search history is Zoocasa’s order list of what to build for potential clients, Haw said.
Traditional real estate is still largely driven by repeat and referral, which will continue pushing Zoocasa to “provide the best service to become the trusted source for agents and transactions.”
When Haw took over Zoocasa in June 2015, she upended Rogers business model — moving the company from strictly a lead-generation platform for agents working across multiple brokerages, to an online real estate brokerage boutique with in-house agents.
“Google wants to display pages trusted by users. Zoocasa presented seven years of trust built up with Google, which meant we were able to fast track growth,” Haw said.
“Canadians recognize (Zoocasa) as a place to go to search for real estate. And that’s something that takes a long time to build,” she said.
Several high-profile investors have also taken note of Zoocasa’s ambitious plans. the company recently announced a $1.35 million round of funding led by Globalive Capital Inc., Hedgewood Inc. and Impression Ventures.
“Walking into a brand with that type of consumer recognition is a dream scenario,” said Brice Scheschuk, chief financial officer of Globalive. “The starting point of acquiring that asset at such a favourable evaluation and getting the benefit of consumer affinity is rare.”
Haw calls the latest round of funding seed investment. While Zoocasa has been around for a few years, the new team incorporated only in May. The brokerage team is profitable, which helps finance the tech side of the business, Haw said, adding “The recent raise is helping us accelerate our tech offerings.”
Zoocasa’s team has been busy rewriting every line of code to reformat the site as “hyper-intuitive” search platform. It launched last month with a new map function that lets users search for anything from townhomes to detached homes with basement apartments, and includes a client concierge portal to help with tasks such as booking elevators for tenants moving into condos.
Haw said users can expect more “informative and intuitive” user-friendly features to be added in three to 12 months — changes Scheschuk said will “rock the world with respect to the user experience.”
Haw first tested Zoocasa’s business model on Scholarhood.ca, a startup that helps parents find homes in strong school districts.
The starting point of acquiring that asset at such a favourable evaluation and getting the benefit of consumer affinity is rareIn the year before Zoocasa came up for sale, Haw said her team showed it could provide information to Canadians and turn online leads into offline sales. “We had clients that were coming to us looking for a very specific real estate transaction and an educated realtor, and we were able to marry the two,” she said.
When Zoocasa came up for sale, “We knew it was going to be a fantastic opportunity for us to take our little startup Scholarhood and scale it across the country,” Haw said.
Zoocasa is benefiting from the talent Haw brought from other ventures, including agents and a chief technology officer with experience at Quandl, Xtreme Labs, and Pivotal, as well as Scholarhood — a beta built by the CTO over a couple of Saturdays, which remains under Zoocasa’s umbrella.
“In the venture world, team is effectively the most important – you live and die by the entrepreneurs you’re investing in. When I stack (Haw) and her management team, along with her partners, against other entrepreneurs … they rise right to the top,” Scheschuk said.
The process of buying or selling a house in Canada is “opaque,” with gaping holes in information, he said. “This allows for the Zoocasas of the world — who do not keep data behind walls, but use modern toolkits and technology to empower the customer with transparency — to rise up.”
John Pasalis, real estate analyst and president of brokerage Realosophy, said Canada’s real estate industry is roughly 10 years behind the U.S. market in terms of tech innovation because of the restrictions on accessing data. He blames data restrictions for the dearth of digital disruptors in real estate.
“It’s difficult to do anything innovative with a limited amount of real estate data. We will see more companies pop up once the data becomes more available,” said Pasalis, whose Realosophy operates on a similar model to Zoocasa’s.
With the Competition Tribunal cracking down on TREB for anti-competitive practises and ordering Canada’s largest real estate board to allow its members to release more home sales data from the MLS to the public that might be soon.
Another challenge for Zoocasa scaling up is staffing. “We’re not a pure tech startup where you plug it in, snap your fingers, and you’re around the world. To grow our client base, we need boots on the ground,” Haw said. “We need to take on leases, management, agents.”
Zoocasa’s in-house team of 15 agents service the Ontario area from Hamilton to Barrie to Oshawa, with partner agents servicing Ottawa, Kitchener-Waterloo, Kingston, and London, as well as Vancouver, Edmonton, and Calgary, where it recently launched a bricks-and-mortar office. In the next year, it plans to have in-house agents in all of these cities.
“We are a boutique team on the service side. How do we make it to 200 or 300 agents, and still have the boutique team feel within the culture and the white-glove service for clients?” Haw asked. “Like any other business, we want to grow — but our focus will remain quality over quantity,” she said.