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.