The NZ real estate industry witnessed a significant milestone just over 2 years ago when Homes.co.nz hit the market. At that time the launch was significant. Today, two years later the service remains significant, and it is my belief that it will become ever more significant in the years to come.
Here is why.
Homes did just one thing when it launched, and it did it well. That is the mark of a business with big ambitions. It, for the first time allowed anyone, anywhere to see historical property sales records and estimated valuations for any property in NZ …. for free!
Sure, it was initially only for the main cities and it was not a great website and there was no mobile app. But for those who crave this type of information, all of those things were of little consideration. They wanted facts. Facts that had for decades been hidden behind expensive price tags. Remember for a minute, that back then in 2015 if you wanted to get the last sale price for a single property you have to dole out $10 on the website / $2.95 on the app of QV. To get a collection of comparable local sales, twice that amount; and for an estimated valuation $50.
Homes very quickly built a sizeable audience and become the chatter of meetings between friends, colleagues and neighbours. Marketing dollars were not needed when you have a source of information that is like cat nip to anyone who owns a property or wants to own a property or is simply curious about what your landlord’s place is worth!
Homes leveraged this consumer appetite with smart PR stories about every imaginable property fact and took on a smart and approachable marketing head in Jeremy O’Hanlon who was savvy and accessible. The word of mouth grew as did the traffic.
Homes is, and continues to be a privately funded start-up and at launch recognised the need to have a seasoned entrepreneur to seek out the initial funding and lead the company, this was when John Holt came on board to support the original founders being Jamie Kruger and Michael Gibbs.
Fast forward two years and whilst I don’t know the ins and outs of the company, I do know from extensive conversations with customers of Homes (agents and users) they are doing well and are on a fast track for the coming years to become a significant force in the NZ real estate marketing arena.
So why do I hold this confident position?
Simply put. What I see in Homes is what I witnessed with Zillow in the US from their launch in 2006 right through to their position today – a 3,000+ employee company with a turnover north of NZ$1 billion and market cap of NZ$7.5 billion. Allowing for the relative population comparison that would provide a potential comparable valuation for Homes in excess of NZ100 million.
Zillow launched with a simple website (back in 2006 don’t forget there was no apps store, so the web had to do). It provided a simple offering – historical sales data and valuation (Zestimate) for almost every property in the US for free – the first such offering.
The site instantly became sticky (first day topped 1 million page views) as people had an insatiable appetite to see what their house was worth. That audience quickly generated a significant advertising revenue. As so with Homes who smartly set up sponsorship arrangements with key advertisers prior to launch as well as regular ads.
For Zillow the relationship with agents was at first testy – loved by few and hated by many; but it was not long before the smarter agents started recognising that the ad units Zillow could sell next to properties records and Zestimates was a perfect place to pitch to prospective clients. For Homes they established the same service with free agent profiles and premium profile so agents could ‘brag’ of their sales success on individual property records.
With agents recognising the power of the Zillow audience it was not long before these agents started uploading active listings which instantly bore fruit with strong viewing figures as Zillow users started using the portal for property search. At the time, the market back in 2008 was not as well developed with pure property portals in the US. There was an industry site (ala Realestate.co.nz in the guise of Realtor.com which was not owned by the industry but a kind of de-facto industry site) so Zillow had competition, but sadly for the owners of Realtor.com traffic soon switched leading to Zillow fast becoming the most visited website for property even if it did not have a comprehensive source of listings.
However whilst agents wanted to upload listings, the issue for Zillow was the complexity of the listing process in the US – much like so much of things in the US it is simply best to say getting a source of listings is a nightmare with 900+ Multiple Listings Services each of which is unique and holds geographical monopolies that are political fiefdoms. Bottom line was that whilst agents started to love Zillow their broker business owners and these industry listing services were not supportive.
For Homes the issue was similar but different. Accessing listings in NZ is easy (in theory). There are 6 major franchise groups accounting for well over two thirds of all listings, who can in theory provide a data feed of all active listings at the click of a key so long as you have their support. These 6 major groups though are the shareholder owners of half of Realestate.co.nz and to date the support for listings uploaded to Homes is limited to Ray White together with some independent operators outside the major 6.
As far as Homes playing to the Zillow playbook, I would judge that they are, where Zillow was back in 2009. Which says they have a lot to do, but I would judge that they will probably start to accelerate to catch up pretty fast. Within two years I would see them being a credible and viable competitor to the key players of Realestate.co.nz and Trade Me and potentially the new entrant of OneRoof.
So, what can the Zillow playbook hold in store for Homes. In terms of property marketing there will come a whole suit of premium advertising products which agents will pitch to sellers as digital continues to grow in relevance in property marketing. In addition as a function of the owners flagging their own home on the site they will be able to actionsmart direct marketing to property owners and prospective vendors. In terms of agent advertising I think they are better developed than any other digital player in NZ today which includes Trade Me and Realestate.co.nz. On top of this then comes the ancillary business opportunities. Zillow created a mortgage origination marketplace, not something that really exists in NZ but certainly a deeper and richer relationship with key NZ banks and financial institutions could be mutually rewarding for Homes.
A bit more lateral is the pivot from Homes adopting the Zillow playbook to adopting the Zoopla playbook. Zoopla in some ways the UK version of Zillow, has very successfully broadened its business from property marketing to price comparison services, originally around utility and finance services through the acquisition of uSwitch to recently pitching the acquisition of Go Compare a far broader and significantly larger player in the UK market for comparison services. The logic being that once you become a trusted source of information and services of the house as an asset, then you can leverage that to any financial transaction from or to-do-with the house, especially as the house is always the biggest financial asset anyone generally has.
So what if any are the roadblock which sit in Homes way?
Listings. If the real estate industry decided it was not going to support Homes and not syndicate their listings to them as a property portal then Homes will struggle. However I don't think it would be killer blow to Homes, if they can demonstrate to agents that their appeal to clients and customers is as good or better than the current portal players then the power of the agent against the force of the key real estate companies will be the real test.
I’m excited to see what happens over the next 2 years in the real estate marketing arena, there is a lot at stake and some well-established players with a lot to gain and a lot to lose.