Zillow fans the winds of change in Canada’s housing industry – The Globe and Mail

At this time last year, many real estate agents were watching the arrival of the U.S.-based Zillow Group into the Canadian market place with a mix of curiosity and trepidation.

For lots of people, searching real estate listings is as all-consuming as following Raptors basketball or scrolling Instagram.

And Zillow is a giant online data portal that feeds that obsession.

Consider the keen-eyed searchers looking at a four-bedroom detached in Lansing, Mich. who spotted the killer from the Scream slasher films lurking in some of the interior shots. It was actually the listing agent hiding in a bedroom closet with a butcher knife but the stunt worked: 209 N. Chestnut St. rocketed to the top of Zillow’s most viewed properties.

Last year a red-brick Georgian in suburban Maple Glen, Penn. blew up on Redfin.com when online house hunters spotted a sex dungeon in the basement. People are paying close attention to those wide-angle photos.

Some Canadian brokerages embraced Zillow’s arrival as an opportunity; others were spurred on to create more user-friendly websites for their own brand. The industry juggernaut, realtor.ca, undertook its own transformation as it prepared to face new competition.

Rick and Rochelle DeClute of Toronto-based Union Realty Brokerage Inc. are two agents who saw potential in Zillow early on. Because the portal is a marketing company that doesn’t employ any agents, they don’t view the platform as competition so much as another tool they can use to draw eyeballs to their listings.

Zillow also offers the property’s listing history and details about nearby schools. There are decorating blogs and walk scores. In the United States, sellers can tap into the platform’s use of artificial intelligence software to produce a “Zestimate” of a property’s market value.

“The power behind it is phenomenal,” says Mr. DeClute, who is a self-confessed real estate junkie, searching listings all the time, all over the place.

The DeClutes began supplying listings to Zillow last spring.

Their listings also appear on the Canadian Real Estate Association’s realtor.ca site, which displays properties from the Multiple Listing Service of real estate boards all across the country.

“It’s not a platform people interact with well and look forward to using,” Mr. DeClute says of MLS. “It’s more of a sales tool than an information tool.”

The DeClutes say the database is designed to funnel users to the listing agent.

“That benefits realtors really well, and I don’t know that that benefits the consumer really well,” Ms. DeClute says.

She says she believes some Canadian agents are reluctant to embrace evolving technology and new industry players because they are uncomfortable with handing power to the consumer with a lot of information – including previous sale prices – that used to be provided only by real estate agents.

But she believes agents can add value in many ways. When she bought a property in Florida, for example, she hired a local agent to represent her at the table. Even though she has years of experience in buying and selling real estate, she knew the Florida agent would know the ins and outs of local transactions.

She believes agents need to provide invaluable insight to buyers and sellers who can already find a trove of information online.

“It makes us up our game.”

Some Canadian agents are unsettled by Zillow’s practice in the United States of allowing real estate agents to pay a fee in return for the contact information of consumers who submit a query on the site.

So if a house hunter submits an online form asking for more information about a two-bedroom condo in Seattle, for example, the person who gets back to them may not be the listing agent, but a competing agent who paid for that lead.

“Agents who are afraid of the platform say, ‘they’ll take our leads and sell them back to us’ – which they may do,” Mr. DeClute says. “I think there’s a fear that it will diminish the control over the transaction a realtor will have,” he says.

“Speaking to colleagues in the United States, some of them are resentful of the investment they’re making every month,” Ms. DeClute adds.

The bottom line for the DeClutes is that they know from talking to their clients that sellers would prefer to have their properties receive international exposure on Zillow. The client’s priority is the sale of their own home – not the business expenses of the listing agent, Mr. DeClute stresses.

From Vancouver, Zillow’s chief industry development officer Errol Samuelson declares the company’s foray into Canada a success so far.

After one year, property views on the Zillow site had increased 400 per cent and the number of inquiries to agents jumped 300 per cent, Mr. Samuelson says.

He adds that 80 per cent of respondents to an online survey of Canadians used a website or mobile app in their purchasing journey, according to research conducted by Ipsos on behalf of Zillow.

“Canadians have clearly shifted to looking online,” Mr. Samuelson says. “Our phones are becoming this lens through which we interact with or view the world.”

He adds that after going live with listings of resale properties in Canada, the platform added listings for rental properties and new construction. That way users can peruse a developer’s plans and lots for a subdivision before it’s built.

The goal is to let consumers see all of their housing options on one site, he says.

Mr. Samuelson says agents in Canada who supply listings to Zillow can currently add their own profiles free of charge. Zillow also plans to launch a service in Canada that allows agents who specialize in representing buyers to advertise to users, but he doesn’t have a date for the rollout.

“A lot of times it’s good practice to have a buyer’s agent who specifically represents you instead of dealing with the listing agent.”

Another line of business currently up-and-running in 21 markets in the U.S. is Zillow Offers. Sellers with a property on the platform can submit information about the home’s size and condition and so forth

“Typically, within 24 to 48 hours, we’ll come back to you with an offer,” Mr. Samuelson explains.

If the homeowner finds the offer acceptable, Zillow sends out an evaluator to check that the property measures up to the homeowner’s description. Then Zillow makes a final offer, minus a service fee.

The service appeals to sellers who don’t want to worry about cleaning the place up for showings or finding somewhere to take the dog, Mr. Samuelson says.

The seller can choose a closing date anywhere between five and 90 days.

“It seems to tap into this consumer desire for ease,” Mr. Samuelson says, explaining that the service fee of 7.5 per cent is higher than the fees an agent charges but some people prefer to opt for certainty and low hassle.

“It’s a fascinating business in the U.S. right now,” he says.

Mr. Samuelson says it’s too soon to say if Zillow will import that business to Canada but no plans are in the works.

“It’s early days – even in the United States.”

In Ottawa, the Canadian Real Estate Association says the competition heating up the industry is good – the pace of change at its realtor.ca site is quickening as a result.

Realtor.ca, which contains listings from real estate boards across the country, has vast amounts of information plus high recognition with consumers, CREA president Jason Stephen says.

“No question the private sector has a lot more money to throw at those portals, but what they don’t have is the data,” he says.

Mr. Stephen says a house hunter submitting a form for information on a property will always hear back from the listing agent.

“The consumers want the most knowledgeable person on that property.”

CREA’s members stress that what they’re looking for from the site is the ability to generate more and more leads, he says.

Mr. Stephen, who represents Royal LePage Atlantic in Saint John, makes note of the huge shift in recent years as house hunters use technology to search for information that was previously only available from an agent.

Prospective buyers can search themselves for the previous selling price of a property since the courts in Canada cleared the way for the sharing of those data. They also use Google’s street view to check out the neighbouring houses and anything else they can find.

“Buyers scrutinize what they’re looking at more and more and more,” he says. “It’s the biggest purchase they’re going to make so they do a lot of research.”

But agents have a chance to provide guidance that isn’t available online, he says. They have local knowledge and experience in negotiating, among other skills.

A consumer searching online might see one of Mr. Stephen’s listings and send a query on realtor.ca to ask about the heating costs, for example. If the searcher isn’t already working with an agent, he has the opportunity to turn that lead into a client.

He adds that he is hearing from residents of British Columbia and Ontario these days who are considering a move to New Brunswick, where real estate is more affordable. Many of them are launching their search from their home province.

One of Mr. Stephen’s neighbours is a recent transplant from Toronto who compiled a shortlist of places in Saint John and Moncton just by looking online.

“That person did all that research before they even had a plane ticket to come down.”

At Royal LePage, president Phil Soper and chief operating officer Carolyn Cheng both have backgrounds in information technology. As a result, the nationwide company has a tech bent, Mr. Soper says.

“We pour a ton of effort and resources into it.”

Mr. Soper says Royal LePage has taken advantage of the gradual liberalization of rules that has allowed competing brokerages to co-operate in sharing listings. The company has beefed up its own website to make it more appealing to searchers.

Ms. Cheng says the firm looks outside of the real estate industry to what the tech giants are doing. This year, Royal LePage will be serving up listings to searchers in the same way that Netflix suggests your next binge watch based on your viewing history and Amazon makes reading recommendations based on books you and people with similar tastes have bought.

So a house hunter might see a pop-up saying “people who looked at this house also looked at this one over here.”

Royal LePage already caters to consumers who want an online assessment of the value of their home, Mr. Soper points out, because of the data available through other divisions under the Brookfield umbrella. Royal LePage is owned by Brookfield Asset Management.

While many industry players fought against change for years, he says, he pushes for transparency and the sharing of information.

“If you share, consumers will reward that trust.”

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