Imagine you’re in the market to buy a home. You don’t want to overpay. You’d love to find a deal. But you’re not quite sure where the right price starts and ends.
If Rokham Fard, co-founder of tech-based brokerage TheRedPin, had his way, buying a home would be a lot like shopping for a car. Go online. Search out all the available options. Compare prices for similar models and configurations, and finally, settle on a price you think is fair. Sure, you may still have to negotiate and maybe you don’t get the exact deal you wanted, but the deal would be close to your expectations. Why? Because you could do research using clear, transparent information and data. It’s comparative shopping in the e-commerce world—and more and more, it’s becoming a reality for Canada’s residential real estate industry.
The biggest move towards transparency came a couple of weeks ago, after the federal Competition Tribunal ordered the Toronto Real Estate Board (TREB) to stop limiting access to home sales data. At the heart of the Competition Bureau’s argument is that TREB, the real estate board that represents more than 40,000 real estate agents and brokerages that work in the GTA, stifles industry competition by restricting who gets full access to market data. To increase competition within the industry, the Competition Bureau argued for open, easy access to housing data—data that lives on the Multiple Listing Service (MLS).
Right now TREB is still in discussions with the Competition Board to try and hammer out details of how and what data will be released. It’s a waiting game that has Fard and other tech-savvy brokerages on the edge of their seat.
Better decision-making opportunities with transparent data
“Access to raw data will be a game-changer,” says Fard. We know this based on the experience of U.S. travel and real-estate industries.
In 2006, fresh off the success of Expedia, a bunch of technologists launched Zillow. (A year before another online brokerage, Trulia, had launched, with an aim to make real estate data transparent. After competing against one another for almost a decade, Zillow finally bought Trulia in July 2014.) The ultimate aim of both Zillow and Trulia was to disrupt the way real estate transactions were being done in the United States.
“Zillow had a lot of financing from the success of Expedia—a site that transformed how we purchase travel,” says Fard. As a result, the founders of Zillow decided to use that money to tackle the monopoly the National Association of Realtors (NAR) had on U.S. real estate data (NAR represents all licensed real estate brokers, agents and salespeople, working in the U.S.). The technologists needed money to tackle this issue, because it takes time to deconstruct the old way of doing things.
But by 2008, things started to really change. The U.S. Department of Justice reached a settlement with NAR that formally and legally allowed low-cost online brokerages access to the Multiple Listing Service (MLS) data. That’s when the growth of transparent data-sharing sites, like Zillow, exploded—fundamentally changing the way realtors do business in the United States.
“The real estate agent will no longer act as a gatekeeper of information,” says Fard. With access to the data, buyers and sellers can interpret the information and make decisions based on their own needs and values. Fard believes this makes for better, more transparent agreements but it won’t eliminate the need for a realtor. “Buying and selling a home is a complicated process that’s not often repeated.” For that reason, Fard sees the realtor’s role morphing away from being a gatekeeper of information and towards becoming a professional real estate advisor. “The agent’s role is to use their years of accumulated knowledge and professional experience to help the buyer or seller to make the best decision.”
New data models could predict new real estate hot spot
But giving buyers and sellers a chance to make more informed decisions isn’t the only reason why Fard is excited about the recent Competitive Board’s ruling. Getting access to raw real estate data opens up a world of possibilities for smart data-miners, like TheRedPin and other tech-savvy firms.
“Imagine getting access to every piece of information that’s available on a certain house, or neighbourhood, or city,” says Fard. “You could look back and see the transactional history of a home or community. That’s when you would start to see patterns emerge.” He predicts, for instance, that there are already people working on creating data-models that would help investors predict the future appreciation of certain rental neighbourhoods, rental cash-flow estimates, the impact of school zones on home prices, as well as the exact market cycles of detached and semi-detached homes in specific neighbourhoods. “There’s just a ton of opportunity to create predictive models, depending on how much raw data is made available as a result of this Board decision.”
Of course Fard, TheRedPin crew, along with all the other industry stakeholders are in a holding pattern right now. TREB is still in discussions with the Competition Tribunal about how and what will be made accessible to the public. A final decision is not anticipated for at least a few weeks, if not longer.
Until then, data-miners and tech-savvy brokerages are at the drawing table, coming up with ideas of how to creatively use raw data to both inform and compete in Canada’s crazy real estate marketplace.