Online real-estate brokerage Zoocasa to relaunch with cash injection
Tamsin McMahon
The Globe and Mail
An online real-estate brokerage shuttered by Rogers Communications Inc. last year is relaunching with a new website and an injection of cash from a group of technology-focused investors.
Zoocasa is set to announce Tuesday that it has raised $1.35-million in seed money from a group of investors that includes Wind Mobile founder Globalive Capital Inc., Hedgewood Inc. and Impression Ventures, whose backers include Franco-Nevada Corp. chairman Pierre Lassonde.
Toronto real-estate broker Lauren Haw purchased Zoocasa with business partners from Rogers last year, less than a month after the telecommunications giant announced it was closing it down. She has continued running the site since then, but has kept a low profile. She plans to relaunch Zoocasa with a faster platform, more search functions and better mapping features.
The investment is a positive sign for the nascent online real-estate industry in Canada, which has struggled to gain traction in the face of a battle between Ottawa’s Competition Bureau and the Toronto Real Estate Board over whether Internet-based brokers should be allowed to share home-sales data with the public.
Earlier this year, the Competition Tribunal issued a ruling ordering the country’s largest real-estate board to loosen rules that prohibit its member brokers from posting Multiple Listings Service data online. The Federal Court of Appeal is set to hear an appeal on the case in December.
Many had hoped that the prospect of unlocking home-sales data would revolutionize the real-estate industry, leading to a proliferation of sites that offered lower commissions and do-it-yourself home sales in the same way that online robo-advisers and DIY brokerages have put pressure on the traditional financial services industry.
But the revolution has yet to materialize. Last month, Toronto-area broker Fraser Beach shut down a popular newsletter that offered details of recently sold homes to subscribers, pending the Federal Court appeal on Toronto home-sales data.
Rogers, which launched Zoocasa in 2008, initially positioned the company as a low-fee service. It made money primarily through selling ads and leads to realtors and then offered a 15-per-cent rebate on real-estate commissions for customers who used its referral services.
For Ms. Haw and her investors, however, the appeal of bringing more data and better tools online isn’t to offer cheaper services, but to make the old full-service brokerage model more streamlined.
“The approach that Lauren and her team are using [is one] where you’re providing the customer with data they need, you’re also looking at providing them with full service, holding their hand through a transaction that is very complicated for most people and not something they do every day,” said Wayne Bigby, president of Hedgewood, which is among Zoocasa’s investors.
After taking over Zoocasa, Ms. Haw, who was then a broker with Keller Williams Referred Urban Realty, scrapped the low-fee model. She has since left Keller Williams and licensed Zoocasa as its own full-service brokerage. It now uses its site to generate sales leads for its team of 15 in-house agents, who then offer their real-estate services at commissions similar to what traditional real-estate brokerages offer.
“It’s very important to me that our agents are of a high calibre,” she said. “It’s very difficult to attract great agents that are willing to work at a discount.”
Zoocasa’s investors say the site was appealing in part because Rogers had poured so much money into promoting the service that it was already a well-known brand among consumers, giving it an advantage over its competitor startups.
Zoocasa has among the highest profiles with consumers of Globalive’s investments, said the firm’s CEO Brice Scheschuk. “It took Wind much more money and more time to get that type of name recognition,” he said.
Mr. Scheschuk does not see the site’s success as dependent on the notion that online real-estate brokerages will need to offer fewer services and lower fees. “What I have found is that a race to the bottom on price ultimately harms the user, generally because something suffers in the experience,” he said.
A founding investor in RateHub.ca, a rate-shopping website, Ms. Haw also runs Scholarhood.ca, a website that generates sales leads for Zoocasa agents by letting home buyers search for properties based on school districts and rankings. She sees Zoocasa’s future as a service that can make the process of buying and selling easier for clients, rather than help consumers avoid using a realtor.
“The reality is that buying and selling a home is still very tactile,” she said. “There’s still that first impression and the way a home is marketed and staged and priced will absolutely affect that the seller nets.”
Copyright 2016 The Globe and Mail Inc.