Disruption tools have the potential to dramatically change the face of the real estate industry. Nowhere is there a better example of real estate disruption than Zillow in the United States and their “Zestimate”, an automated property valuation (APV) that has been at the forefront of Zillow’s breathtaking rise to prominence within the industry.
What they have accomplished with the Zestimate is impressive. The Zestimate tool is able to estimate a property’s real-time market value with an accuracy that is within five per cent of its selling price, 82 per cent of the time across the entire United States.
The Zestimate was introduced more than a decade ago and since then it has become a big hit with both homeowners and wannabe homeowners. It has been a game changer for their business model.
Now that Zillow is firmly established as the APV champion in the U.S. market, Insightt has researched the market to see who has the potential to claim this crown in the Canadian real estate industry. So far, there is no clear-cut winner, but there are number of proptechs that are making some huge strides.
We see three Canadian proptech companies that understand the importance of big data and artificial intelligence and have already developed industry leading APVs. These companies are our picks for having the best chance for automated valuation supremacy in Canada.
HouseSigma
This was the first real estate brokerage to make housing market information simple and easy to understand for consumers, real estate investors and even Realtors. The brokerage has made a conscious effort to leverage data and technology as a differentiator and they have done a great job.
HouseSigma created interactive, visual and real-time housing market information, something that has always been lacking in the Canadian real estate market. House Sigma has also developed a robust and accurate APV tool called SigmaEstimate that it includes on every listing.
HouseSigma shows its strength as a data company since it is able to provide rent estimates, rental yields and even let the consumer know the state of the real estate market.
Zolo Realty
This is another proptech real estate company that has been in the market for some time and has been leveraging technology and data. The team at Zolo have built a real-time property valuation model, which we have tested with impressive results.
Properly Homes Brokerage
The team at Properly has not only raised a lot of private equity capital to propel their rocket ship real estate brokerage, but they have the potential to disrupt the real estate industry. They have focussed on solving customer pain points in the real estate transaction through a sales assurance program and they also have built an impressive property valuation model that leverages artificial intelligence. What we like about the Properly valuation solution is that the client validates key facts about the home in their APV, which will help to make it more accurate.
We also wanted to give an honourable mention to Condos.ca even though it has not yet listed a real time APV on its website. This company has the data capabilities and strength to have an APV up and running very quickly.
Formally known as Property.ca Inc. Brokerage, this real estate brokerage has been around for some time now and has been a clear leader dealing with big data and market information in the condominium market. What is most impressive about this company is that it looks at the selling price of condominiums on a price per square foot. The company has built a competitive advantage by sourcing this square footage information. At the time of this writing, the company did not have a real-time property valuation tool shown on its website. But it has the data capabilities and strengths that would allow it to have one up and running very quickly.
Putting it all into perspective
While we have only featured four proptech companies in this article, there are plenty of great start-ups building property valuation models. Some notable companies that have made great headway with data, insights and building an APV include Buy Properly, Konfidis and Offerland.
We see real-time property valuation as a key disruption tool in the Canadian market. Real estate companies that are not making serious investments in data and technology are at risk of being disrupted.
Brian Bell, MBA, M.Pl, broker is a real estate and technology consultant and founder at Insightt. Insightt helps real estate and real estate related companies understand the risks of disruption, but more importantly help them take innovation to the next level through data, technology and training. Bruce Atyeo has 40 years of experience as an institutional client of the residential real estate industry. He co-founded Canada’s largest relocation management company and is highly regarded for his innovation within this industry.
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