Zoocasa, an online service for home seekers, is aiming to win market share with rebates to buyers and sellers that will refund roughly 15 per cent of the commission they pay their real estate agents.
The web service's new strategy, which includes becoming a licensed real estate brokerage so that it can tap into the latest housing data from real estate boards across the country, adds to the pressure on real estate commissions industry-wide.
Zoocasa, which is owned by telecommunications giant Rogers Communications Inc., is not hiring any agents of its own. But it is boasting that it has sifted through the cream of the crop from all of the top brands such as Re/Max and Royal LePage, and has created a tool that will allow consumers to search through those agents using a variety of criteria, such as the languages that they speak, years of experience or whether they specialize in condos. By becoming a brokerage, Zoocasa will be able to collect a fee for referring customers to agents.
The new service will be available this week in the Greater Toronto Area, and will be rolling out to other markets across Canada in the next few weeks.
Agents not affiliated with Zoocasa might find themselves offering customers a 15-per-cent commission discount to compete with one who is. Zoocasa will earn a referral fee of roughly one-third of the commission, so the agent and their brokerage will be splitting a smaller commission than they otherwise would on the same deal.
"We are an objective third party who has done the preliminary vetting of all agents in our directory and we stand behind these agents with our consumers," said Lawrence Dale, group head of the real estate business at Zoocasa. "We are not telling consumers which agent to use, but providing a comprehensive select group of top agents across top brands and brokerages. …
"In addition to a better way to find a top agent, consumers have been looking for better value, and we have recognized that by providing consumers with a rebate worth thousands of dollars for the typical buyer or seller," he added.
The rebate on a $550,000 sale or purchase of a home would amount to roughly $2,060, which is 15 per cent of the typical 2.5 per cent commission. The majority of the rebate will be in the form of cash, with the remainder coming in the form of gift cards from national retailers such as Best Buy, Home Depot, Sears, Canadian Tire and Rogers, Zoocasa said.
Zoocasa's decision to obtain brokerage licenses across the country in order to access housing data that are held by real estate boards was made at the same time the Competition Tribunal was deciding the outcome of a lengthy case that the Competition Bureau had brought against the Toronto Real Estate Board. In what was seen as a national test case, the bureau argued that the real-estate board, which represents more than 35,000 agents, was unfairly keeping data about home sales away from online services that threaten to compete with real estate agents or eat into their commission structure.
The tribunal dismissed that case last month, and the Competition Bureau recently announced that it was appealing.
Startups such as Zoocasa are hoping that the bureau will win its appeal and pave the way for certain data to become more accessible online, such as information about how much a house has sold for in the past.
The Toronto Real Estate Board argues that it is protecting consumer privacy by locking down such information. "What we were being asked to do is provide private confidential consumer information, such as what your property has sold for and the seller's name, so I could go online and find out that you sold your property for X dollars," Von Palmer, chief government and public affairs officer at the Toronto Real Estate Board, said recently.