Web 2.0 and real estate portals

Written by Fernando Maciá

Web 2.0 sites are characterized, above all, by the integration of contents and functionalities from other portals (e.g. Google Maps, Google Earth, YouTube, etc.) and because users take on a leading role with multiple ways of generating feedback that is integrated, as additional content, into the development of the website itself, enriching it.

“Where will my guests park if I buy a house in San Francisco? Is it worth the daily commute to work in San Francisco to live in Palo Alto? What is the going rate for a parking space in Pacific Heights?” These questions, along with their corresponding answers, are a small sample of common content in the latest batch of real estate portals that have joined the new trends of what has been called Web 2.0: a fresh and revolutionary way of understanding what the Internet is and how to take advantage of the full potential of online communication. It is about users asking or answering other users in a common meeting point: the real estate portal, which becomes through this constant feeding of contents by its visitors and the integration of information and functionalities from other portals, a very powerful tool at the service of a more documented decision to buy or sell in the most important commercial transaction that most people usually make throughout their lives: the one related to their home.

But… what is Web 2.0?

The term Web 2.0 was coined in 2004 by Tim O’Reilly to refer to a second generation of websites characterized by increased interaction with and among users, which aims to facilitate creativity, collaboration and information sharing among users. It does not refer so much to a new language or a new protocol, but to a new way of understanding the Web and of taking advantage of all its functionalities.

While first-generation websites were characterized by centralized content creation and dissemination – companies decided what they wanted to include in their websites, created the content and functionalities, and published their pages through a web host, disseminating them, at most, through newsletters and bulletins -, Web 2.0 websites are characterized, above all, by the integration of contents and functionalities from other portals (e.g. Google Maps, Google Earth, YouTube, etc.) and because users take on a leading role with multiple ways of generating feedback that is integrated, as additional content, into the development of the website itself, enriching it.

The creator of the World Wide Web himself , Tim Berners-Lee, disagrees with the concept of Web 2.0 because, he argues, all these potentialities were already present in the very concept of networked communication that gave birth to the Web as we know it today. It was the companies, he says, that transferred to the Web a traditional one-way communication model that largely failed to take advantage of the possibilities of the new medium. In fact, the companies of the brick and mortar economy accessed the Internet reducing the role of their websites to a mere online showcase of the same offer they communicated through other offline media: TV, press, radio, outdoor advertising, direct marketing… but which did not take advantage of all the potential of the Web: multidirectional communication, integration of information and functionalities, possibility of sharing data between users?

It has taken several years of experimentation, a boom and subsequent dotcom crash and, perhaps, a whole new generation of professionals whose careers have developed from the beginning with the Internet as part of the scenario to be integrated into management positions in companies, for us to finally come to really understand what concepts like “networked communication” mean and begin to see the development of business models that take full advantage of this potential.

The outlook in Spain

Meanwhile, in Spain, the real estate portals with the highest level of traffic are burning stages years behind the North American portals which, in my opinion, are now among the most advanced in this respect. It was not even three years ago that the search engine positioning of these portals began to be on the agenda of their managers. We are now timidly beginning to see how third party functionalities such as Google Maps, cadastral information, etc. are being integrated. However, there is still a misconception: the sales pitch for real estate is still rigid and closely linked to the information on the property itself. When the reality shows that in the decision to buy a home, potential buyers take into account many more factors when choosing their future property.

In this way, the greatest advances we have seen in the different real estate portals in our country have focused on “selling” the property itself better, through more complete information -or perhaps just more visible- of the property itself: downloadable floor plans, quality reports, surface areas broken down by room… We have moved from artistic perspectives to photorealistic 3D perspectives… if not directly to photographs of the pilots. And we are also seeing “virtual flyovers” of the development, “virtual tours” of the different types of housing…. A very expensive deployment of resources that, ultimately, never replaces the actual visit, since no one makes a purchase decision of this magnitude directly online without first having been in the field.

The value of the environment

But let’s go back to the misconception discussed two paragraphs ago. Real estate portals focus on the information they provide about the property itself, neglecting fundamental aspects such as the environment. It is a perspective typical of a manufacturer’s vision: whoever manufactures a product is usually so proud of his own product that he believes that just highlighting its many virtues should be enough to convince potential customers of its goodness. However, this perspective forgets that people purchase products or services based on the tangible or intangible benefits that we expect these products or services to bring us. In other words, we do not buy for the technical characteristics of the products, but for the benefits or value that these products will bring us.

In the case of buying a house, it is important to know whether it is a townhouse or an apartment, whether we will buy a villa or we will settle for an apartment. But it is no less important to know what our neighbors will be like, how I will be able to commute to my place of work or, if I have school-age children, which schools I will be able to choose to take them to. Therefore, being important the information that the potential buyer gathers about the house itself, as well as about the promoter to know the level of confidence that it deserves, or even the financial company that will guarantee his payments, it is not less important all those data that he can discover about the environment, about what it will bring him, since his social life, that of his children, his quality of life and, in short, the enjoyment of the house will depend both on that environment and on the house itself.

This is what pioneering real estate portals such as Trulia.com, Biggerpockets.com or Zillow.com have seemed to discover. A visit to any of them opens up a whole world of information that seems light years away from anything we have seen so far. The paradigm shift is threefold:

– On the one hand, these portals integrate a huge amount of information that they present in an orderly, logical and related manner, allowing the user to form an approximate idea of what a given neighborhood may be like in a multitude of variables.

– Secondly, the portals provide a multitude of data to determine whether the price requested for a property is adequately related to its characteristics in comparison with the selling price of similar properties in the area in recent months. Many of them even present the evolution of the average sales price per square meter in the area.

– On the other hand, the portal users themselves become protagonists and content generators with their questions and answers. It is the people who live in a particular place who know best what are the advantages and disadvantages, the problems or the opportunities of buying there and now. So first-hand information, from an apparently more credible and unbiased source that does not hide commercial interests, and that responds to the real doubts of potential buyers serves to make more informed and informed purchasing decisions.

Let’s first see what level of information we can access with this new batch of real estate portals.

New real estate portals

We entered Trulia.com. We are looking for a home in Plano, Texas. It is a typical residential city in the northern part of Dallas. We chose one of the houses at random. In the housing file itself, we can see how prices have evolved for that neighborhood (delimited by the homes that share the same postal district) in the last few months. We can even compare average sales prices for 1, 2, 3 or 4 bedroom homes in sales closed in recent months. And we can also see in a graph the evolution in housing prices for the city of Plano from 2000 to the present. Clearly, if the purchase of a home is made in part or in whole for investment purposes, this is something we would definitely like to know.

We can also find out the evolution in the average price per square meter, the evolution in the number of sales and which have been the most popular developments in recent months.

If we have children, information about available schools will be critical in making a purchasing decision. Trulia.com allows you to check the level of schools in this postal district by comparing the level of schools in the district to the state average level according to TAKS standards in both English and mathematics.

The panorama of the neighborhood is completed with a statistical table whose data is so exhaustive that it makes us feel a certain impudence. For example, we know the average income per household, the per capita income, the average value of each home as well as the average asking price of homes offered for sale. And all these data are also compared to the state average. Thus, we know that only 2.44% report an income of less than $10,000 per year, while 8.39% report earning more than $200,000 per year, for example.

Trulia.com also allows us to access crime statistics for Plano and so we discovered that we would have a 3.35% chance of being subjected to a property crime (4.08% statewide) or a 0.29% chance of suffering a violent crime (0.32% for the entire state of Texas). Of course, we can know these figures broken down, if the mood takes us, to know how likely we would be to suffer a robbery, assault with violence, murder, rape or vehicle theft if we decide to settle in the neighborhood.

Turning to more mundane matters, Trulia.com reports that 10.41% of Plano residents take between 45 minutes and an hour to get to work. Approximately 50% take less than 25 minutes and 7% take more than an hour. Almost all of them drive their own vehicles to work.

Trulia.com rounds out this wealth of data with a comprehensive directory with links to local maps of the area, attractions, parks and recreation areas, census data, area statistics and studies, community organizations, environmental and local government issues, schools and other educational facilities, as well as media, print and radio references.

The integration of information from the users themselves as well as from real estate agents with interests in the area comes through Trulia Voices: it is there that the potential buyer has the possibility to leave his question that another user with the necessary information will be able to answer. In this way, the users themselves become the main generators of information and content of great added value and credibility for the portal.

If you find Trulia.com overwhelming, don’t miss the opportunity to stop by Zillow.com. It has amazing map integration, to the point that it can present not only the aerial view of almost any home, Google Maps style, but also a perspective view from any angle. One of the most striking features of Zillow.com is the concept of Zestimates: it is an estimate of the appraised value of a home. Thus, you can enter your own neighborhood and find out what the approximate market price is not only for your home… but for all your neighbors! but that of all your neighbors! In fact, the aerial view shows all the houses with their corresponding price estimate -Zestimate- superimposed.

Zillow.com also does a great job in presenting alternative proposals for any home we are interested in, allowing us to compare with others of similar performance in their environment.

Unlike Trulia.com, Zillow.com offers interesting qualitative data on the environment: for example, the percentage of single, married, divorced and widowed people in the neighborhood. Percentage of homes with and without children, as well as the distribution of the population by age range (neighborhood population pyramid) and also, like Trulia.com, average commuting time.

Other data that may be of interest are the ethnic composition of the population, the degree of education they have attained (primary, secondary, graduates, graduates, postgraduates) as well as the type of work they do: executive, engineering, administrative, sales… Thus, a query about the type of people who live in Plano, Texas tells us that they tend to drive to work alone, that a large number of them hold a master’s degree, and that they tend to have a high income.

Zillow.com includes direct contact with neighbors in the consultation area whom we can question about anything we want to know: from the quality of schools, to shopping centers or parking problems.

Another striking aspect of Zillow.com is its “Make me move” concept: these are people who, even if they do not plan to sell their home, would be willing to do so provided they are given a sufficiently attractive offer.

These are just some of the most striking aspects of the new generation real estate portals: basic housing information, of course. Complete with plans, specifications, descriptions and photographs. But all this integrated with exhaustive information of the environment, with reliable data on the evolution of the housing market at the level of each neighborhood and with the possibility of interacting in real time with people who live in those places and who can be a source of unbiased, credible and helpful information.

Does it work for Spain?

Some may object that perhaps the Spanish market does not resemble the U.S. market. In fact, our country is much less extensive and Spaniards themselves tend to presume a knowledge of other areas of Spain different from those in which we reside, a presumption that perhaps exceeds the real knowledge. But there are several factors to take into account when judging that this model of real estate portals is not so far-fetched in Spain:

• Spain is the second country in the world in terms of immigration: that is to say, every year people from other places come to live in our country who do not have such a direct knowledge of our cities and who could very well use this type of information to make their purchasing decisions.
• A high percentage of real estate purchases in Spain are made by foreigners: a real estate portal such as the ones presented here would provide much more valuable data when making a purchase decision: existence of bilingual schools, number of people of the same nationality in the area, average income level, evolution of average sales prices by type of housing in the neighborhood in the last months…
• With the slowdown in the housing market, many developers and real estate companies are moving further and further away when it comes to fishing for potential clients. There are already portals that are translated, or are in the process of being translated, into languages as diverse as Russian and Chinese. The more distant the potential buyer is, the more he needs to know about the environment and the market when judging whether or not a particular purchase decision would be interesting.

For all these reasons, we believe that this new type of portals will set a trend that, in the short or medium term, will be imitated here as well. Perhaps not so much by national portals, but by European real estate portals aimed at the growing floating population that will bring the social mobility data of the Old Continent closer to those that are common in the United States in the future. In this new scenario, it is clear that the type of information that potential buyers will demand will be much more related to that provided by Web 2.0 than that of the traditional portals we have known until now.