Real Estate Turns To Internet In Major Transformation

Every year, millions of Americans buy homes – but the way homes are found has evolved greatly over time.

Today, the internet is playing an increasing role in connecting home buyers and sellers.

According to data from the National Association of REALTORS, approximately 51% of U.S. homebuyers found their home through the internet. 28% of buyers found their homes via agents, and more than 10% through word-of-mouth or print advertising.

Investment Implications

Historically, buyers were subject to a complex and clouded discovery process. Licensed real estate professionals were the main point of contact, and access to housing data was tightly guarded. The internet provided for an opportunity to change this.

In the early 2000s, Rich Barton decided he would attack this issue and co-founded Zillow.

Zillow essentially uploaded national housing data to a marketplace and created their famous Estimate to help homeowners gauge home value. Today, the company offers a variety of services too through their collection of brands including Zillow, Trulia, StreetEasy, and more.

Other companies like Redfin are approaching the issue from a different angle, generating most of their business through their integrated brokerage. Meanwhile, OpenDoor has focused on serving as a market maker providing liquidity in the market.

Going forward, it will be exciting to see how the process for home buying and selling changes, how friction is removed, and which companies will lead the pack.

Twitter:  @_SeanDavid

The author or his firm may have positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

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