NUMBERS GAME
Real estate startups measure statistics buyers have been missing out on,
So you want to buy a house but the lawn next door is knee-high and covered in weeds. Or, you’re considering a condo. But would subway access make the smaller unit across the road a better investment?
These are the sorts of questions that an agent’s sheet of comparables won’t answer and in Toronto’s hyperactive market, information-hungry buyers and sellers want more answers in a hurry.
Real estate startups are mining the data to feed the demand with new real-estate tools for consumers and their agents.
Here are two examples of the trend. MarketScore Most real estate listings feature a Walk Score — a rating out of 100 that equates a property’s accessibility by foot to public transit, shops and amenities. The more walkable the location, the higher the Walk Score.
MarketScore aims to provide consumers with the same at-a-glance assessment of the investment worthiness of a property.
It’s not the only way to measure a property’s worth, but it’s one piece of information in a buyer or seller’s pricing decision, said MarketScore CEO Roman Fedchyshyn. He developed the index with his sons, both of whom have backgrounds in financial services and mathematics.
“There’s an odd inverse relationship between the amount of money you spend and the time you take to spend it. People will take days looking for a new cellphone. Yet they’ll walk through a house and, in 10 minutes, spend $1 million,” said the retired CEO of Manulife Bank.
To use MarketScore, a user plugs in the address and square footage of the property and receives an up or down arrow.
To get a specific, numerical score they can buy a bundle of 10, 30 or 100 scores priced at $10, $20 and $40, respectively. The smallest bundle is for property sellers, the package of 30 is for buyers and the 100 MarketScore is expected to appeal to realtors, who want to provide the information to clients.
A score of 0 to 19 on a property means it is “highly overpriced”; 20 to 49 is “overpriced”; 50 to 79 means a property is “underpriced” and 80 to 100 means “highly underpriced.”
Available for markets across Canada, the score out of 100 is based on sources such as Bank of Canada interest-rate projections, economic variables and regional statistics.
“When we back-tested this thing over a 10-year period it had an incredibly good predictive rate,” Fedchyshyn said.
Launched a few weeks ago, MarketScore is being tested at the bottom of Kijiji’s real estate services page.
It’s just one small piece of data, but MarketScore has the advantage of being immediately available whereas a broader market analysis takes at least 30 minutes to an hour to produce, said realtor Morgan Keating, a Century 21 agent who is among those test-driving the tool.
“(MarketScore) is enough to give you an idea of where market values are at, especially if you’re doing multiple properties,” he said.
Its limitation is that its analysis is based purely on address and square footage. It doesn’t distinguish when a property is in exceptionally good or poor condition, said Keating.
Fedchyshyn admits that MarketScore doesn’t look inside a home and it requires some input from the user. Most MLS listings don’t include square footage, so it’s up to the user to input a reasonable estimate. Hometrics David Silverberg has spent a career watching realtors jockey for distinction and buyers and sellers scramble for listings. As an agent, Silverberg said, “It was easy to be informed, but not well informed.”
There was a lot missing from MLS listings.
“I went on a mission to fill in all the gaps that I saw that could be filled to make an agent more worthwhile and to put some additional value to what they provide,” he said. Silverberg and co-founder Terry Moshenberg have mined the city’s data and other sources and collected it in to comprehensive, customized Toronto real-estate reports.
For $99, their company, Hometrics, will research and publish in a matter of minutes an address-specific report that includes details ranging from neighbourhood fence disputes to local school performance. Buyers also get an email with a link to their report so they can access it on their phone.
“We’re pulling out data most people wouldn’t even know is available,” said Silverberg, 52.
Hometrics reports are typically about 80 pages long and they rank neighbourhoods according to demographics, environmental factors — even the tree canopy.
High, low and average property sales information is there, along with the neighbourhood’s sales history.
There are also fence disputes and construction permits, crime reports and noise, graffiti and zoning violations. It also has restaurants that have been flagged on the city’s Dine Safe reports for health violations.
It will tell you what the neighbours are doing to improve their properties, from new kitchens to driveways, fences and swimming pools.
“If there are a lot of building permits, it may signify that the neighbourhood is good to buy and sell because there’s a lot of people looking to do work on that street,” said Moshenberg, 53.
As deep a data dive as Hometrics provides, Silverberg says the reports don’t replace realtors.
“What I certainly don’t want to say is that I’m capable of pricing a home. That’s the task of the agent,” said Silverberg, 52, who admits he didn’t expect to be pulling all-nighters and sleeping on his office couch in his middle age.
“All this does is add value to their service.”
Realtors have already paid to sponsor 90 of the 140 Hometrics Toronto neighbourhood profiles so they can provide reports to their clients. But consumers can also access the information directly.