Miami-based tech entrepreneur Richard Swerdlow wants to compete with the big dogs, Trulia and Zillow.
Swerdlow recently signed a joint-venture agreement with a prominent asset management firm and now plans to expand one of his three real estate listings websites to take on the two publicly traded companies, which have a lion’s share of online real estate transactions.
But the 49-year-old Swerdlow faces stiff competition in an already crowded field that includes players backed by Google and CoStar Group, the leading provider of commercial real estate information and analytics.
In early April, Swerdlow’s company eReal Estate Holdings, which owns Condo.com, Houses.com, and Property.com, partnered with Bayview, a real estate investment and mortgage firm headquartered in Coral Gables. The relationship calls for Bayview to provide Houses.com with funding to further develop the site’s brand, add product features, and drive up consumer traffic and revenue, Swerdlow told The Real Deal. Houses.com will also list properties in Bayview’s portfolio as part of the deal.
“We needed to find a strong partner who can best finance our future,” he said. “Going with Bayview was a good strategic decision because we get to leverage their strategic assets in addition to a cash investment.”
Houses.com has more than 2 million annual visitors and more than 5 million market-rate and distressed property listings, Swerdlow said.
Bayview representatives did not respond to requests for comment.
The asset management firm’s backing of Houses.com comes when Swerdlow is vying against several firms offering a similar model. In Miami, he faces competition from start-up Properati, a web portal that connects South American buyers with Miami real estate brokers. It also allows U.S. real estate investors to browse property listings and connect with real estate agents.
Nationally, real estate listings websites are attracting interest from blue chip technology companies. For instance, Google Capital recently invested $50 million into Auction.com, a site launched in 2008 that is valued at $1.2 billion. CoStar placed its bets on Apartments.com, acquiring the company for $585 million.
Both companies could follow in the footsteps of Trulia and Zillow, two Internet real estate companies that went public in 2011 and 2012, respectively. In 2013, Trulia reported annual revenue of $143 million, more than double the previous year. Zillow generated $197 million in revenue last year, a 69 percent bump from 2012.
“It is obvious why new media companies want the opportunity to get involved in real estate listings,” said Jonathan Gelman, a real estate attorney. “I think this is the start of a new trend. Listings sites are providing avenues to sell and market properties to people whom you may never been able to reach before.”
For instance, Gelman represents a New York-based client that used Auction.com to recently purchase a large shopping mall in a part of the United States it had never done business in. “The bidding and sale process is very efficient and fast,” Gelman said. “It was an eye-opening experience when you recognize that transacting real estate has been a face-to-face business for decades, if not centuries.”
Rick Gersten, a Washington D.C.-based commercial real estate broker who started the apartments listing site UrbanIgloo.com, said Google has the street credibility with Internet users to capitalize on real estate transactions conducted online. “They are already doing mapping,” he said. “So why not tie in some of that content with making it easier for a person to find a place to live or a home to buy?”
Founded in 2009, UrbanIgloo started with two employees working out of a 100-square-foot office, Gersten said. Today, the company has a full time staff of six people and 18 licensed real estate agents in two offices.
But he said there are already too many companies vying for a share of the online real estate marketplace.
“Right now it is very congested,” Gersten said. “The challenge is developing a site that really helps the consumer get information about a property they are looking at. In addition to the listings, you have to provide content on a number of things, from the nearest schools to what crimes are occurring in the neighborhood.”
Swerdlow, whose father Michael Swerdlow is a prominent Miami developer, insists he is leveraged to expand and grow the business. “We have a great, recognizable domain name,” he said. “We are also a nationally licensed brokerage firm.”
Partnering with Bayview will allow Houses.com to engage a digital marketing firm “to grow traffic and optimize the site’s existing traffic,” Swerdlow said.
Jay Massirman, one of Swerdlow’s early backers, expressed confidence about his investment. “The value is in building the system behind the domain name,” he said. “Houses.com and Condo.com earned it by building the infrastructure to generate traffic on the sites.”