Solving house buying angst

For the past nine months, we have been house hunting.

In the current market, it is a bore. Not enough housing stock being the biggest issues. But the biggest problem in my book is the asymmetry of information between buyer and seller. Fundamentally we are intermediated by the estate agent who holds his cards close to his chest. He is the one who understands the market and the motivations or buyers and sellers. Yet he is also the best source of information for buyers (or has been)--but he is commissioned by the seller to get the best prices. (Actually, the commission structure is rubbish too. A typical salesman will make less than £100 on every extra £10k he gets on a house, so his incentive is velocity.)

The Net isn't helping buyers or sellers as much as it could either.

There is no Zillow in the UK, instead a raft of disaggregated aggregators all competing 1.0 style. Worse, many estate agents aren't represented by these four--and some estate agents seem to put only a small selection of stock on these sites.

The estate agents are also effectively re-intermediating by keeping in touch with serious buyers and offering us looks into homes early. "It's not on the website yet" is a sure-fire way for a prospective buyer to make time today.

In short--the Internet home buying experience is broken--in the UK at least. In order to find homes you need to search a minimum of four websites, if not more. Each of which has a different user experience and search vernacular. And each frequently shows outdated housing stock. And in a time when homes are placed with multiple agents it isn't uncommon to see five or ten entries for the same property.

The obvious solution to all this is some kind of meta-aggregator. The problem is that your only entry point is via scraping and rebuilding the databases of the 'big four'. And if you did that (and if they didn't get indignant, legal and IP-banning on you), you'd still have a business you couldn't easily export globally.

There is some comfort.

The most obvious is NetHousePrices which provides you the price of that houses last sold for. This  can be highly relevant in busy urban streets. Couple that with estate agents estimates of property area (often exaggerated by 10%), you can quickly get the property developers £/square foot rule-of-thumb which can help in negotiations.

Two other less obvious but rich sources are:

• The Land Registry which will provide you with title deed searches which in turn tells you the name of the owners and their mortgagor. If you Google the owners name, you can pick up a ton of information about them which can be useful when it comes to negotiating or (in a sellers market) creating those empathetic connections that might set you above other buyers. If you have an owner who is a company director--and quick search of 192.com will tell you--then you're able to create even more transparency for your most important purchase. (Bizarrely, the LandRegistry database is only available during weekdays--are there people manning the HTTP queries?)
• The final--and richest seam--is HomeTrack. HomeTrack provides a valuation on your home based on local sales and other comparables. HomeTrack is now used extensively by mortgage companies for valuations. The HT report provides an estimated valuation of the target property and then tons of data on recent local pricing, the activity of the housing market, conveyancing times in that area, average viewings per sale, market demand for estate agents--pretty much everything you need tounderstand a desired market. The valuation is the kicker, particularly if the owners are asking a bit too much. (HT does charge £20 per report.)

Clearly there is some kind of opportunity in this space--the housing market in the UK is broken. Highly fragemented, a regressive tax regime, a market where buyers rely on the sellers' agents for market information, where sellers' agents aren't incented to get the best price: totally insane, in other words.

Fixing it isn't a pure Web solution, although the new databases like HomeTrack, LandRegistry and NHP are helping to address the information problems. All of this is still very much first generation.The second generation is still waiting in the wings somewhere.

Comments

[Ed Freyfogle]

Hi Azeem,

great overview of the current state of affairs in UK property valuation data.

Here at Nestoria we're hard at work on building a second generation UK property search engine.

I'd be grateful if you could take a few minutes and have a look at our site and see how you think we compare. We only launched a few weeks ago so there's still a lot to do, but we do think we're taking a bit of a different approach to finding property.

Would love to get your opinion.
Thanks.

http://www.nestoria.co.uk