There was big news in the Canadian real estate industry last week, as Rogers announced that it is shutting down its brokerage website Zoocasa, which served as a referral service for real estate agents, effective June 22. As the CBC the website, a wholly owned subsidiary of Rogers Communications, began as a listings website before expanding in 2013 into linking up buyers and sellers with realtors. The news comes as a shock to some, but many analysts and conspiracy theorists foresaw this eventuality for reasons that went beyond Zoocasa’s control.
There are some that believe the closure was the result of a failure to meet bottom line estimates. Susan Pigg of The Toronto Star reports that that company had been losing approximately $1 million a month for much of the last two years, according to an anonymous source close to the company. A website like Zoocasa shoulders high administrative and technology platform costs that far outweigh the number of real estate transactions taking place on the site.
However, for others, the closure doesn’t at all seem coincidental, comeing only a few months after succumbing to pressure from the Toronto Real Estate board to stop publishing housing data, particularly home resale prices.
One of the key services Zoocasa provided to users was the ability to subscribe to daily emails containing data on the selling prices of homes. As Alexandra Posadzki of Global News points out, this feature was intended to be no more than an email marketing tactic to boost traffic to the website. However, earlier this year, TREB urged all of its members to stop sharing sold data, warning that this constituted a violation of the Board’s rules that may warrant the restriction of access to Multiple Listings Service (MLS) data.
But what “rule” did Zoocasa break? According to TREB, the publishing of home sales data breaches the privacy of home sellers.
But what Posadzki and many other analysts argue, is that the closure of Zoocasa “demonstrates the extent of the monopoly that MLS has over Canada’s real estate market.” As many realtors will tell you, there was a time when it used to be far more difficult to obtain that sort of proprietary information about how much houses sold for — not just listed for. Keeping a stranglehold on that information, it is believed, encourages would-be buyers to work directly with real estate agents in order to get that information. Zoocasa was a disruptive service, in that, by providing home buyers and sellers with that information, one could effectively broker a deal without an agent, further pushing them out of the process altogether.
John Andrews, a professor of real estate at Queen’s University, in an interview with the CBC, said Zoocasa was the most likely of the “alternative agencies” to succeed (because of their Rogers backing) and agrees that the shutdown is largely in part due to the dominance of the MLS system.
“I’m not really surprised by the [shutdown.] The MLS system really had a very strong market share and the various alternatives to listing don’t necessarily provide the whole host of agent services to their markets.”