Last year, 80 percent of potential homebuyers used the Internet to find real estate information – nearly twice the figure from 2001. The online real estate industry is now valued at $3 billion, with 41 million unique visitors each month. And every year sees more real estate advertising dollars spent on the Web.
As house hunters increasingly turn to the Internet for information and guidance, a growing number of Web-based tools are cropping up to help.
But until recently, these tools required that people already know where they wanted to live – based on information from family, friends, real estate agents, or elsewhere on the Web. And they didn’t tell these prospective homebuyers much about the issue that’s most important to them, according to a recent study by the National Association of Realtors: the neighborhood.
Neighborhood Scout changes all that. In the words of creator Andrew Schiller, Scout is a “heat-seeking search engine, sort of a Google for neighborhoods.”
Using a patented search engine, Scout enables house-hunters to find neighborhoods they’d want to live in based on criteria that they themselves choose. The result is a search that is more strategic, comprehensive, and efficient. Scout also offers preset searches based on different lifestyles (for retirees or young families, for example) and a way to find a neighborhood that closely resembles one where they live, or would like to.
Created in 2002 by Woonsocket-based Location Inc., Scout offers detailed information about schools, property values, crime and other characteristics for every neighborhood in the country.
“And a few boats,” jokes Schiller.
What’s more, Scout’s breakthrough algorithms offer a picture of neighborhoods that can’t be found anywhere else. Scout’s developers have found a way to make state-based school data (required under No Child Left Behind) comparable across states.
Scout then allows home-seekers to seamlessly view real estate offerings in their target neighborhoods, and connect with real estate brokers. Scout’s network includes more than 4,000 brokers representing 134,000 licensed real estate agents coast to coast.
These relationships are the primary source of company revenue. For every homebuyer that Scout refers, it receives 35 percent of the real estate commission, roughly 1 per cent of the sale price.
“Real estate agents are looking for customers, and customers want information. This model gives them both what they need,” says Schiller.
To date, the company has helped close more than 600 deals.
The company also generates revenue through subscriptions to its services, and commissions on “click-throughs” to real estate listing services.
Scout grew out of Schiller’s curiosity about why places were similar or different from each other. Schiller, who holds a PhD in geography from Clark University, moved around a lot and wanted a more reliable source of information for new places.
“I wanted to quantify peoples’ conception of place so I could help them find a match” explains Schiller. “There are magazines that supposedly list the ‘Best Places to Live,’ but there is no best place for everyone. It really depends on what you want.”
In 2007, Scout drew 1.8 million unique visitors – an impressive figure, but still not enough to generate advertising buys. In the next two months or so, Scout will roll out a significantly expanded Web site, featuring a quarter-million pages with even more detailed information and refined analytical tools.
Down the road, the company plans to expand Scout by introducing neighborhood forums that allow people to share opinions about different neighborhoods, offering free accounts that will allow home seekers to “save” neighborhoods and searches, and making components of Scout available for use on other Web sites.
“Ultimately, we want to become part of the lexicon,” says Schiller. “We want people to ask, ‘Did you Scout it?’ ” •
