How Trulia Soared Through the Housing Crash
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individual brokers and franchisees had to take over their own marketing activities. This completely changed how Trulia sold ads, and led to the invention of the Local Ads product, as well as a huge hiring binge. “We essentially turned our sales organization inside out and hired dozens and dozens of inside sales folks,” says Flint. More than a third of Trulia’s employees are ad sales representatives, most of them working from a facility in Denver.
The up side to the tremors in the real estate business, says Flint, is that brokers have had to focus their marketing spending on the channels that bring them the most leads. “It’s forcing people to be more thoughtful about their advertising spend and to take ad dollars from offline to online,” he says. The bottom line is that Trulia’s revenues are doubling year-over-year. (Flint wouldn’t disclose specific financial details.)
To keep up with consumers and the ways they access information, Trulia has developed mobile versions of its service for multiple platforms, including the iPhone, the iPad, Android phones, Android tablets, and Amazon’s Kindle Fire. It also recently released a special iPhone app for real estate agents that includes a Foursquare-like check-in function. “It’s a flag to say, ‘Hey, I have been to that house,’ which gives the consumer much greater confidence,” Flint says.
But the company’s biggest technical push is in the area of big data and analytics. It has built a large-scale computing cluster running the Hadoop distributed computing system, and it has hired a Harvard-trained chief economist, Jed Kolko, to put the system to work. “We have incredible, real-time data about one of the largest parts of the world economy, the U.S. housing market,” Flint says. “We know where consumers are searching. We know what properties are coming onto the market and off. We know rental prices. It’s a staggering amount of data, and we can use insights out of that to improve the experience for consumers and advertisers.”
Improve in what way? Trulia’s Shuman explains it like this: Imagine that you’re trying to buy or sell a home in Fremont, CA. Trulia’s data might show that homes in Fremont are on the market for an average of 73 days before the first price reduction. That reduction, on average, might be 6 percent of the asking price, and the probability of a second reduction might be 27 percent. All of this is information that can help a buyer know when to place a bid, or help agents and their clients decide how aggressively to set prices. And that’s just the beginning.
“There has been a shift in mentality in the real estate industry,” Flint says. “Agents used to fear a well-educated consumer. But I think, now, agents are saying that a well-educated consumer is a better consumer, because they can make smarter decisions and have a pragmatic view of the market. The agent can then spend more time thinking about higher-value stuff. It hasn’t been an overnight change, but many agents are starting to embrace it.”
As is Trulia—but it will likely be years before the startup and its competitors can harvest the full fruits of their data. With unemployment hovering around 9 percent, Americans are still having a hard time paying their mortgages, which means foreclosure rates are still rising—a trend only temporarily slowed by investigations into robot-foreclosure scandals. Foreclosures create what Flint calls “shadow inventory”: distressed properties that bring down home prices for everyone.
“There is just a lot of scar tissue left in the system that will take time to heal,” he says. “We’ve got several years ahead of us before we start to see a healthy market again.” On the bright side, that means real estate agents will stay hungry for leads—and Trulia will be able to make money dishing them up.