VentureBeat

The real estate market is in serious turmoil and has likely thrown the entire economy into a recession, so you’d think a real estate search startup might not be a hot item. But you’d be wrong.

One such real estate search startup, Trulia, is not only doing fine, but usage of the site is accelerating as a result of the housing downturn, co-founder and chief executive Pete Flint tells us. Users are flocking to sites such as Trulia, because they are independent and give people more control to find exactly what they are looking for, at the right price, in troubled times.

Today, Trulia is launching a new feature to to make the service even more useful: Integration with Google Street View. The service, which you might have heard of because of the controversy that surrounds it amid privacy concerns, shows panoramic pictures of places on Google Maps that can be rotated 360 degrees. You can traverse within this view to give you the feeling as if you on the city’s street itself.

This is useful for Trulia. Imagine you are looking for a new home. Sure, you read all of the descriptions and see a few static photos, but actually looking around the entire neighborhood as it looks on any given day — from your computer — is invaluable. “[It's] literally the next best thing to walking down the street yourself,” Flint says.

Trulia worked closely with Google to implement the functionality, and both sides are pleased with the results. While there have been the aforementioned security concerns about Google Street View, this is a perfect example of why how such a feature can be practical.

Assume you are looking for a home in one of the 40 cities Google Street View currently covers. When you do a search through Trulia and find a result you like, you are taken to a page with all the detailed information you would expect to find, but also with the street view of the property embedded right in the page. It’s not simply porting in the entire Google Map and having the big bubble pop up that you might be used to seeing if you’ve used Street View before, instead a street view picture focusing on the property is placed right in front of you in its own area on the page (see above picture).

Even though chief competitor Zillow has raised a lot more money (somewhere around $87 million), Trulia has been more than holding its own, growing its audience three fold in the last twelve months and seeing revenue almost double in the last quarter. Trulia raised $18 million in funding from investors including Sequoia and Accel.

A massive shift in advertising from periodical classifieds to sites such as Trulia has also helped the site, the company wrote about in a blog post recently.

Trulia currently has over 60 million real estate properties. The company plans to add this new street view feature to all of them as Google rolls it out to more cities.

We previously covered Trulia here, and have also covered another of its competitors, Roost, here.

Real estate website Zillow wants to give borrowers more control when they’re looking for a mortgage.

It may seem like an odd time to be entering the mortgage market, since the subprime crisis is still shaking up the national economy. But Spencer Rascoff, Zillow’s vice president of marketing, says people are looking for exactly what Zillow is selling.

In the Zillow Mortgage Marketplace, which launched last night, users looking for a mortgage enter their finances but not their contact information. Mortgage brokers and banks make their offers, and users get to decide which deals to pursue. The borrower is in control during the entire process, Rascoff says.

This seems like a huge improvement over the existing model exemplified by LendingTree, where borrowers’ contact information is given to lenders. The lenders decide when and if to contact you, which means borrowers can get barraged with phone calls. You also get a more detailed, customized offer than those found on Bankrate, where mortgage offers are sorted by zip code.

And despite the housing slump, the time is right for Zillow’s new offering, Rascoff says. The benefits to lenders are obvious — and it’s not just people buying a house who need a mortgage, but also homeowners desperate to refinance before their rates increase. Meanwhile, banks want to cut out the middlemen, and those middlemen (namely, the brokers) are struggling, so both banks and brokers will jump on any opportunity to connect with borrowers. Finally, the foreclosure crisis and its larger economic consequences are raising a lot of political heat.

“That raises the visibility of the issues that Zillow Mortgage Marketplace helps solve,” Rascoff says.

Zillow’s new product also includes lender-rating system like Ebay’s, so you can find out more about a lender’s reputation when sorting through offers. This kind of reassurance is particularly important now, given recent stories of unethical lending.

The Seattle-based company, which also offers estimates of people’s homes and other real estate services, gets around 5.2 million unique views a month, Rascoff says. It’s raised a total of $87 million.

updated below
Trulia, a web site that lets you search for homes, today launches a way for real estate agents to pay to to reach you with their listings.

The feature comes at a time when Trulia is showing traffic momentum, even as a competitor Zillow is struggling with stagnating traffic.

For $50 per month, agents can pick up to ten of their home listings to be featured in Trulia’s results when people search for homes. Better yet, they’ll be listed among the top three search results. The prominent placement means users are more likely to click them to find out more.

In testing of the feature, called Agent Featured Listings, agents who participated received four times more traffic to their featured listings than other listings received. Trulia did not report if the additional traffic actually led to more home sales. A featured ad may deliver more clicks, but it remains to be seen if those clicks convert to dollars.

A big challenge for real estate websites like Trulia, a San Francisco company, and for competitor Zillow, of Seattle, is that home transactions occur offline. This makes it difficult for advertisers to track results, because clicks may generate leads, but big question marks hang over the rest of the transaction. So it’s hard for an efficient market to develop around the real estate sites. The big challenge for these sites is how can they capture more of the value, such as a portion of agent commissions, simply by generating clicks.

Trulia’s new subscription-based service model contrasts with the model most companies rely on. Zillow relies on both CPM (a rate paid by an advertiser for every thousand ads viewed) and CPC (cost per click), meaning advertisers pay Zillow a certain amount if users click on their ads). These CPM and CPC models work well when traffic and CPC prices are high. CPM ads account for about 90% of Zillow’s revenue and the rest is CPC, according to Zillow Chief Financial Officer Spencer Rascoff.

Recently, Trulia’s traffic has grown rapidly, while Zillow’s traffic has trended sideways, and lately, possibly downward, depending who you believe. Over the past year, Zillow’s U.S. traffic is up only 11 percent, to 1.9 million unique visitors per month, according to Comscore. Meanwhile, in the past year, Trulia’s U.S. traffic is up 130 percent, to 1.2 million unique visitors per month, according to Comscore. Of particular concern for Zillow is user engagement. In the past six months, U.S. daily unique visitors to Zillow are down about 20 percent, according to Quantcast. [Update: Zillow's monthly uniques are up 20 percent from last year, at 4 million, according to its internal data.]

At left is Zillow.com’s daily U.S. unique users, according to Quantcast.
Trulia CEO Pete Flint said the company spends hardly any money to market itself using ads on other sites, such as on Google or Yahoo.

Despite considerable press coverage given to Zillow’s controversial practice of providing estimates for home values, and its large staff of 155 employees, it’s not clear how the company plans to make money. Zillow appears committed to the CPM and CPC models, but will Zillow follow Trulia and offer a subscription service? We’ve requested comment from Zillow, and will update accordingly.

In September, Zillow raised $30 million from an institutional investor, Legg Mason Capital Management, bringing the total raised to $87 million. Legg is led by legendary investor Bill Miller, who until last year had a 15 year streak for generating returns beating the S&P 500 benchmark each year.

But why is Legg — known for its investments in public companies — investing in private internet companies? Legg started by investing in Spot Runner in March. Since, Legg has made five other investments (some of them not publicly announced), including in Ning, a social network service. Legg invested after Rascoff put out a request for bids in July, according to Legg Director of Research Randy Befumo.

Befumo said Legg has expertise investing in the internet sector and pointed out Legg is a major shareholder in Amazon, InterActiveCorp, Yahoo and Expedia.

Befumo said institutional investors like Legg will take the role formerly served by IPO’s in 1997 and 1998. At that time, internet companies without business models went public to raise capital in order to figure out how to make money. Befumo said institutional investors are better suited to assume that risk than individual investors in the public markets. Befumo acknowledged investments like these can have “binary” outcomes, either making a lot or none at all.

In the meantime, Zillow is throwing money at hiring engineers, though it’s not certain why. Zillow has 155 employees, and 108 of them are technical workers, of which the “vast majority” are software developers, according to Rascoff.

Zillow has 30 open positions and the company targets an employee count in the low 200’s, according to Rascoff. He said new hires are important to building the ad business (Zillow has 25 people on its ad sales team) and developing new features to attract users. Given competitor Trulia is rapidly catching up with Zillow despite having only 47 employees, the lingering question is why isn’t Zillow’s traffic growing faster?

Zillow’s user community appears weak. See Zillow discussions in Seattle, the company’s home turf. They’re essentially non-existent. Trulia, by contrast, shows much more life . Zillow’s local discussions pages are not as active because Zillow has chosen to not actively promote them yet, according to Rascoff. Zillow’s Discussion boards have over 85,000 posts since launch. Still, a vibrant local community may be important to helping local home buyers interact with real estate professionals in their area, and in that Trulia has an edge.

Both Zillow and Trulia are working on how to build profitable businesses. With today’s launch, Trulia is experimenting with a new business model. Flint said Trulia will be profitable before most expect it to be, but would not estimate a date. Until then, it remains to be seen what business model will be effective enough for real estate websites to justify the investments, especially for Zillow.

Updated

Trulia may be the dark-horse of the real estate market.

Trulia, which offers a search engine for homes, has quietly been signing deals with large real estate brokers, and boosted its traffic considerably — to 1.5 million unique monthly users. Thursday, it announces it has scored $10 million in a third round of capital led by respected venture capital firm Sequoia Capital. It says it is the fastest-growing real estate web site.

Its low-key strategy contrasts with companies such as Zillow and Redfin which have made waves by scaring people. Zillow slaps a value on your home, puts it online, and doesn’t giving you a whole lot of choice in the matter — raising ire among many. Redfin, meanwhile, threatens to lower the commission of real estate agents (our coverage)

[Update: See Hitwise data below, which show Trulia is gaining. Zillow still has more traffic, and says it has 4.1 million unique users -- more than double Trulia's claimed number].

Though Pete Flint, co-founder and chief executive, says Trulia is seeing double-digit monthly user growth. He’s done it, he says, by visiting the major real estate brokers across the U.S., spending countless hours on planes, signing them up in partnerships. These deals include Coldwell Banker, Century 21 and Prudential affiliates. Trulia, based in San Francisco, has 95 of the top 100 real estate brokers on its platform, Flint says. These brokers give Trulia the right to list their homes, along with advertising dollars; in return, Trulia sends them qualified home buyers.

Trulia says it has two million homes for sale. Zillow, by comparison, has only 130,000, according to its site (see graphic here, taken from Zillow’s home page), reflecting Zillow’s focus on home estimates versus actual home-for-sale search.

While housing downturn may mean fewer people are buying, the people who are buying are doing more research before buying, thus using sites like Zillow and Trulia site more intensely.

Flint co-founded the company two yeas ago, with a team of four. Trulia now has 40 employees, and has raised $18 million in total. Another striking stat: One-third of his employees have a degree from Stanford.

He says Trulia is close to profitability, but that he’s consciously investing heavily to grow the business.

Previous backers Accel Partners and Fayez Sarofim also invested in the latest round.

Separately, John Cook writes tonight about how Zillow’s CEO has sold his home for a price above his company’s own Zestimate for the house.

Real estate Web site Zillow.com continues to show momentum.

The Seattle company has released a new feature called Home Q&A, letting people ask questions and get answers about each of more than 70 million U.S. homes. Zillow demonstrated the feature to VentureBeat two weeks ago. If Zillow can leverage the traffic it is getting from its controversial home price estimates — and signs are that its traffic is robust and growing (see Hitwise rankings in spreadsheet below) — and thereby get enough people to make these Q&As lively, it could be a breakthrough feature.

This appears to be a swift competitive response to My Currency, a younger company that relies on user-generated commentary about home prices, and which needs a new URL if anyone is going to find it.

If you’re a home buyer and see a quirky listing — the house may have been listed for a long time, whatever — you can ask a question about the house and get feedback (hopefully, people will respond; agents will have the most reason to do so, because they know the most, and because their comments will include a link back to their own profile page at Zillow, so that they can get leads.)

If you’re curious about the neighborhood or commute patterns, you can ask about these too. Zillow has introduced a host of other features around this. You can load historical photos of the homes, for example. Anyone can rate answers as “helpful” or “not helpful,” and Zillow has hired people to troll the site to remove spam from agents or others. (See screenshot below).

The feature follows Zillow’s move to enabled homeowners and agents to update home facts, and post homes for sale. There’s also a notable “Make Me Move” feature, where an owner who is not otherwise interested in selling can list the price of an offer so enticing that they couldn’t resist taking it anyway.

Zillow has also introduced an advertising feature, which lets agents, professionals and others take out geographically targeted ads, which get listed on pages people get when they search for homes on Zillow.

The year-old Zillow says it attracted more than four million unique visitors in February.

My Currency is a new real estate company that tries to turn Zillow on its head.

Zillow, you’ll recall, is controversial, because it estimates values of homes. Some people love to gawk at the estimates for their neighbors’ homes, others are irked when they feel Zillow gives a low-ball value to their home. Zillow works because it is top-down. Unlike other Web 2.0 companies, it didn’t require lots of user-participation to get where it is now. On the other hand, that might be Zillow’s weakness. After a user visits the site, what do they do then?

My Currency is the opposite. It lets people participate, and encourages them to estimate the value of homes for sale. If a home is selling for $500,000, and you think it is worth less, you get points if it is sold for less. The idea is that estate agents will want to participate. If they develop a track record of accuracy, their credibility grows, they get more customers. By aggregating votes from all users, the “wisdom of the crowds” can also be assessed — which may or may not help in home-buying decisions.

My Currency has a futures index, too, which lets agents and others predict the future average square-foot price of homes in a region.

The San Francisco company launches at DEMO. The company is focusing initially on housing but plans to roll out services in other areas. Its model is advertising.

Karim Tahawi, Founder and CEO of My-Currency.com, is a former derivatives trader and former Vice-Chairman of the Pacific Exchange.

The challenge for My Currency will be to command enough authority to make people want to participate. This is a long shot; there’s so much noise out there — Zillow, Trulia and many others.

Trulia, the San Francisco housing site start-up, has unveiled more data about where the buying action is: It harnesses the search input of its users, to show you where buyers are looking.

By giving your real-time indication about where buyer interest is, and also supplying you historical prices of homes in the areas you are looking, the company says you’re able to make better decisions about where prices are headed — a great resource for anyone looking to buy, or sell. Trulia has placed this information into “heat” maps (see graphic above), showing for example that Noe Valley is the most searched for neighborhood in the SF region. You can then drill down into that neighborhood, and see individual homes for sale, and compare them on a number of measures — by price, price per square foot and so on.

It will be rolled out nationwide by the end of the month.

Combined with maps, this latest offering is one example of how fast Web 2.0 real estate Web sites are moving. If you bought your home in early 2005, you didn’t have a way to look at houses on Google Maps. Since then, innovation has blossomed, and consulting maps with integrated housing information is taken for granted. A slew of sites have emerged, from Housing Maps (an early player, bought by Google), and Zillow, which has mashed home value estimates.

Trulia’s Pete Flint says the softening housing market makes it more important than ever for people to have information to make the right decisions.

The three new tools are:

1. Heatmaps. A comparison of every neighborhood in the country, showing you the geographical boundaries of each, and then coloring them on a number of metrics, making for easy comparison. Competitor Zillow, for example, has heat maps, but does not let users power those maps by selecting average sales price, traffic rank, median price, and average price per square foot. You can then select a region and drill down to the spotlight page (see 3 below).

2. A comparison tool. You find a home you like, and Trulia finds comparable “for sale” and “recently sold” homes side by side for the neighborhood.

3. Neighborhood spotlight. Here you see in more detail how the neighborhood compares with other areas by sales price or by interest from users, and more. You can see listings of all homes for sale in the area. It lets you see all the schools, the quality of schools and crime rates. You can see which homes have the most bathrooms, and more. Better, you can select graphs, showing how interest in say, Noe Valley has risen or fallen over the past year, and compare it to the interest in Potrero Hill, for example. Or pick a graph comparing rise and fall of prices, and so on.

Flint said Trulia has had 50 percent growth rate in page views over last four months. It is now sending 750,000 home buyer referrals to brokers and agents every month, and those referrals have been growing 60 percent a month over the same period, he said.

Trulia is also about to turn on advertising, in a more earnest effort to make money, but wants to making ads relevant to the listings, he said.