Zillow Inc. (Z)’s purchase of StreetEasy for $50 million shows how dominant the listings website has become in the New York City real estate market seven years after it was founded.
StreetEasy allows users to view apartments for sale as well as all units that have sold in a given building, how long they were on the market, and what kind of discount their owners had to offer to strike a deal. If someone in your building had a federal tax lien filed against their apartment, you can find that on StreetEasy. Want to know when a unit is listed for sale at an exclusive Park Avenue co-op? That’s possible too.
“I have clients who are completely addicted to StreetEasy,” said Jacky Teplitzky, a broker with Douglas Elliman Real Estate in New York. “It’s almost like they are watching the stock market, the way they are watching StreetEasy.”
Brokers weren’t always so receptive. The search site debuted in January 2006 to critical howls from the real estate community. StreetEasy was introduced to make basic data more available to consumers, who had no easy way of finding out how long an apartment had been for sale or what comparable properties were trading for, said Sofia Song, vice president of research for the website. The business relied in part on getting daily updates from Manhattan’s biggest brokerages with details of their listings, pictures, floor plans and prices.
“When we first came on to the scene, we were seen as interlopers, we weren’t welcome or embraced,” said Song, who has been with the company since 2007. “And the fact that we were StreetEasy.com -- being a website there’s always a danger of appearing very anonymous, appearing very devoid of the human element.”
Teplitzky recalled that brokers urged a boycott of StreetEasy, asking their firms not to share information with the website. She was an early supporter and agreed to help its founder, Michael Smith, reach out to other brokers, she said.
The bankruptcy of Lehman Brothers Holdings Inc. in September 2008, followed by a near standstill of the Manhattan home-sales market, was a turning point. StreetEasy went from 3 million page views that month to 12 million in January 2009, as apartment values were beginning to plunge, Song recalled.
“It was like looking at a traffic accident,” she said. “You can’t turn your eyes away from it.”
In the aftermath of the crash, “everyone was curious,” Song said. “They were tracking their own property, they were tracking their neighbor’s property -- who was putting their property up for sale, how much they paid for it originally, if they were selling at a loss.”
These days, as a shortage of inventory in Manhattan and Brooklyn ignites bidding wars, the site -- which has about 1.2 million monthly unique users -- is more often used to see how much a buyer agreed to pay above the asking price.
“It lets you start a dialogue with an informed buyer, and it’s the dialogue that gets you the best possible result,” said Dolly Lenz, a broker and founder of Dolly Lenz Real Estate LLC.
When she works with sellers on pricing their properties, she explains her strategy, then refers clients to StreetEasy to “get comfortable” by viewing comparable sales.
“Here’s the data, and you can confirm everything we’ve talked about,” Lenz said she tells clients. “The fact that it’s an independent site is the whole point.”
Smith, StreetEasy’s founder, previously started Insight First, a developer of customer-behavior software. Before that, he worked for seven years at Credit Suisse Group AG, serving for part of that time as head of trading technology and telecommunications for the North America division, according to StreetEasy’s website.
The firm’s staff has grown to 34 employees, a majority of whom are equity holders, said Dawn Lyon, a spokeswoman for Seattle-based Zillow. StreetEasy had about $2.9 million of venture-capital backing from investment firm FA Technology Ventures, she said.
Last year, StreetEasy expanded into a new office on Crosby Street in Manhattan’s Soho neighborhood, next to the Mondrian Hotel. The 6,500-square-foot (600-square-meter) space, designed by Christoff:Finio Architecture, has a custom-built bike rack, an open bar and two wall-to-wall televisions.
“You can’t be the largest and most important real estate website in the country without being No. 1 in New York,” Spencer Rascoff, chief executive officer of Zillow, said in an interview today on the “Bloomberg Surveillance” television program with Tom Keene, Sara Eisen and Scarlet Fu. “And StreetEasy was No. 1 in New York, so we paid up for it.”
The purchase allows Zillow to expand its reach in an urban market as it faces increased competition from Trulia Inc. and other providers of property listings amid a U.S. housing-market recovery. The company also bought San Francisco-based HotPads in December for $16 million in cash.
“It’s amazing how the climate has changed,” said Song, who with other StreetEasy employees rang the bell at the Nasdaq Stock Market yesterday under a projection of Zillow’s logo. “I’ve been there -- from being hated and feeling unwelcome to now becoming the industry standard.”
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