By now you must have heard, Zoocasa which is owned by Rogers has decided to close up shop. That's right, a brokerage backed up by millions/billions of dollars no longer felt it could compete in the real estate market. Some reports even suggested it was losing upwards of 1 MILLION dollars per month!
To be honest, I wasn't surprised one bit when I received an email last week from them explaining the shut down. For those of you not aware of their business model, here goes...
Zoocasa would spend millions of dollars advertising their brokerage online, on the radio, on tv, etc... They talked about their 'preferred agents' w/cash rebates when buying or selling, their listing search tool , and so on...
If you were looking to buy, you'd go to their site, fill out a form and have a Zoocasa rep contact you. From there, the rep would refer you to one of their agents (which could be from Re/Max, C21, Homelife, etc..) and if you ended up closing a transaction - you would receive a cash rebate of 15% of the commission. Awesome right? Not so.
I was a 'preferred agent' and here's what I can tell you without a doubt. Consumers didn't care about the rebate. They wanted superior knowledge, expertise and service. With the amount of information available, now more than ever people need interpreters of that information.
The criteria to become a preferred agent with Zoocasa was to be in business at least 5 years and do 12 + transactions per year. Again, consumers didn't hold that in high regard (or did they simply not know about it?) Most realtors frowned upon the brokerage, got mad, and bad mouthed them - some even cancelled their Rogers phone/cable plan! I did the opposite, and really wanted to find out for myself, what consumers really valued (there is no way any individual realtor or team of realtors could have spent the amount of marketing dollars Zoocasa did to 'test' this)
Unfortunately, it wasn't a profitable business, which to me, is an eye opener for future business models. Cash rebates, 'cool' search tools for listings and deep marketing pockets are useless if you cannot provide the consumer with value and really build that trust with them. How you go about that is a different blog post all together but nonetheless, interesting to see a brokerage trying to reinvent the wheel and going after what they perceived the public wanted, fall flat on it's face.