With James Packer onboard, can Zillow break RP Data's stranglehold on Australian property data? Cameron McEvoy

A friend shared with me an interesting story about James Packer’s recent purchase of a stake in the U.S. site Zillow.

Most Australians would not be familiar with this site unless they had experience buying property in the US. The site effectively enables home buyers and investment property buyers to see recent sales prices of every property in the same street and suburb. It does this by overlaying price data from their own third party data collection source with Google Earth-like maps of the neighbourhood where the property is located.

The key success of the site in recent years has been mostly attributable to the fact that top-line pricing information and comparison is readily available for free when using the service. The paid subscription version then enables for much more granular data about the property you are interested in buying, as well as neighbouring properties. Prices are updated via database inputs in almost real time, meaning that market values ebbs and flows per suburb, and per city, really can be recorded and monitored as they occur.

With Packer’s purchase of a substantial portion of the Zillow enterprise (about 9.4%) it will be interesting to see how this company progresses. Could there be opportunity for Packer to extend Zillow’s offering to markets beyond the domestic US? If an offering such as Zillow were to be made available in the Australian market, this would change the dynamic of how people purchase residential property here.

There are tools available to would-be home buyers and investors to allow them to access pricing and sales data about residential properties in Australia. The biggest of these is RP Data. RP Data plugs in to many of the ‘free’ data sources that property seekers already use in their searches – for example, median sales trend data per-suburb, as supplied on sites such as Realestate.com.au and Domain.com.au.

However, the ‘free kicks’ that RP Data gives away to such resource sites are really just snippets of the true value that the data can show. Of course, more granular detail on specific properties is made available by RP Data’s paid services. Paid RP Data reports can offer the following intel and detail on properties:

Property ownership history:

Red flags can be raised if a property has consistently been bought and re-sold every six to 12 months, for a long period of time. It could mean there are structural problems; potentially unresolved strata legal issues with property developers, or upcoming approved expenditure in strata complexes that will require huge ‘special levy’ increases to fund them.

Property detail:

This will give the true dimensions of the land plot a property is situated on; which may not always correlate with the dimensions contained in the contract of sale. This is important particularly in high-land-value areas where every single square meter of land ‘lost’ (based on assuming the block is bigger than it actually is) could result in thousands of dollars of lost value for that property.

Valuation:

Though bank and independent valuers are called in to assess value of a property (and often they themselves will use RP Data tools to corroborate their inspection findings); RP Data does offer a true market valuation of a chosen property.

Comparable properties:

Some paid reports allow property buyers to see similar properties in the area and the prices these properties have recently sold for. This helps provide peace of mind to the buyer of the true value of their chosen property in comparison to similar ones, in that same market (suburb, or sometimes street).

There are additional services that RP Data reports can provide. Unfortunately, many property buyers are not purchasing the RP Data sales history reports for their shortlisted property, prior to negotiating the final sales price. This means buyers could be overpaying for a property, thinking that their negotiated price was a good deal and in line with true market value, when in reality, the price they paid was still substantially higher than the true value.

Regardless though, my view is that Zillow is a far better model. RP Data, under its paid model, can give some idea of comparable property prices in just that street or in some similar properties in that suburb; to have access to an entire city’s pricing data – so, dozens and dozens of suburbs worth of individual properties – would cost a fortune. Zillow offers top-line, real-time, pricing data for entire cities and towns, not just a few ‘similar’ properties in one suburb, and this data is very valuable.

Why?

Because although it is all good and well to make sure you are not overpaying for your chosen suburb, what if the suburb choice itself in the first place is wrong? This would be similar to saying ‘I want to pick the best seat positions in a cinema’ when you want the best movie experience, when in reality the more important choice is not always just about the seat position, but the cinema type itself (Gold Class/IMAX/VMAX v a standard cinema).

Zillow also plugs in and amalgamates many other useful data sources that local services such as RP Data, do not. This makes your due diligence work time spent more efficient and productive. Included features such as mortgage rate comparison from different lenders, real estate sales and rentals listings from almost every local real estate who is affiliated, as well as the major search sites out there (this would be the equivolent locally of having Domain and RealEstate.com.au plugged in, as well as every local agent operating in every suburb with their own sales listings) provide added value to Zillow’s service.

Additional due diligence data such as local demographic and infrastructure data (so, how many schools, hospitals, and so on, a suburb has; in comparison to neighbouring areas) are also useful to have in one place. In Australia, this due diligence intelligence must be sourced from other sites.

So, whilst Packer no doubt has his own commercial success objectives to meet in acquiring his stake in Zillow, it will be interesting to see where the future of such a service could go, if introduced locally. Providing that Zillow would have the means and investment needed to acquire and fuse the data streams locally to provide such an end-to-end research service, it would most certainly be of benefit to home buyers and investors alike.