Roshan SrinivasanThe residential real estate data space is highly fragmented similar to how the automotive industry was almost 40 years ago when Carfax entered the space to provide a database for used car information from dealerships. There are over 500 multiple listing services (MLS) across the United States which all have their own property listing databases and memberships controlled by the various realtor associations and board. More importantly, while there are platforms like Corelogic which have consolidated some property information into APIs such as looking up mortgage rates and weather by address and zip code, majority of data around zoning, liens, and other financial records is still dispersed across various public databases. Specifically in the residential space, there is a very strong need for having a centralized comprehensive reporting structure.
Contextual understanding
🚗 Purpose of Carfax in the automotive space
Carfax was created with the aim to offer transparency and help individuals make more informed decisions when buying or selling used cars. Their goal was to help with:
- Revealing Potential Issues: Carfax reports include information about accidents, title branding (such as salvage or rebuilt titles), odometer readings, and other potential issues. This information can be crucial for buyers to assess the condition and reliability of a used vehicle.
- Preventing Fraud: Carfax can help uncover instances of odometer rollback, title washing (changing a vehicle's title to remove branding), and other types of fraud that might be associated with a used car. This assists in promoting fair and honest transactions in the automotive market.
- Building Trust: By providing a comprehensive history of a vehicle, Carfax helps build trust between buyers and sellers. It allows sellers to demonstrate the integrity of their vehicle, and it empowers buyers to make more confident decisions based on the available information.
- Consumer Protection: Carfax contributes to consumer protection by offering a service that helps buyers avoid purchasing vehicles with undisclosed problems or a history that might impact safety and performance.
- Marketplace Efficiency: Carfax contributes to the efficiency of the used car marketplace by streamlining the information-gathering process. Instead of relying solely on the word of the seller, buyers can access a detailed history report to supplement their decision-making process.
Intrinsically, Carfax was never created with the purpose of fully replacing due diligence or pre-purchase inspections, but rather as a “super vitamin” to help with narrowing down a list of vehicles for a potential buyer.
🗒️How Carfax is utilized by other players
Carfax is used by various players in the automotive space, including consumers, dealerships, auto auctions, and financial institutions. Here's how:
- Consumers:
- Used Car Buyers: Consumers use Carfax reports to obtain detailed information about the history of a used vehicle they are considering purchasing. This helps them make more informed decisions and avoid potential issues associated with a vehicle's past.
- Dealerships:
- Used Car Dealers: Dealerships often provide Carfax reports to potential buyers as part of their sales process. This transparency can build trust with customers and facilitate smoother transactions. Dealerships also use Carfax internally to assess the trade-in value of vehicles and to stock their inventory with used cars that have clean histories.
- Auto Auctions:
- Auction Houses: Carfax reports are sometimes made available at auto auctions, providing buyers with additional information about the vehicles being auctioned. This transparency can impact bidding decisions and contribute to fair market value assessments.
- Financial Institutions:
- Lenders: Financial institutions that provide auto loans may use Carfax reports to assess the risk associated with a specific vehicle. Understanding the vehicle's history helps lenders make more informed decisions about financing terms and conditions.
- Insurance Companies:
- Insurance Providers: Insurance companies may use Carfax reports to evaluate risk when determining insurance premiums for used vehicles. A vehicle's history, including accident and repair information, can influence the likelihood of future insurance claims.
- Automotive Service and Repair Shops:
- Mechanics and Repair Shops: Carfax reports can be used by mechanics and repair shops to understand a vehicle's past maintenance and repair history. This information is valuable when diagnosing current issues and planning for future maintenance.
- Government Agencies:
- Regulatory Agencies: Government entities, such as consumer protection agencies and departments of motor vehicles, may use Carfax reports as part of investigations into automotive fraud or deceptive practices.
🏠Analogous problem in the real estate space
Several challenges in real estate could benefit from a service similar to Carfax:
- Property History and Condition:
- Challenge: Buyers often lack detailed information about a property's history, including previous sales, renovations, and potential issues such as water damage, pest infestations, or structural problems.
- Analogous Solution: A service similar to Carfax for real estate could compile information on property transactions, renovations, inspections, and any reported issues, providing a comprehensive history of a property.
- Title Issues and Liens:
- Challenge: Title problems or undisclosed liens on a property can lead to legal and financial complications for buyers.
- Analogous Solution: A real estate information service could offer insights into a property's title history, including any liens, encumbrances, or legal disputes associated with the property.
- Neighborhood and Community Data:
- Challenge: Buyers often seek information about the neighborhood, schools, crime rates, and other community aspects before making a real estate investment.
- Analogous Solution: An integrated service could provide data on neighborhood characteristics, school ratings, crime statistics, and local amenities to give a more comprehensive view of the property's surroundings.
- Environmental and Natural Disaster Risks:
- Challenge: Understanding environmental risks, such as flood zones, earthquake risks, or other natural disasters, is crucial for property buyers.
- Analogous Solution: A real estate information platform could include data on environmental risks, floodplain maps, seismic activity, and other relevant information to assess potential risks.
- Market Trends and Valuation:
- Challenge: Buyers and sellers may struggle to gauge whether a property is priced accurately based on market trends and comparable sales.
- Analogous Solution: A service could provide data on recent sales, market trends, and property valuations to assist buyers and sellers in making more informed pricing decisions.
While there are various tools and services in the real estate industry that address some of these challenges, a centralized and standardized service akin to Carfax for real estate could enhance transparency, streamline information access, and contribute to more informed decision-making in real estate transactions. Building this solution would involve pulling both on-market listings as well as property data for residential units that are off-market.
Building the single source of truth for residential data
🔧 Current landscape of companies and tools
We previously covered the landscape of tools and companies in this space here such as Corelogic, Listhub, and Cherre as the incumbent players in the space. You can read more about them here to understand what the existing data tools look like and what their data comprehension looks like.
🤖 Leveraging AI to improve report generation
With the advances in AI in this past year, there are improvements that can very easily be made to property reports. Currently, most reporting tools are just that - tools for generating data reports. But for the average consumer, these tools are not particularly helpful if you do not know what you are looking for. Solving this problem with LLMs to generate advanced and personalized property summaries is a simple way to provide users with the opportunity to interact with reports.
🏘️ How Camphor is addressing this problem
Camphor is taking a three-pronged approach to build a centralized source of truth and expose it to real estate agents, brokers, homebuyers, sellers, and investors:
- Sourcing both on and off market properties: Camphor has been sourcing property information both for listings on the market today as well as information for properties off-market for report generation. Our goal is to expose both types of data through our reports to allow users to make more educated decisions when looking at properties in a specific neighborhood or county. Currently, we are starting by providing this value to communities in the Bay Area, CA and New York City, NY.
- Providing additional data value: we currently source additional data around zoning laws, liens, property financials, weather, school ratings, transportation scores and more from public data sources such as FEMA, Department of Transportation, etc. and stitch this information together with property addresses in order to provide a more comprehensive report to assess property risk, investment potential, and provide more education to homebuyers on personal characteristics they may care about when conversing with an agent.
- Improving the user experience for viewing reports: at Camphor, we realized very quickly that viewing a data dump in a report for a property listing on or off-market is a terrible user experience. Using the power of open-source LLMs, we have built a secure and robust solution for generating report summaries based on the primary characteristics homebuyers care about such as crime statistics, school ratings, ADU eligibility of a property, tax assessments, and more!
Check out all of these features at search.camphor.co today!
Applications in the real estate space
👔 Serving brokerages and real estate agents
For brokerages, Camphor has been building a set of automation tooling around reports and property discovery to improve internal operations for transaction coordinators and real estate agents. There are three core services we are offering:
- Automating the addition of new MLS listings for agents and transaction coordinators: adding a new listing currently takes 45 minutes to 2 hours for majority of agents. By making it easier to create a new listing by prefilling all fields with prior listing/property information from our datalake as well as leveraging LLMs for prefilling MLS descriptions, we cut down the time an agent takes to create a new listing or update a listing to 10-15 minutes maximum.
- Enabling a personalized version of Camphor’s property search to a brokerage’s website: this product improves a brokerages inbound with prospective buyers since Camphor integrates our search engine with the brokerages MLS IDX feed. This feature improves inbound traffic by 20-30% which can then be directly routed to a buyer’s agent within the brokerage.
- Personalized email reports for agents to share with clients: based on new listing additions and the prior search history of a buyer/agent, we build out automated reports for new listings on the market that cater to a specific buyer persona that an agent can copy+paste and send out to their prospective client lists.
These services are completely custom and available to any brokerage in the United States. If you are interested in learning more, schedule some time with us today!
💵 Providing more visibility to homebuyers and investors
Camphor has published a public search engine for homebuyers to learn more about listings in the Bay Area and New York City. You can ask any question based on your preferences for home type and identify a list of properties that meet your criteria. You also have the ability to see property reports that contain the basic listing information, safety, census, crime, and location scores.
If you are an investor and want to view zoning laws, liens, permitting, and off-market listings, subscribe to our premium version of search today to unlock these attributes both for asking questions and generating property reports with this additional information.
Concluding thoughts
The success of Carfax in transforming the used car market stands as a testament to the power of centralized information in facilitating informed decision-making. As the residential real estate industry navigates its own data challenges, the call for a comprehensive reporting structure is becoming increasingly urgent. A centralized platform has the potential to streamline transactions, reduce risks, and foster a more transparent and efficient real estate market for all participants. We at Camphor plan to lead this revolution for more data transparency.