Have you noticed that with any new gimmick, there’s always a catch?  In this case, the program is centered around directing the buyer to the in-house lender – who also happens to own auction.com. With multiple profit centers, they hope to dominate the landscape.


An excerpt:

It’s widely known in the industry that Trulia and Zillow don’t have comprehensive databases of homes, in part because they aren’t members of multiple listing services, which supply real-time data. The companies are currently working on resolving that, but in terms of coverage, Raman believes that is one area in which Solutionstar excels.

He said they will be getting the listings through direct and indirect relationships it has with the MLS’s. “We believe when we launch next month, we will have 80 percent of listings for all sales across the country, and by that time, we’ll have more active listings than any other site,” he said. “It will be closer to 100 percent by summer.”

Raman said for Solutionstar, the home-buying platform will make money by streamlining a process that’s full of inefficiencies and passing some of the savings along to consumers. “What we are trying to do is put them all together, so there doesn’t have to be any wastage in the process, he said. “There’s a cost savings, so we’ll get there [to profitability].”

Still, even with incentives like warranties and discounts, customers will have to become comfortable making a big decision online. Rabois’ OpenDoor is also counting on a shift in consumer thinking, hoping that a discount on closing costs will help persuade people to sell their house over the Internet.

For either company, it could take a while for the concept to gain traction.

“With home-buying the biggest financial transaction of people’s lives, that type of functionality to get widespread adoption, would take some time,” said Chris Merwin, an analyst with Barclays, who tracks Zillow’s stock. “There would have to be lots of transparency to be comfortable with what they are getting.”

Still, Merwin recognizes the power of closing the home-buying transaction online. “If they become the de facto place where consumers ultimately go to purchase the home, it’s going to be valuable to online real estate portals in the future,” he said. “This is the final frontier of e-commerce.”

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