Canada: Online real estate innovator Zoocasa set to close its doors

Zoocasa, a huge online referral platform and discount brokerage in Canada, is going out of business later this month.

Canadian telecommunications giant Rogers Communications Inc. launched the Toronto-based firm in 2008 as a real estate portal, but Zoocasa radically revamped its model in May 2013 when it became a licensed brokerage.

The decision to transition the company from portal to brokerage was fueled by a desire to get up-to-date listings from Canada’s MLSs, Rogers spokeswoman Allison Fitton told Inman. With approximately 153,000 active listings on the site currently, Zoocasa displayed all of the MLS-listed homes in Canada.

But the innovative real estate portal-brokerage hybrid — which would be known in the U.S. as a “paper brokerage” — apparently fell flat. Rogers is shuttering the operation on June 22.

“Rogers has made the decision to no longer continue our investment in Zoocasa, as the business is no longer a fit with our overall company plan and core areas of focus,” Fitton told Inman.

All of the approximately 200 agents currently in Zoocasa’s referral network hang their licenses at other firms, according to Fitton.

Zoocasa made money from site advertising and by charging agents a referral fee of 35 percent for deals it brought them. The company refunded approximately 43 percent of the referral fee it collected from agents to its buyers and sellers.

Because Zoocasa displays listings as a brokerage with no in-house agents, it would qualify as a paper brokerage in the U.S. Although the paper brokerage runs afoul of National Association of Realtors MLS policy, NAR’s counterpart to the north, the Canadian Real Estate Association, hasn’t placed similar restrictions on the model.

CREA was not involved in Rogers’ decision to shutter Zoocasa, CREA spokesman Pierre Leduc told Inman.

Neither was the Real Estate Council of Ontario, the real estate administrative authority responsible for granting brokerage licenses in Zoocasa’s home province, according to RECO spokeswoman Kristina Wilson.

A number of U.S. firms, including San Mateo, California-based brokerage Movoto and the new brokerage Xome, are piloting bold new brokerage models that seem to meet the real estate industry’s definition of paper brokerage.

Zoocasa’s fate raises the question of whether the model would ultimately survive in the U.S., even without the current roadblocks.