Case study for House Canary

Sean Pan
Sean Pan
Jul 20, 2017 · 5 min read

As a product manager, you will occasionally have to do market research on another business. This could be a competitors market analysis, or it could be for a potential business acquisition. Here is my case study for House Canary, a real estate analytics company. Enjoy!

House Canary

Core Value:

To help people make better real estate decisions.

Products:

· Mortgage Leads — Helps you get in contact with mortgage lenders

· Value Report — On demand access to the industry’s most accurate home valuations, forecasts and market analytics

· Pro membership — Lets you see their data. Get access to their forecasts based on millions of data points. Helps you build an understanding of the local market.

· Analytics API — Lets you use their data and api to do any of the other features on your own website.

· Appraiser — Automatically generate reports required by lenders, buyers, and government agencies. Capture evidence and analysis at the property. Lets you choose your own comps.

How they make Money:

· Mortgage Leads — They get a commission for each mortgage lead that successfully closes.

· Value Report — Different subscriptions

§ Basic 10 value reports for $54/mo

§ Plus 20 value reports for $90/mo

§ Premium 50 value reports 180/mo

§ No plan $9/value report

· Pro membership

o Regional unlimited access $1000/mo

o Nationwide unlimited access $4165/mo

· Api

o Pay as you go, you pay per call to the API. Pricing is on the website.

· Appraiser

o Basic 25 appraisals for $90/mo

o Plus 50 appraisals for $135/mo

o Premium 100 appraisals for $210/mo

Societal/Technical Trends around their product:

The company uses big data to create informative analysis and forecasts about the real estate market. Big data is a hot market right now and real estate investing has always been a big topic. The company is based in San Francisco where a lot of wealth is made through Real Estate.

Key Personas:

Individual Investor

· Small time investor who doesn’t know what market to get into. He pays for the valuation reports for some homes to get a feel of where he should invest. He’s trying to purchase a property out of state because his area is too expensive (numbers don’t work). He’s trying to figure out what markets to invest in and will probably stay away from the pricier things on the website.

Executive at an institutional real estate company/Large insurance agency

· He has millions of dollars that he needs to invest. He is ok with receiving a low cap rate and only invests in A class properties. The $1000/mo subscription to gain access to House Canary’s data is trivial and they will gladly pay for it. He uses their analytics to decide where to purchase their next lot and makes plans to develop new apartment complexes on top of them. He wants to make sure that he’s purchasing an area that is growing and has a great tenant base (stays away from the ghettos and rough neighborhoods)

Decision maker (senior manager) at a company whose website revolves around real estate (i.e. someone at Bigger pockets)

· He doesn’t have a huge budget like the other executive, but has enough that he will be willing to pay much more than the individual investor. He is most interested in their API feature, where he can act as a middleman and charge his clients a premium for the data. He makes money off the spread.

· Since his company is based on real estate, he can use the information and analytics from House Canary to write blog posts and articles about where he thinks the property values will increase. If the data is accurate and the forecasts are correct, he will be more credible and more people will go to the website.

Key use Cases:

· See what the ‘true’ value of the property is. Gives you an educated guess on how much you should purchase the property for to generate a profit.

· Lets you see the forecast of the neighborhood. Are prices trending upwards? Will your investment increase or decrease over time?

· Allows you to find a lender and get a mortgage faster than usual. Let’s you appraise a property through technology vs a traditional but slow way.

· Lets you use their raw data that you can run through your own proprietary algorithm.

· Allows you to share the data and host it on your own website through their analytics API

Key Success metrics:

· Growth

o How many accounts do they have?

o How many people have subscribed to their PRO accounts?

o How many people have subscribed to their value report accounts?

· Engagement

o Are people using their data?

o Are people making calls through their API?

o How long are people spending on their site and reading their analytics and forecasts?

· Revenue

o Number of subscriptions times the number of dollars per subscription

o The number of API calls times the average number for the price of an API call

o The number of commissions they make for a mortgage (avg commission times number of closed deals)

o How does the revenue trend over time?

Competitive Landscape:

Costar — data and analytics for commercial real estate. Their subscriptions are incredibly expensive, but their data and reports are very good. Extremely well known real estate analytics company. They own Loopnet.com and apartments.com and use the data from those websites to create better forecasts for their subscribers.

Corelogic — Connects information between different groups. Provides analytics to predict performance, identify opportunity, gauge trends and detect risk. Provides algorithm-driven automated valuation models. No API feature like House Canary. Website looks dated.

SmartZip — Also creates predictive marketing solutions. They target Real estate professionals (REALTORS etc..) and provides CRM (customer relation management) software as well. They are here to help agents land more listings by identifying and targeting homeowners most likely to sell in any neighborhood across the US.

Zillow/Trulia/Redfin — These websites give free information and are accurate up to ~%15. Most people take their Zestimates with a grain of salt, just to get an idea of what the property is worth. They have free tools that tell you how a neighborhood is doing and what the houses in the area are worth. They make money from selling advertising space to Realtors who want their contact information on the site.

Whew, that was a long post. But it goes to show that a case study takes a lot of work! You want to be as thorough as possible so that you understand the business in it’s entirety. Feel free to contact me if you have any questions on the process.

Looking forward to the future, the possibilities are endless.

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Sean Pan

Written by

Sean Pan

Sean is a real estate investor in the Silicon Valley, Bay Area. He is the host of the Everything Real Estate Investing Show. See more at EverythingREI.com

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