We did it!

After what can only be described as an eventful and interesting year and a half, our website has finally gone live.

In the end, we have decided to launch vertical by vertical, country by country. The goal is to offer a depth and degree of local knowledge that tends to be absent in some of our competitors. We understand that classifieds are extremely local. Not even national in many cases. Extremely local.

A user in Berlin could often care less about the housing market in Munich (unless the move is inter-regional).

Similarly, most home buyers in Barcelona could care less about the various neighborhoods in Madrid. That information does little to inform her search for a property in a few select neighborhoods in Barcelona, and even within Barcelona, if she’s only searching for properties in Gracia and the Eixample Esquerre, she could probably care less about the real estate market in Sants and Sarria (two other districts within Barcelona).

Our goal is to understand what motivates and concerns the user in each key region. Otherwise, it will be very difficult to provide a truly satisfying user experience. There’s a limit to how individualised you can make the search experience, but the goal is to make it feel extremely personalised, and the first step in the context of a real estate search engine is to make it feel extremely local.

So that’s why we have started with two real estate sites: one in Germany (www.nuroa.de) and one in Spain (www.nuroa.es). They’re password protected for a couple of weeks — we’re still correcting a few major bugs like the fact that the search engine confuses Barcelona city with Barcelona province — but we will give the password to anyone who wants it, and we wholeheartedly welcome your feedback. (Please send me an email to gary @ migoa.com, and I’ll get you the passwords.)

Our goal is to launch in the UK and France within the near future, but only to the extent that we can launch something that demonstrates an understanding of how the local markets work. And only to the extent that we can dedicate sufficient resources so that the websites don’t just become cut-and-paste versions in French and in English.

We are the only vertical search engine in the world to include what we are calling “intuitive search”, which essentially means that we integrate web 2.0 aspects (i.e., we integrate relevant real estate blogs, newspaper articles, videos, photos, etc.) into our search results without detracting too much from the central focus of the page — the real estate listings. So if you do a search for “piso Barcelona”, you will get the search results AND in another column you might see relevant articles from the APIs in Barcelona telling you why now is the time to buy, or a study from BBVA about the evolution of prices in Barcelona, plus pics that other users have taken in and of Barcelona, etc.

We think that intuitive search is the wave of the future. The “big” search engines are already experimenting in this area with Ask3D and Google’s universal search. We think that they understand the future of search pretty well, so we adapted some of their insights to our particular verticals.

And such an approach makes sense. We understand that finding the right apartment is often only the first of many steps in the property purchasing process. And it is only one of the many considerations that will determine if, when and how you will purchase your dream home. So our results page tries to figure out what these other relevant considerations might be and provides you the collective insight of other members of our real estate community.

Our refined search features are also pretty cool and are supplemented by the ability to search by tags. And it all works pretty dynamically. So you have many options to narrow down the millions of possible search results into the few really relevant results that meet your criteria. That’s the key comparative advantage of a “vertical” search engine relative to a “horizontal” one like Google — the results should be more precise and relevant with regard to the vertical in question.

Our “official” launches will take place during the month of October at various conferences. We will launch the German site at DemoGermany (the German/European equivalent of the successful US conference). And if all goes according to plan, we will launch the international site at the Future of Web Apps (FOWA) conference in London next week. We’re currently ironing out the details right now with Ryan, but it looks like they’ll give us a few minutes in front of the general audience to make a brief pitch. Both are cool events that will be attended by influential bloggers and press, so it makes sense for us to use them to launch.

And on top of that, both conferences should be cool.

I sincerely believe that the final product reflects the hard work and analyses that went into it. A lot of influential investors and people from the sector have already congratulated us on the interface. And our tech is probably among the best of the current vertical search players. That’s our goal, in any case.

One commentator on Juan Luis’s blog said that we took too long in development, which surprised me given that we took the same amount of time as the original vertical search engines in the US. Our goal wasn’t to put out a rushed and underdeveloped product, or a cut-and-paste version of what already exists in the US. Our goal was to put out something innovative with truly disruptive potential. I think that we have done it.

And as I have noted elsewhere on this blog, Google was the 12th search engine to launch.

The goal isn’t always to be first.

The goal is to be the best.

Particularly in the tech sector, the two concepts are often not synonomous.

Try out nuroa and let me know what you think.

Did you know that the English term “mortgage” originally meant “dead pledge” in French?

Real estate (or property, as the Brits say) almost meant “dead pool” for me. (”Dead pool” is the term that Michael Arrington of TechCrunch uses to characterise failed tech start-ups.) I ran my own real estate business for three years, so I fully appreciate the challenges that small real estate agencies face.

We started out as a franchisee of a well-known Catalan agency, but we soon found out that we were paying 2-3x more to advertise on a weekly basis than if we had called the newspaper and placed our own ads. The extra money was to subsidize the franchise’s expansion, but we never received anything of equal value in return.

We were too dumb at that point to realise that it was larceny.

We asked them why they didn’t improve their website to cut expenses, but they treated us like silly little kids and told that Spaniards don’t use the Internet to look for apartments. That we were being too American.

They were wrong: Most Spaniards initiate their real estate searches online. It’s not an American thing, it’s a common-sense thing.

And the franchisor’s website still sucks.

So we asked them to buy us out of our remaining franchise payments, and they agreed. And so we moved our staff to our independent office.

Things were going better for a while. We had more money to spend on marketing, and we used an approach that included 2 local newspapers and various online sites, including Loquo and Idealista.

We found that sites like Loquo and Idealista generated loads of new clients, but there were key differences in the types of calls that we received.

At first, Loquo was a phenomenon. We were getting at one point 100 calls a week, and maybe 20-30 of them were from Loquo. And best of all, it was free. But at some point, Loquo became too glutted with real estate ads without any effective search or filtering mechanism, and it stopped generating calls.

Other free sites claimed to have hundreds of thousands of monthly visitors, but they never once generated us any leads. They seem to rely on Google ads to make money without offering any real value to their users.

Idealista was also generally quite solid, but not so much as Loquo at first. And, it was a pay service, so that meant that we weren’t quite as enthusiastic about it.

We’d get a solid 15 calls per week from La Vanguardia, a local newspaper, but it was the most expensive single advertising outlet. My agents tended to favor the La Vanguardia clients, because Internet clients tended to be more demanding. They didn’t want any pitch. They don’t want to see 10 other apartments. Their bullshit-detector is on high alert. They just wanted to know if you had the advertised apartment, if it met their criteria and, if it didn’t, they didn’t want to leave their details.

Newspaper clients tend to be more willing to meet up. They are more trusting. They’re not going to do loads of searches on the Internet. They liked it if you did the work for them.

That was our experience, in any case.

And with this combination of marketing outlets, as they sang on the Jeffersons, we were moving on up.

But all of that came to an abrupt end in late 2005, when all of a sudden the market dried up. People were still looking for apartments, but banks weren’t giving out any money given all of the talk (IMF, the Economist, etc.) about a real estate bubble in Spain. They started to ask for double guarantees and to scrutinize mortgage applications more deeply.

But here’s the conundrum: The average Spaniard earns about €1500 a month from what I read in one of the free newspapers. (I say that as a disclaimer.). But the average price for an apartment in Barcelona was about €6000 per metre squared. Assuming that a small apartment in Barcelona is about 40 metres squared, that meant that the buyer would have to pay about €240.000. The Bank of Spain requires that the buyer should have about 20% of the purchase price as a down payment. So that’s €48.000 for a deposit, plus another €24.000 (10% of the purchase price) to cover expenses, meaning that a buyer of a mediocre, small apartment in Barcelona should have about €72.000 in cash to buy a flat — or the equivalent of about 4 years’ salary, assuming that no taxes are paid on the salary and that the buyer has no other expenses (maybe he’s been living at his parents’ home and has no car or social life?). And this means that the apartment should not be in any need of refurbishment and no designer furniture should be contemplated.

And of course, most buyers don’t dream of buying a 40 metres squared apartment. In Spain, they’d rather continue living at home with their folks. Or increasingly, they are moving outside of Barcelona.

For a while banks were offering creative solutions to fix this misalignment of realities, but the Bank of Spain soon got serious and become more vigilant in disallowing lax mortgages. The Spanish economy was at risk.

On top of all of this, a lot of real estate agents are badly trained, accustomed to being able to sell junk to eager buyers — most didn’t have the talent to actually convince someone that a mediocre apartment could be transformed into a dream home.

And, of course, you had all of the clever home owners and investors who refused to accept discounted prices / offers, sure as they were that the prices would continue to grow by an average of 17% per year.

A recipe for disaster, that I must admit, the Spanish government appears to have averted.

The US wasn’t so lucky, because they gave out “no-doc” subprime loans (i.e., you didn’t have to verify the borrower’s income, even though the borrower was a credit risk) and “ninja loans” (i.e., the borrower didn’t have to have income, a job or assets).

But the bottom-line is the same in both countries:

• The real estate market is struggling, meaning that it takes a very long time to sell a home;
• Many real estate agents have had to look for new professions, as commissions are harder to come by; and
• A lot of small agencies have closed, unable to weather the storm.

Real estate is a tough business.

And the key to the whole thing is marketing your portfolio of properties at the cheapest possible price to the widest possible audience. For a variety of reasons, the only options that used to be available in Spain were handmade Xeroed fliers that were placed on cars and expensive but generic ads in local newspapers. And then there are free sites like Loquo, which are cool as long as they don’t become so big and glutted that they lose all value. Or pay sites like Idealista and Fotocasa, which are great values relative to newspapers but not necessarily relative to sites like Loquo (at least from the agency’s point of view).

We are hoping to disrupt those approaches by giving talented real estate agents with a little bit of vision a new opportunity.

For most small agencies, even €300 a month on one portal or on one source that is generating mediocre lists of leads is too much. That’s why our service is free.

We understand that our property search engine will succeed only if we are able to generate real and meaningful leads for real estate agencies and sellers in general, so that we can all avoid the dead pool.

It’s that simple.

Reuters is running an interesting story today noting that Yahoo has beat Google in a major US user-satisfaction survey. The University of Michigan American Consumer Satisfaction Index (ACSI) showed that Google is on the decline, while ASK has shown the most improvement and Yahoo is no. 1:

• Ask.com’s search engine has risen most significantly in customer satisfaction ratings, up 5.6% to 75 points. ASK’s improvement is the result of a phenomenal redesign and refocusing on its search technology, plus an ambitious $100.000.000 marketing campaign.
• Yahoo rose 3.9% to 79 out of 100 points. It’s improvement is due to a relaunching of the main site and the increasing popularity of various features and services.
• Google fell by 3.7% to 78 points. It’s decline is due to the perception that the Company has not really improved or altered its search technology and interface in years. The summary is that Google needs to find a better way to market its new features and services, because the Company is being overshadowed by the dominance of its main search engine, which doesn’t look like it has changed much. And web users want to see marked improvements in a product from year to year to increase in their user satisfaction.
• AOL dropped more than 9% to 67 points, despite its recent strategic shift from an Internet access service to an ad-supported e-mail and entertainment source. AOL’s customer satisfaction score was only slightly higher than the IRS (the US tax authorities). That’s not a good sign.