Data Firm Sees the Light

In the new headquarters of CourthouseData in Fayetteville, they have seen the light, and it was not cheap.

At CourthouseData, lighting is a big deal. It’s been changed several times because of the amount of time employees in the tech department toil in front of a computer.

“We had to get special lights that really work,” said Allen Crouch, CourthouseData’s chief financial officer and chief operating officer. “We spent a lot of time trying to get the right lights in there.”

The third light fixture was a charm. By that time, the company had spent about $3,000 for all six fixtures.

For 12 hours a day, data-entry specialists at 12 stations key in an average of 6,000 real estate documents daily into a database system that now stores more than 5 million documents from 13 counties in Arkansas. The documents can be viewed online by subscribers at www.courthousedata.com. The firm services clients in 19 states including Arkansas, California, Florida and Texas.

If in the next five to seven years, CourthouseData could capitalize on several untapped markets and grow into other markets, its President Bart Patterson said, the firm could easily top $100 million in annual revenue. He won’t reveal recent revenue figures.

In three years of operation, InfoData Inc., doing business as CourthouseData, has grown exponentially.

“We are doing five times more revenue in 2003 than we did in 2002 and we are on track to do the same in 2004,” Patterson said.

He took a business model that worked in other larger real estate markets and decided to test it out in the 75 counties of Arkansas, offering real estate data retrieval services in all counties and building a database in major markets.

“If you can take the turnaround time on a property report from say two days to 20 minutes and you can charge half as much money for it, I mean, it is pretty compelling,” Patterson said.

Patterson solicited investors for about a year to fund the multimillion-dollar startup costs. His entrepreneurial dance card, however, was full before he even began CourthouseData.

From the Ground Up

After graduating from the University of Arizona, Patterson took a position with a startup global positioning system technology company, Pro Link Inc. of Phoenix. The company provided GPS applications for vehicle tracking, having the first GPS system ever developed for the golf industry.

Crouch, who’s also a certified public accountant, joined in a consulting capacity at first. He moved from California to Fayetteville to work for a biotechnology holding company PFRM Inc. Crouch then served as chief financial officer for the staffing division of StaffMark Inc., which was sold to Stephens Group Inc. for $190 million in 2000 during StaffMark Inc.’s transformation into Edgewater Technology Inc. of Wakefield, Mass.

“We basically started out intending to prove the model in Arkansas,” Patterson said. “Building out the major markets like Little Rock and Northwest Arkansas. As that proves to be successful, which at this point we have lot of confidence in, we have also identified a target market of an additional 360 counties across 10 states in the South that give us the kind of growth opportunities that we are really looking for.

“When you look at the market you look at the number of real estate transactions and people needing a report on a certain piece of property, you are talking about a tremendous volume of transactions and a tremendous need at this point.”

David George, president of Access Title Ltd. in Bentonville, has been subscribing to the CourthouseData service for about a year now.

George said the database saves the company time overall and acts as a research tool in the title insurance process.

“Generally, before a transaction has taken place, we do research through Courthouse’s database, and we turn up the necessary data to let us make a determination about a title to a particular property,” George said. “We are looking for all the documents that have been put of record that might affect that particular property, and we are also looking through matters of record that might have an affect on the property through the people that own it or are buying it.”

The company’s target markets for database construction are the “tier II and III” counties where the population averages 50,000 to 750,000 people.

The firm identified 15 counties in Arkansas that met the target market criteria and since 2001 has been actively completing the construction of real estate information databases in 13 of those counties.

“Our goal is to become the first company in Arkansas to enable businesses to search and retrieve real estate information and county records [mortgages, deeds, liens, plats, tax records, etc.] via the Internet, automating the current process of costly, manual information searches,” Crouch said.

“There were some guys I met in Phoenix who built the system for Chicago Title,” Patterson said. “What they explained to me was the opportunity was still out there where the market hadn’t been saturated by major players, and that was in the South.”

The secondary markets created a window of opportunity.

“The larger real estate companies are focused on tier I market places, leaving the opportunity in the tier II and III markets for companies like us to build out the databases.”

The Whole Enchilada

The number of clients using the information in addition to the variety of ways the information can be packaged and marketed, Crouch said, make CourthouseData an attractive service available to a broad base of users. Customers can simply subscribe to the database or request custom information retrieval.

CourthouseData developed its own trademarked original document management software called Abstractor to ensure speedy and accurate information entry.

“By using a database, you rule out the whole human error issue encountered in manual research processes,” Crouch said. “You start to build a process that’s using a database where, just in method each and every time, it produces a consistent quality product.”

The database has been the biggest challenge, Patterson said, as the data has to be compiled and applications have to be developed for the consumer to retrieve the data.

“To build it right and to get it in a position where we can actually generate the product that we are all talking about and thinking about …” Patterson said, “you have to compile data, and you have to develop applications to deliver the data. You have to do both.”

Both are quick to point out that the information offered on courthousedata.com is far different from the raw data being picked up at the county courthouse.

“You can get that raw piece of data, but you cannot get the rest of what we do, and that is in the data building process,” Crouch said.

Crouch said the trial is key to explaining the product.

“One of the challenges is stimulating that trial, getting them to try it that first time and get their arms around it,” Crouch said. “Once they’ve done that, it’s gotten a very good market acceptance.”

Crouch and Patterson both continue to see the market opportunities expanding even in the wake of the real estate refinance boom.

“When you look at the number of transactions that are out there from the last six months, it is really starting to cool from the refinance boom, but we haven’t seen that in this company,” Patterson said. “I mean, it’s a real feather in our cap to know that we’ve substantially outperformed the market.”

Crouch said they are not in a position where they are dependent on one big client, and that is exactly what they want. CourthouseData has customers who call once a year for a report on a particular piece of property or they have customers who call “150 times a month.”

“We don’t have a concentration of business with a single customer,” Crouch said. “That is a big deal to us.”