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Is “Find an Agent” the Next Big Opportunity for the Real Estate Industry?

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In 1981 Al Ries and Jack Trout published Positioning: The Battle for Your Mind. The marketing book became an instant classic. The authors were the first to suggest that consumers have room for just one “leader” in their minds for any given product or service.

  • Safe cars? Volvo.
  • Ketchup? Heinz.

And more recently:

  • Search? Google.
  • Electric cars? Tesla.

Ries and Trout further suggested that mindshare leaders tend to dominate their markets for as long as their products and services remain relevant. It follows then that the priority for any new business should be to establish mindshare leadership for their product or service and then rake in the profits once they have established their dominant position.

Who Owns “Find a Home”?
Zillow appears to understand the market-dominating power of positioning better than many in the real estate industry. They have spent the last 10 years – and $128 million – working hard to own the position of “find a home” in the minds of buyers and sellers.

They have been quite successful. By my math, the data presented in a 2014 Inman News article[1] gives the combined networks of Zillow and Trulia an 89% share of the total market for online real estate searches. Zillow is clearly focused on consolidating their leadership position with a substantial marketing campaign focused on positioning themselves as the best place to “Find your way home.”[2]

Interestingly, Zillow wasn’t the first real estate industry player to market themselves as the best place to find a home online. In fact, Zillow.com didn’t arrive until November, 2004[3], almost eight years after realtor.com first offered to help consumers “Find a Home” online in December, 1996[4].

Is “Find an Agent” the Next Big Thing?
Assuming the battle for “find a home” mindshare is largely over (and I understand that not everyone in the industry believes that to be the case), what’s next for the real estate industry? I submit that the next positioning battle for the minds of home buyers, sellers and real estate agents is “find an agent.” Ask 100 millennials where they would go to find a home to buy and most will probably name Zillow. Ask those same 100 millennials where they would go to find a real estate agent and most of them will likely give you a blank look. In other words, “find an agent” is a mindshare position that is currently up for grabs.

How Much is “Find an Agent” Worth?
Not only is “find an agent” up for grabs, it could be a significantly more valuable position to own than “find a home.” Consider these numbers: 2014 generated roughly $55 billion in real estate commissions. Given that agents will typically pay a 15-30% share of their gross commission for referrals[5], the total market size for “find an agent” could be as much as $8–16 billion.

To put that $8-16 billion into perspective, Zillow generated revenue of $326 million in 2014 monetizing “find a home.” Zillow, or any other player in the real estate industry for that matter, could match that $326 million in “find a home” revenue by capturing just 4% of the “find an agent” market assuming a very competitive[6] 15% referral fee.

Could “Find an Agent” Help Agents Get a Better Return on their Marketing Investment?
Based on my own anecdotal research for Zellba, a prototype marketplace my business partner and I developed for connecting home sellers to listing agents, many agents consider a 15% referral fee a better use of their marketing dollars than portal display ads. Or any other form of online/offline marketing for that matter. The key reason is that referral fees are an after-the-fact cost of revenue for agents – with a guaranteed return on investment. Agents only pay for a referral lead if and when it closes and they collect their commission. By contrast, traditional advertising, online or offline, is an upfront marketing expense for agents with no guaranteed return on investment.

Will the Rise of the “On-Demand Economy” Drive “Find an Agent”?
There is a generalization of this reallocation of marketing dollars that will accelerate the emergence of “find an agent.” That generalization is the rise of the “on-demand economy”[7] where local service providers spend less time and money generating awareness and demand, and more time competing for customers who are actively shopping for their services. The on-demand economy is here to stay and online leaders from Amazon to Google are racing to own a piece of the pie[8].

While the on-demand economy started in the home services industry, I don’t think it will be long before consumers expect real estate agents to compete for their business too. This will further fuel demand for “find an agent” services.

How Might “Find an Agent” Work for Buyers and Sellers?
“Find an agent” assumes that agents are actively or passively competing for buyers and sellers. Obviously, the basis for competition will be more sophisticated for real estate agents – who manage complex transactions with significant financial consequences for their clients – compared to say plumbers fixing dripping faucets.

I imagine consumers will want to compare agents across a combination of factors including:

  • Experience: “How many homes like mine, in my price range and my neighborhood, has this agent sold?”
  • Services: “Does this agent provide all the services I need or want? And any I don’t?”
  • Client Reviews: “What do other people think about this agent?”
  • Personality: “What do I think about this agent? Do I personally like and trust them?” and
  • Cost: “How does this agent’s commission compare to other agents that meet my criteria?”

Could Agent Reviews and Videos Level the Playing Field?
While experience, service and cost are important objective factors, I believe that subjective factors like agent reviews and agent personality have the greatest potential to level the playing field in this mix. Amazon and Yelp have conditioned us all to use customer reviews to drive our consideration and selection process for many of the products and services we consume today. It doesn’t take much imagination to predict that reviews will play a major role in agent consideration and selection going forward, particularly for millennials.

The good news for agents on the personality front is that different buyers and sellers will click with the personality and communication styles of different agents. Agent videos that allow buyers and sellers to see and hear agents before committing to an in-person meeting will be a key component of successful “find an agent” services.

Does Zillow Have the First Mover Advantage?
Is anyone moving fast to own “find an agent” in the minds of home buyers, sellers and agents? It looks like Zillow might be. Witness, for example, the recent relaunch of their agent matching service[9] with a significant emphasis on experience and client reviews. I suspect they’ve been thinking about the “find an agent” opportunity for quite a while because they’ve been collecting and publishing agent reviews since 2010[10]. While their early iteration of “find an agent” has a long way to go, it’s clearly a step in the right direction.

Let’s also remember and learn from two earlier industry attempts to help buyers and sellers find agents online: Redfin’s Scouting Reports[11] (2011) and realtor.com’s AgentMatch[12] (2013), both of which suffered a quick and painful demise in the face of significant agent backlash. I believe a more inclusive basis for matching that gives many more agents a seat at the table – including agent reviews and videos as I outlined above, for example – might have saved these early forays. Ranking agents based on performance data alone is not what “find an agent” is about. Like finding a partner for life, “find an agent” is a much more nuanced matching of objective and subjective factors where different agents will appeal to different buyers and sellers. It’s a delicate blend of Yelp and eHarmony.

I Believe the Field is Still Wide Open
While Zillow has a made the first major move amongst the incumbents, or at least the first that appears to be sticking, industry startups like AgentAce, HomeLight and UpNest have all recently landed multi-million dollar investments to launch dedicated “find an agent” services, and I believe the $8-16 billion opportunity is still very much up for grabs. Will Zillow capitalize on their early lead? Will Redfin or realtor.com try again? Will one of the aforementioned startups, or one we have yet to hear about, beat the rest of the field with singular focus and superior execution? Or will one of the other industry players step up to the plate and make their own run at owning this multi-billion dollar opportunity? Only time will tell. However it plays out, it’ll be fun to watch.

  1. http://www.inman.com/2014/07/29/comscore-data-show-potential-for-combined-zillow-trulia-to-dominate/
  2. https://www.youtube.com/watch?v=WZk__l8yCHo
  3. http://web.archive.org/web/20041121055020/http://www.zillow.com/
  4. http://web.archive.org/web/19961223194107/http://realtor.com/
  5. http://www.inman.com/2014/08/12/1-in-3-agents-and-brokers-would-pay-35-referral-fee-for-scrubbed-real-estate-leads/
  6. http://www.inman.com/2014/08/05/nations-biggest-brokerage-plans-websites-to-outflank-zillow-trulia-realtor-com/
  7. http://www.businessinsider.com/the-on-demand-economy-2014-7
  8. http://www.nytimes.com/2015/04/13/technology/amazon-google-and-more-are-drawn-to-home-services-market.html
  9. http://www.inman.com/2015/03/24/zillow-beefs-up-real-estate-agent-matching-tool/
  10. http://www.inman.com/2010/12/02/zillow-launches-agent-ratings/
  11. http://www.inman.com/2011/10/04/redfin-pulls-agent-scouting-reports/
  12. http://www.inman.com/2013/11/15/can-realtor-coms-bold-experiment-with-agentmatch-survive-agent-backlash/

About Malcolm Lewis

Internet entrepreneur. 18 years. 6 startups. 3 acquisitions. 1 $BB IPO. 2 TBDs. More at malcolmlewis.com.

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  • ““find an agent” is a mindshare position that is currently up for grabs.”
    Agree, but I’m not sure it’s something that will ever develop mindshare due to being an incredibly infrequent use case in most people’s lives. They only want to find an agent so that they can buy a house. They don’t really care about finding an agent otherwise.

    • Not sure frequency matters. Eg: I might only buy one “safe car” in my life – eg when I have young kids – but I’ll almost certainly include Volvo on my shortlist thanks to Volvo’s positioning.

      If I were Zillow or realtor.com or redfin or ??? I’d certainly want to be top of mind when buyers need a buyers agent and sellers need a listing agent.

      • Great post, Malcolm, and I agree. There’s a big value in being the “go to” for this topic. NAR has been trying with Find a Realtor, which covers that vast majority of productive agents in the country. It’s just hard to get things moving at a reasonable speed with association committee structure.

        Realtor.com and NAR have a strategic advantage in terms of data and roster. Zillow is out ahead in terms of software engineering right now. We’ll see how it plays out.

        • Thanks, Sam. I think the magic trifecta is data+reviews+videos. I believe (correct me if I’m wrong) the data is available to anyone who has access to MLS feeds. So that leaves agent reviews and videos. The winner in find-agent will be the folks who assemble a critical mass of agent reviews and video and combine it with sales data.

          I imagine buyers/sellers will use the sales data and agent ratings to shortlist 5-10 agents (eg I want a 4/5 star or better agent who has sold at least 5 homes in my neighborhood in my price range over the last 2 years) and then use the agent reviews and videos to decide which ones they like enough to meet in person.

          If I’m correct and data + reviews + video is the trifecta, and the data is available to all, then Zillow probably has the best head start because they have more reviews. And they are getting focused on agent videos too: http://www.inman.com/2014/11/03/zillow-testing-new-agent-video-ad-product/ and https://youtu.be/wSO7YLgC0d0

          • dave

            Visual storytelling is going to become even bigger in the RE industry. I have been working with my father who started selling RE 33 years ago. 13 of those 33 years he was the #1 agent. How did he accomplish that…referrals from past clients….his reputation and consistent marketing. He has built a brand for himself especially in the higher end (he sold the very first million dollar home in our market many years ago), so much that if he doesn’t run and add in a certain section of the local paper (yes the paper is still around) he gets phone calls as to why he didn’t advertise for that week. Things are evolving not just in RE but in a lot of industries. Uber has pretty much started another Renaissance so who’s to say that something like that won’t happen in the RE industry as well? Just in the last 3 years we have seen internet lead generation become a big player in every RE market. The internet is changing it so much that if another site or tool can make it easier for that seller/buyer then I think it will survive. I have a few things I am working on(which I think will be a big game changer as well in our industry or would like to think so)and one of them doesn’t even need a realtor….

          • Agree re visual. People are visual. They want to see and hear agents before they decide who to meet in person. Sales data can help them shortlist agents and then they will want to read reviews and watch videos to winnow that shortlist down to the folks they’re prepared to meet. My 2c 😉

      • Like I said..I certainly agree with you that there is an opportunity: http://geekestateblog.com/next-big-fight-reviews/

        I guess I’m still not sure the consumer mindset will lead to a market leader in this area. Is there any marketplace, in any vertical, that has massive mindshare around finding a trusted professional? Find a lawyer? Find an accountant? Find a X?

        • I hear you, but bear in mind we’re early in the cycle of finding service providers online. Yelp is becoming a mindshare leader for “find a restaurant,” Folks like Amazon are investing bug money in expanding from “Buy stuff online” to “Hire an x online.” I’m sure more specialized Find x brands are coming soon – primarily because it will make life easier for consumers and make money for the folks who own the brands. We’ll say. Let’s double back on this in 3-5 years 😉

          • Tyler Weinrich

            I’m surprised there aren’t more comments on this. If people aren’t commenting I know they are at least thinking about it, or should be.

            At any rate, I do agree with Drew that the infrequency with which people are presented with the problem of finding a quality agent in their lives takes a little bit of shine outta them boots.

            Also, if such a tool did solve the issue of finding a quality agent and that agent turned out to perform up to or beyond expectations, there is no need for the buyer/seller to use the tool again. They already have a quality, battle-tested agent in their pocket. Unlike with yelp and restaurants, I have no need to go test out a new agent in town when I know of a solid guy I used in the past.

            I also think part of the difficulty in pulling off something like this is any backlash when an agent doesn’t work out. If I use a tool that is supposed to connect me with a quality agent and the agent I work with performs terribly, the tool can’t escape part of the blame. It would seem that if that happened, my options would be (1) trust the suggestion of a friend who personally witnessed the experience/service/personality of an agent or (2) give it a second shot and trust some words on the internet published by the very agent trying to get me to hire them backed by reviews from strangers. Seems like a coin-toss to the average user.

            Despite everything just mentioned, I still like the idea. With the bar to get into real estate so low, something that would easily allow a consumer to quickly find a quality agent in the sea of so-so’s while also letting agents clearly display their value has some potential. This is one of those ideas that rolls around in my head every so often. I love that you guys keep bringing it up here and there. Good stuff and thanks for the post.

          • Tyler, That’s a thoughtful response with some great points. A few comments:

            1) You are correct that if a find-an-agent tool works well then it might not get used again by a buyer/seller – but there will always be new need-an-agent buyers/sellers to replace those who have found an agent they like. And don’t forget, even if you find an agent you like using a find-an-agent tool, you might move to another area that is not served by your trusted agent so you’re back in the market for an agent again.

            2) The tool I’m envisioning would only facilitate interviews with agents – not select the agent for the buyer/seller. So it would still be incumbent on the agent to close the buyer/seller in person to win their businesses, and the buyer/seller would be making a decision based on a face-to-face meeting. At that point, it’s hard to blame the tool that simply helped you shortlist 2-3 agents to interview in person. Think of a dating site/app. You wouldn’t blame the dating site of someone that looked great on the site turned out to be less of a match once you meet.

            3) Trust and reviews need to go hand in hand. I’ve done a lot of work around reviews and I am convinced that anonymous reviews help nobody. A useful find-an-agent tool should require reviews to be named/located imo. Ie Malcolm Lewis, Newport beach said… vs. Malcolm L., or worse, sellerdude99.

          • “I am convinced that anonymous reviews help nobody.”

            Same here. I am not personally interested in anonymous anything, from anyone. I don’t see the benefit. I really ONLY care what people I know/trust think about something. And even then, I really only care about what my closest friends think.

          • Tyler Weinrich

            You are probably not like the average user/consumer though. That is why review sites exist. People want confirmation that what they are looking to do (eat at a restaurant) or buy (a service or product) was done/bought and approved by others before they take action. Thoroughly researching decisions is contrary to the “on-demand economy” we live in. People want it now. If they are one click away from buying that next pair of shoes or booking a restaurant reservation, they’ll sacrifice solid, time-consuming research through peers for a quick “like” by 100 others or a 4.5 star rating or a few reviews by past users. You could argue if 100 anonymous people did or bought something and approved of it, then that outweighs or is at least on equal ground as the approval of a handful of your friends.

          • Indeed I’m not like the average person.

          • I think there are degrees of trust and I use them to a greater or lesser extent to drive my consideration/selection process accordingly. I use Yelp to shortlist restaurants in an area I am visiting that are probably better than most even though I don’t know or trust the reviewers. Ditto Amazon for product and TripAdvisor for hotels and attractions.

            Your “friend” comment is interesting. I built a prototype recommendation engine that used the notion of a “taste graph” (ie “people like me” – ie who share my taste in x where x could be books, movies, wines, restaurants, etc.) instead of the “social graph” (ie “people who like me”). The social graph is probably more useful for local service providers, but for products, places, etc., the taste graph approach can often be better.

          • Tyler Weinrich

            1) True if they move to another area not served by their agent they could use it again. The question is how big of a percentage of people would use it again? I honestly don’t know. That would involve a lot of user stories to figure out.

            2) I think we are envisioning the same thing although people still blame the dating site. You are thinking logically which not every user/customer would do. I have nothing to back this up but I’d bet $50 if you asked 100 girls about dating sites, they’d all have different opinions. Some would like dating site 1 but hate dating site 2 because of all the….quality of guys there shall we say. Others would swear by 2 but detest 1 because this one time they got hounded by a random guy for their number. The girls can choose to talk to whoever they want on the sites but based on their sample size, they made a decision to like or not like site 1/2. Logically, there are probably millions of guys on both sites, some good, some bad….and any where they go the same guys will be there. I don’t know if that is really any worry though as not every user reacts that way and if the tool actually worked and had good success stories, any negative feelings toward a bad agent “hook-up” could be negated. A minor worry in the grand scheme of things to be honest.

            3) I agree that reviews shouldn’t be anonymous but I if you ran an A/B test on a site selling a product and put anonymous reviews vs no reviews, the site with reviews would sell more. It’s a comfort thing. People want reassurance they aren’t getting duped or making a bad decision. Seeing a 4.5 star rating from 250 other people or 750 likes or a detailed review by J. Smith gives them that comfort and helps them overcome their own sales objection. Anonymous is just enough to get the sale sometimes. I don’t advocate anonymous or veiled reviews though as they don’t hold the same weight as one with full disclosure. I’m with you on that. No reason not to have the name/location information.

          • I know what goes on behind the scenes at all sites that have reviews and critical mass of traffic. They are all gamed. Hence, I trust pretty much none of them.

          • Re 1) Given that the average person buys or sells a home once every 6-7 years, I’m not sure repeat usage is the primary concern. The bigger opportunity is convincing the 11 million people who buy/sell a home each year (assuming 5.5 million home sales) to try the service.

            Re 3) Agreed. Named/located reviews beat anonymous reviews which beat in turn no reviews.

            Here’s a thought. Why have Zillow, Redfin and Realtor.com all launched find-an-agent services? Probably because they see significant opportunity there. Redfin and Realtor.com stumbled with their opening move, but they’ll be back with a more thoughtful second effort. Zillow has added reviews into the mix, which is helping their initial solution stick. They’ll all evolve as they learn how to walk a fine line between what consumers want and what agents will embrace.

            As I concluded my post, time will tell. It’ll be fun to watch.

          • I’m also surprised like you that it hasn’t generated more discussion. A link to the article here on Geek Estate Blog was posted on one of the most active RE groups on Facebook (https://www.facebook.com/groups/RaiseTheBar/) where it received fewer comments than posts like “Do you keep clients that are irritable & rude?”. Go figure 😉

          • Some may not have seen it yet since it was posted on a Friday.

  • Mike Price

    Malcom, first of all, thanks for such a well researched and structured post. Well done. For years I’ve been beating the content drum in this vertical. If I had time to search the Internet Wayback Machine for links to previous blog posts, I could find numerous posts that I, and many others, have written about RE pros establishing themselves as providers of media content, the most important of which is community content. It’s a proven fact that consumers are drawn to those that can do the best job of packaging their knowledge of what it’s like to live around a listing. It’s long tail, but it works. We’re i an agent, I would be doing a steady stream of “man on the street” videos where I ask a local, “Why do you love this neighborhood?”. Keep it less than 60 seconds. The barber, the baker and local candle stick maker. Keep it granular at a neighborhood level, not focused on an entire city or town or even sub-division.

    • Thanks, Mike. I agree that “check out the neighborhood” video content is another great way for agents to differentiate themselves by providing valuable info for buyers (especially out of town buyers) while also allowing prospects to see and hear the agent before meeting them in person.

      I won’t take one iota of credit for his meteoric rise, but several years ago I met an intellectual property attorney in Palo Alto, CA who was planning to switch careers and become a realtor. I advised him to create short videos of himself showcasing each of the Palo Alto neighborhoods (homes, schools, parks, shops, etc.) as a way to market himself in a unique and valuable way. He did so – https://www.youtube.com/watch?v=DcKmY8PQ830

      Those videos, plus a ton of hard work marketing himself aggressively to the local community, allowed him to quickly rise to be the best agent in the nation with $275 million in sales volume in 2011 – http://www.prnewswire.com/news-releases/realtor-ken-deleon-takes-top-sales-spot-in-the-us-159997695.html

  • Thanks Malcolm. Great article and you make many excellent points. I agree with you there are going to be tremendous opportunities in that space.

    Drew, you make a great point about not caring what anonymous people think. I agree with you that the strongest referrals are by people that I personally know and trust. There should be some amazing opportunities with what Malcolm mentioned and layering in social connections as well.

    I’m really excited at seeing new companies trying to innovate the real estate sector.

  • Odie

    Interesting article. I had two thoughts.

    1) I think that a buyer is usually interested in what an agent’s inventory is. Zillow and Trulia, because the sites offer the picture of the properties, this feature diminishes the buyer agent’s role (the internet user assumes this role). So how would such a “Find an agent site” would be helpful to a buyer agent?

    2) Regarding the listing agent, if the website property had these listing agents which have agent reviews, transaction history, etc., the listing agents would probably also want to have the ability to list properties on the site. This would in effect, be another version of “Zillow”, or “Trulia” or “Naked Apartments”. How different would it be from a “Find a House” site.

    What do you think?

  • Nathan Smith

    Hey guys we are working on an app called Realy where we are attempting to work on doing just this better than anyone. You can sign up for a free account at realy.co we would love if you tried it out and gave us some feed back on it.

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