Can the Industry Combat the Portals Long Term? And If So, How?
Every week or two, on Facebook, Twitter or a blog comment, I see someone in the industry say something to the tune of…
- The portals take our data, then sell leads back to us with the traffic they generate from it.
- The portals were built on our backs.
- Consumers go the portals and I am forced to answer their questions about incorrect and outdated information.
Frankly, I’m a bit tired of hearing the arguments. So, I put up topic for a session at RE BarCamp NY, “how to combat the portals”, to discuss the topic in more depth. And I managed to rope Greg at DoorSteps into helping me moderate, given he has a bit of experience from both sides of the discussion.
The portals are here to stay, and the demand side of any marketplace is the insanely hard part of any equation. The portals have the buyers (who pay everyone else’s bills), so the sellers show up. Until the industry (agent, broker, franchise, MLS) CHANGE the game, and attract a massive number of buyers — they will be forced to play ball with the Zillow’s of the world.
What came out in the session?
I was expecting a hostile crowd. But, actually, most agents seem to be quite happy with paying the Zillow’s of the world for leads. They convert at a high percentage, and the ROI makes sense. Do the leads cost you more than you generate in commissions from them? If yes, buy. If not, don’t buy.
If you don’t know the answer to the ROI, start tracking the sources of those that close religiously so that you do.
There were multiple Zillow Premiere Agent’s in the audience, and not one of them questioned the value they are getting for their money. (I did meet one person in the hallways who said Trulia outperforms Zillow in his area). They realize, their business is selling real estate; not doing internet marketing.
At the end of the day, this discussion is about cost of lead acquisition. Leads cost money, regardless of whether they are driven from internal or external efforts. If there is a way to decrease the cost of those leads by reaching buyers directly, brokers, franchises, and MLS’s in the industry will try it. It’s of course true, that any company is better off strategically if they aren’t reliant on one or two major partners; it’s always better to have a direct relationship with their customers/clients. Realty Alliance is trying to figure this out. See Greg’s post with the grand plan here, or Rob’s thoughts here. They won’t be the last to take a stab at it.
Will the industry take an Orbitz approach (6 largest airlines teaming together to take on Expedia, Travelocity, etc), with the largest franchises/brokers teaming together to build a new portal? If they do take that approach, here is the dream team to hire.
What should the industry do to weaken the strategic position the portals currently hold? What can they do?
Mike McGee
Posted at 15:46h, 25 JanuaryHere’s what I could see happening: Either from their own concerns about data accuracy, or in response to their member’s objections to automatic syndication, MLS’s start canceling their agreements with ListHub, et. al. This leaves it up to the individual agent whether or not to post their listings on various portals. At least half of agents don’t do this, some because they’re lazy, others because they lack the tech savviness, still more because they have philosophical objections to doing so. In those markets, the portals end up having less inventory to show to buyers. Buyers become aware that the portals are missing half of the listings available on the market, so they turn to alternatives, that being the websites of local agents and brokers.
Drew Meyers
Posted at 16:43h, 25 Januarybut z/t have the buyers/home owners…how do agents/brokers combat sellers wondering why the hell their listing isn’t on the sites w/ the largest audience? if the answer is “because our industry is getting screwed, and we want to control the buyers” (which would be the true answer), good luck trying to win that argument w/ a seller. where the buyers come from is not their problem. they just want you to sell their house.
Mike McGee
Posted at 18:56h, 25 JanuaryIf they don’t have the listings, they won’t have the buyers for long. As for homeowners, many are surprisingly passive about the sale of their home. I’ve seen shockingly unprofessional listings out there, and I’m sure you have too. I’m talking poor photos or none at all, inaccurate info, etc. I’m always wondering, “Don’t these sellers look at their own listings?”
I am not one who would withhold my listings from Zillow, but many will. Of those who are cognizant of doing so, if asked by their seller, they would probably then add their listing. Many won’t ask.
Drew Meyers
Posted at 19:50h, 25 JanuaryI’m not convinced the industry can band together with a consistent strategy in order to change the leverage. I do think it’s only a matter of time before brokers/franchises band together to build an orbitz of real estate. Whether they have the tech chops, design skills, and $$ to make a serious run at it….is the real question. If the answer is no, they will build it, spend a crapload of money, and fail….left right back where they started (minus a few million bucks).
Mike McGee
Posted at 21:00h, 25 JanuaryI don’t think an “orbitz of real estate” will work. The real estate industry is too fragmented when compared to the airline industry. Way too many regional players.
I also don’t think it’s the case that the industry needs to participate in some sort of coordinated plan. Instead, with 1,000+ MLS boards across the country, we have “the grand MLS experiment” that Sam Debord wrote about on Iman. Different MLS’s trying different things. Some will hit on a strategy that works for its members, others will take notice and follow suit. Domino effect ensues.
Drew Meyers
Posted at 21:03h, 25 JanuaryI’m anxious to see what mls try over the next few years.