Posted by: realestatewebtrainer | May 19, 2011

Has the Internet helped Real Estate? Part 1

One Blog Post will not do justice to this topic; and it is an important one; think about this question: “Has the Internet been good for the Real Estate Industry?

This is the most important question a Broker or Real Estate Professional must confront before embarking on her professional journey; there used be a stability factor to Real Estate that went on for 60+ years. One could enter this profession and make a living in a thoughtful way by just helping their neighbors, but the neighbors are making new friends and they are on the Internet. (I don’t blame our Neighbors I blame us for being asleep at the switch!)

Can we have an honest dialog about the Internet and its current place in Real Estate? Many are re-hashing the past and are forgetting that the present is steaming at them like a freight train.

Do keep in mind that I love the internet and Real Estate, and my trainings are focused on returning it within the embrace of those who depend on it… But with that comes responsibility and truth; we must choose to see things as they are – Not as we wish them to be,

So here it goes:

The battle for Real Estate Buyers has been lost to the Internet – the next big battle is going to be for Sellers!

Top 10 Visited Real Estate Websites

Let me flesh this out a bit more:

Let’s Talk about the Lost Battle for Buyers:

1. What do I mean that the Battle has been lost to the Internet; simple: The highly placed organic aggregators are the Trulias, Zillows, Yahoos, and Cohorts – the highly placed Pay per Click benefactors are Search Engines such as Bing and Google.

2. Look at the chart above – the Top Ten Visited Real Estate Websites do NOT hold a Real Estate License anywhere and are NOT Franchises or Brokerages. If that chart does not cause you a true awakening I don’t know what will! (They are aggregators who feed on your freely provided data!)

3. The Age of the “HTML Internet” is gone – this is the Age of Massively Scalable Real Estate Databases Aggregators; and they don’t need a Real Estate License to build them – all they need is Syndication! (The term HTML Internet looks something like this – your cousin Vinnie learns how to write <HTML> Code at the local junior College and builds you a website for your Real Estate Business… Those days have been gone for a while! We love Cousin Vinnie but he can’t compete against Zillow!)

4. You must accept that it will cost you $800 to $1,500 to close a lead from the internet. You are paying that much and you don’t even know it. Internet Marketing Providers do not sell you “Closings” they sell you leads… Dig deep and realize that fact.

5. 50%+ of all Real Estate Internet Traffic is controlled by Non-Broker and Non-Franchise, Non-Real Estate Agents Hubs. (Look up the chart above and start adding!)

6. There is an illusion that this traffic is translating into Sales for Real Estate Agents – No! It is translating into Marketing Dollars for Aggregators and they make money whether you Sell Real Estate or Not.

7. These costs to the Real Estate Industry are translating is less jobs in support staff at brokerages. I estimate that during the 90s the Real Estate Industry used to employ nearly a million people as Administrators, Managers, and Clerks to run offices – maybe more. We would be lucky if 100 thousands do so now on a full time basis. In fact Virtual Assistants from all over the world that you can pay $2 to $5 an hour have exploded, which has meant that an Administrator for a Real Estate Office can never see a salary of $50,000 a year; Those days are gone… Most Qualified Administrator are being started at $8 to $10 per hour and used part time. (You Tell me how Technology is helping create jobs that are broad…???)

8. Brokerages and Franchises must truly understand this phenomenon; it goes something like this: If Real Estate Agents are getting their Leads directly from the Aggregators, say Zillow or Homegain, what is then the point to work for any Franchise and pay a split – might as well go work for 100% company and take that difference in the split and pay the large aggregators the Marketing Dollars to get the Leads.

9. The Internet will Fragment The Franchise Model simply because the Aggregators have become much bigger players than the Brands. Your Agents are working for the Gods of the Internet and they are waking up to that fact!

10. This last one is a vestige of the past: Floor Duty – Agents, do you remember when you used to make money by being on the floor? What happened to that? it’s called – The Internet!

The Next Battle – Sellers:

I will make this one simple, I will share a scenario, and you tell me how the Real Estate Industry is preparing for this. I will have more to say on this topic in details in the next few weeks.

Imagine a Hub that is strong enough to attract millions of would-be buyers, creating the mechanism for Sellers to post directly to said buyers, for say a small fee of $79 per month. You must understand that Sellers are clamoring for this – whether it will help them sell the property and work through the paperwork and the layers of the transaction that is another problem altogether.

The Next Battle will be waged with the idea that Sellers don’t need Real Estate Professionals and can run the whole process themselves and Save Money.

Here is the Crux of the Pain: Real Estate Agents are paid based on performance (Actual Closings) – Marketing Aggregators are paid regardless of Performance.

PS: If you do find a flaw in my logic please point it out and then tell me how much Kool-Aid you have been drinking!

PPS: Real Estate Brokers and Agents can do something about this – Not through rules and legislations; I think they can do this through effective education, superb Customer Service, Focusing on Listings more than Buyers, True Understanding of the forces of Marketing and the Internet, and more focus on their localities than the pretense of Selling Real Estate Everywhere.

Happy Blogging 🙂 – Key Yessaad, Real Estate Internet Strategist

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Responses

  1. Looking forward to part 2

  2. Interesting. Most think the aggregators have just replaced the newspapers & homes magazines. Next step the franchisors? or do the franchises become aggregators?


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