Real Estate sales are a large, highly fragmented market that evolved around control of data through the Multiple Listing Service. However, with its premise that information should be freely available online, the Web has jarred this system. Eric Enge discusses changes to lead generation strategies in the real estate industry.
About 6 weeks ago, I wrote a blog post titled 6$ of Web Sites are Real Estate Related. Since then, I have had a chance to look at some aspects of this market in more detail. In this article, I am going to show how slowly this market is maturing, and provide some data on the impact of lead conversion depending on whether or not a user had to register to get access to home listing information.
One of the things that makes this market so interesting is that there are so many agents and brokers, ranging from independents to small brokerage houses to large national firms – hundreds of thousands of them. They have a business model based on having an exclusive relationship with their customer, many of them work alone out of their house, and the great majority of these smart and entrepreneurial people are not technical experts.
Even those agents who work in small real estate brokerage houses are not set up much better to market their services through the Web. In general, the level of technical savvy is still not high in these firms. The Multiple Listing Service (MLS) system that has been in place for decades has provided real estate agents real time “online” information about available houses for decades.
Historically, the MLS system has been a major reason for enticing homebuyers to work with a real estate agent. The agent had lots the information, and you didn’t. In addition, it was a powerful strategic advantage for the real estate agent over the “for sale by owner” (FSBO) market. If you were a buyer, you could look at FSBO houses, but the number of choices available to you was comparatively tiny, and there really was no guarantee that you were saving any money if you went this route. Plus, no agent would ever show you an FSBO house.
There are also large traditional real estate firms like RE|MAX, Coldwell Banker, and Century 21. You can quickly see the problem though, when you type in a search for “real estate” at Google. Century 21 shows up at the number 7 slot, and RE|MAX is not even on the first page of results. Realtor.com takes the first two slots. If you try searches on leading terms like “buy a house,” “sell a house,” “home listings,” or “house listings,” RE|MAX and Century 21 don’t even show up.
But it should be no surprise that the large, highly fragmented market that evolved around control of information would be slow to adapt to the Web. And who can blame them? The MLS system was amazing for its time, and access to this system was a huge and fundamental advantage for the real estate industry. The idea that all that information should be freely available on the Web had to be a jarring notion, to say the least.
Let’s take a closer look at how this is evolving. There is a popular protocol for exchanging listings and getting access to MLS data known as Internet Data Exchange (IDX). The software packages out there that support the IDX protocol allows you to make decisions about whether or not you provide information without requiring a registration by a user, or only after a user has registered with your site.
The advantage of requiring registration is that now you would have the contact information of the person, and you could rapidly get in touch with them and improve your chances of acquiring a customer. But as you might predict, the Web has brought a new era of openness to the real estate business. Basically, you can get all the information you want by searching through the MLS listings on Realtor.com.
So, the big question becomes whether or not to push for a registration. If you look at the Century 21 site and the RE|MAX site, they clearly handle this a bit differently. To aid in answering this question, I got the assistance of Point2 Technologies, a national marketing and advertising platform exclusively for real estate professionals.
The folks at Point2 provided me with the chart below, showing how there is a shift in the effectiveness of requiring registration as a lead generation strategy. The chart is based on data from 100,000 Point2 Web sites over a 3-1/2 year period. The chart shows the decline of leads generated as a percentage of visitors to registration forms over time.
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Over the 3-1/2 year period, the success of the strategy of requiring registration has dropped by 80 percent. That is a huge shift. Of course, it is not at all surprising that fewer people would give up personal information in order to get home listing information. More and more people simply assume that the information they want will be available freely online, and more and more of them have the skill level to find it.
Yet, the changes remain slow in coming. Clearly, it’s a hard change, and is still being debated by real estate agents.