Public or Private Web Sites? Sold or Active Data?
Should the Multiple Listing Service be in the business of providing public websites? Who should provide real estate content on the Web for consumers? Should it be the broker, or should it be the REALTOR® association?
Are REALTOR® associations leveling the playing field for brokers to give smaller companies a “leg up” with their competition? Are non-dues revenue programs enabling associations to grow their ranks a disservice to the industry at large?
These questions were the focus of debate between a pair of real estate industry powerhouses at a recent Association Executive (AE) Institute meeting recently in San Diego, CA. Bob Hale, president and CEO of the Houston (TX) Assn. of REALTORS® sparred with Charles Melidosian, vice president, chief information officer, Baird and Warner, Chicago, IL. The AE Institute is comprised of members who run and operate local and state REALTOR® associations throughout the United States.
“The broker's primary role in this industry falls into a few categories,” said Melidosian. “First, it is providing consumer-facing services. A real estate broker is competing with other brokers and other peers. Brokers are into more than just selling real estate. Brokers want to compete fiercely in other areas besides real estate -- insurance, home services, and mortgages.
“This is where brokers are starting to recover their bottom line and stay in business,“ he said. Melidosian pointed to reduced commission dollars on listing agreements, and increased commission splits with agents as factors limiting broker profitability. The broker must often sell real estate himself to keep the company running, he continued. If he chooses not to compete with his agents, he must run it like a business, and then diversify, offering a full family of services.
“It is also the broker's job to the market real estate,” he said.
“The last point and people are afraid to say this, is: Keep the playing field as ‘unlevel’ as possible. This is America. This is capitalism, and people who are in business are in business to make money. I will do everything I can to prevent the competition from beating me at my own game,” declared Melidosian.
The Baird and Warner corporate website is the cornerstone of the company’s $6.6 billion business that accounts for some four percent of Chicago real estate market share, according to Melidosian. He pointed to recent statistics showing 82% of buyers use the Internet to buy their homes.
“What should the association be doing?” he asked. The primary role of a real estate trade association should be to stick to things like the Code of Ethics enforcement, education, and legislation. Some would rather be doing more "sexy" stuff, he said, like running their own public websites, having their own TV shows, producing their own commercials and owning billboards.
“Why is MY trade association using MY dues to level the playing field? My money is being used to give my competitors a "leg up" to have some of the same resources and tools and marketing efforts that I can provide to my REALTORS®,” he said.
“What's next? Should the association provide transaction management to its members?” he asked. In cases where associations are providing these services, the services lose their recruiting value because they no longer serve as a point of differentiation for a broker who offers it in his menu of agent services, said Melidosian.
Innovation and entrepreneurship are misplaced in association executive ranks and more aptly applied in the private sector, said the Baird and Warner exec. He challenged association executives to consider the likelihood of offering title insurance services and mortgages and the impact of competing directly with real estate brokers who offer those services.
Reselling bulk print advertising is another non-due revenue that associations can consider, he said. “Why not go out and buy 10 pages in your weekend newspaper at a volume rate and resell it so that the smaller players who pay a higher rate for that small print and can enjoy the same rate as the larger offices. You can probably make some money doing that. Google is doing that, buying print advertising and reselling it.”
“Reselling bulk print advertising is analogous to what associations are doing by advertising properties on the Internet and providing a level playing field for their members,” Melidosian said.
“Having a public website and driving the leads to the listing REALTOR® facilitates dual agency,” he said, adding that 65% of associations offered public websites in 2005. “The number is now below 50%, it is a positive trend that associations are going back to basics.”
Discount brokers look the same as the other brokers on MLS run public websites, he noted.
He cautioned MLS execs to carefully consider their responsibilities with active and sold property data: “We have evolved from an off-line business to online. Nothing has changed with respect to our responsibility. It was the broker's job before and it is the broker's job now, to display that active data to the consumer.” He said that the MLS does not have the responsibility to offer sold data to consumers.
Bob Hale, president and CEO of Houston Assn. of REALTORS®, is charged with operating www.HAR.com, the second most visited site in Houston, ranking 20th among the nation’s real estate portals in the number of unique visitors that it attracts, some 700,000 per month, according to HAR.
Public websites are critical he said because they promote REALTOR® value to consumers and they generate leads to brokers at no cost, by driving leads to agent and broker websites.
“We generate 5.8 million click-throughs to agent and broker websites. You can get those same click-throughs from Google or Yahoo! or others for $2 - 5 per click through. At HAR.com it does not cost a penny,” he said.
An independent consultant assigned the HAR website an asset value of approximately $29 million, said Hale.
“Who gets the most value from HAR.com? The big brokers. They have the most listings,” he continued. “Coldwell Banker is our largest member. It is the tenth largest real estate company in the country. Their listings have been viewed 14 million times and they have received 70,000 leads from HAR.com. Richard Smith likes this system and he is a very big broker.”
Hale said that at HAR no broker has ever opted out, and no listings have ever opted out. All listings include a map, up to 16 photos, virtual tours, you can view open house information, agents can request showing appointments, and consumers can view the listings in seven languages. There is no extra cost for all that information to be included. Broker and agent contact information include name, photo, websites, and telephone numbers.
The website also contains valuable information the consumer wants and it supports the value proposition of the REALTOR®, according to the HAR CEO. A consumer will learn that he will make 16% more on the sale of his property if he works with a REALTOR®.
Consumers can compare every school in the Houston area. They can see all the homes listed in each school district. They can research neighborhood price trends. “We drive consumers to REALTORS® to find out what a home is actually worth,” said Hale. “They can map every golf course in the greater Houston area and find and map every home for sale near every golf course.”
Advertising and promotion are the secrets to the web site’s success, he said. HAR uses billboards throughout the Houston area and the group promotes the site in Spanish, English, and Vietnamese. Billboard copy reads: “Is your home on HAR.com? 60,000 consumers are! Ask your REALTOR®”.
Hale ignited controversy last year when HAR decided to upload all of its listings to Google. The search engine now drives traffic back to HAR member brokers and agents.
Hale dismisses Melodosian’s assertions that MLS websites are competing with broker websites. He cites the following numbers:
“Brokers are not competing with MLS websites, they are competing with the search engines and franchises,” he said.
Hale pointed at December 2006 market statistics in three metropolitan areas:
In Dallas, REALTOR.com gets 14% of the web traffic, Yahoo! gets 6%, and RE/MAX gets 6%.
In Chicago, REALTOR.com tallies 15%, Yahoo! gets 11%; RE/MAX and Zillow each get an 8% share of web visitors.
In Houston, HAR attracts a huge 37% of the web market, REALTOR.com share is 7%, HomeGain has an 11% share, and RE/MAX gets 8%.
Hats off to both Bob Hale and Charles Melidosian for an informative and friendly Point/Counter-point discussion of the public MLS issue. For a collection of public MLS sites, visit www.PublicMLS.RealTown.com.
As Chair of the NAR Business Technology and Information Systems Forum, Saul Klein has organized a special program for the Forum’s upcoming NAR MidYear Meetings in D.C. at 3:00 PM to 5:00 PM on Thursday, May 17, 2007. The session will focus on the distribution and display of listing data. Along with Bob Hale, panelists will include top representatives from Point2Agent, Zillow, Google, and Trulia. This will be a Standing Room Only event, so be sure to attend.
(John Reilly is Vice President of Publishing for Real Estate Electronic Publishing Company, home of RealTown.)