Real estate industry professionals seem to be engaged in a war both within the industry as well as with the consumers they serve. At the core is one simple issue: failure to adequately articulate the value they provide.
Due to technology changes and the worst real estate market in our lifetimes, everyone has had to redefine their value proposition. Whether it’s boards of Realtors, multiple listing service providers, third-party syndicators, vendors or real estate agents, everyone is struggling to persuade the other people they deal with that what they provide is really worth it.
Will brokers be disintermediated?
At the Real Estate Connect conference in New York City last month, Brad Inman opened the conference noting the trend for middlemen to be disintermediated (forced out) when they fail to add sufficient value to the sales process.
Inman observed the same trend is occurring within the real estate industry: Agents are creating their own brands and have in some cases worked to disintermediate their brokers’ brands. An Inman News survey of agents found that about 61 percent of those earning over $100,000 per year planned to start their own brokerages.
Who owns the data?
At the Inman News Data Summit in July, there was a strident debate over who owns the listings data. While that debate was more focused on the conflict between MLSs and brokerages, the undercurrent in the room was that a number of brokerages were considering breaking away from their local MLS and simply publishing their listings on their own website.
The reason? They didn’t see the value in what their MLS was providing.
Third-party syndicators under attack
Last fall, Edina Real Estate made the bold move to remove all of its listings from Realtor.com, Trulia and Zillow. On Jan. 27, 2012, Jim Abbott, the broker and president of ARG Abbott Realty Group, explained why ARG listings will no longer be permitted on third-party syndicator sites such as Realtor.com, Trulia and Zillow.
The YouTube video Abbott posted boils down to one simple fact: Abbott said he cannot document that these sites are providing any measurable value to his brokerage in terms of creating more listings or sales. In fact, his claim is that the duplicate listings and other related syndication issues are actually costing his brokerage money rather than helping him.
Bill Lublin asked if the decision that Edina and Jim Abbott made was "raising the bar" in a Facebook group dedicated to that purpose. This hot-button issue generated more than 350 comments in just 72 hours.
HomeGain, Realtor.com, Trulia and Zillow all gained a foothold in the market for one simple reason: Consumer demand was there for a service that the brokers and agents were not providing.
Phil Libin, the CEO of Evernote, made an interesting observation during his presentation at the Real Estate Connect event. When he goes online to browse these major third-party sites, he has an outstanding user experience. The sites are easy to navigate and provide him with the information he needs.
When he goes to many agent or brokerage sites, he’s often asked to register, the user interface is awful, and because of this, it provides little value to him, he said.
Not only are some brokers angry with many of the MLS providers, some agents, too, are angry with their brokers, their MLS providers and the third-party syndicators.
As one agent put it:
"I pay my broker 30 percent of my commission. Even though I am a member of my board, I am charged fees to belong to the MLS and additional fees for an IDX (Internet Data Exchange) feed for my website. The MLS then sends my listing to Realtor.com at no charge and Realtor.com charges me for prime placement.
"Worse yet, my broker gives all the pictures and videos I took to Zillow and Trulia at no charge. These companies then charge me to have my name rather than some other agent who paid them a fee to be the featured broker next to my listing!"
Consumers don’t see the agent’s value
Sellers often don’t see the value in paying 6 percent commissions. In virtually every case, this results from the fact that the agent cannot articulate his or her own value or the value of his or her brand.
Show your value
As an individual agent, you can compete in a way that your brokerage and the big syndicator sites cannot. Here are two simple suggestions that will make what you offer extremely valuable to prospective clients.
1. Give consumers what they want
When consumers visit a real estate website, they are looking for three things: what is on the market; what their house is worth; and community information.
To meet this need, use an IDX feed from your local MLS that shows everything currently available for sale in your area. Track third-party syndication sites as well as for-sale-by-owner and foreclosure sites for additional properties that may not appear on the MLS.
2. Give them what they can’t get from a big brokerage or syndicator site
What the big-player sites cannot provide is what is great about the lifestyle in that area:
- where the best pizza joint is located;
- the best place to get your dog groomed; or
- who has the best tomatoes at the local farmers market.
It’s these lifestyle components that provide the value the consumer is seeking that no third-party, brokerage or MLS can provide in the detailed way that you can. Take advantage of it and watch your business grow.
Stop the infighting
We need to stop the infighting and look at how we can best serve our consumers at every level of the value chain. For those who fail to do so, disintermediation may be the result.