SAN FRANCISCO — It’s not always an either-or proposition, but some of the most successful online real estate businesses tend to cater either to consumers, or to real estate agents and their brokers.

Executives of two popular Web sites — Trulia and HomeGain — debated which business model is best positioned to succeed in the world of Web 2.0 at the Real Estate Connect conference in San Francisco.

Provide consumers who are looking to buy or sell a home …

SAN FRANCISCO — It’s not always an either-or proposition, but some of the most successful online real estate businesses tend to cater either to consumers, or to real estate agents and their brokers.

Executives of two popular Web sites — Trulia and HomeGain — debated which business model is best positioned to succeed in the world of Web 2.0 at the Real Estate Connect conference in San Francisco.

Provide consumers who are looking to buy or sell a home with the information they want — listings and market data — in a free and user-friendly setting, and they will flock to your portal in droves, goes the consumer-centric school of thought.

But as is the case with any number of popular, free sites — YouTube comes to mind — the question then becomes how to turn all that traffic into revenue.

Concentrate on generating leads and traffic for real estate agents and brokers’ own Web sites by asking consumers to provide their contact information, on the other hand, and you have a clear-cut source of revenue. But how do you keep consumers coming when other sites are providing their services with no strings attached?

Real estate search site Trulia, which provides a wealth of listings and market data, might be seen as catering to consumers. But Trulia co-founder and Chief Operating Officer Sami Inkinen said the site is one of the biggest lead generators on the Internet for agents and brokers who syndicate their listings to the site.

Although Inkinen estimated that "90 percent of the value we’re giving" agents and brokers is provided at no charge, agents and brokers can also pay for local "spotlight" ads and upgrades like featured listings and performance stats on their listings. He compared Trulia to an airline that provides cheap flights from New York to San Francisco, but makes its money on upgrades.

Trulia is also taking advantage of the Web 2.0 phenomena, in which users not only consume content, but create it — through Trulia Voices, a service in which consumers invite real estate professionals to answer their questions about buying or selling their home.

Inkinen said that savvy consumers use Trulia Voices as part of the process of selecting an agent, researching answers provided by agents over several months to decide who is the most knowledgeable.

Although he could provide only anecdotal evidence that agents are using Trulia Voices to grow their business, Inkinen cited a conversation with one agent who’s been an active user. He said the agent told him the loyalty of clients she lands through the site is double that of clients that come to her through more traditional lead forms.

Louis Cammarosano, general manager of HomeGain, said his company is a marketing service for real estate agents that’s designed to connect consumers to real estate agent.

"We measure our success by how much money our agents make using our service," Cammarosano said, and has statistics to back it up.

In June, HomeGain recognized 17 agents the company said had earned more than $500,000 in gross commissions using the company’s AgentEvaluator marketing program. The company had previously recognized 359 agents who earned more than $125,000 in gross commissions.

"We have customers who tell us they’d be out of business if not for HomeGain — that they are getting 30 percent of their business from us," Cammarosano said. "I doubt if anybody says they are still in business because they answered a question on Trulia Voices." …CONTINUED

HomeGain’s strategy for attracting visitors to its Web site includes tools that help them compare Realtors, get home valuations and home prices, and search for listings. But it’s not a listing site — visitors searching for homes are directed to the Web sites of partnering agents or brokers, such as ZipRealty.

According to Hitwise, Trulia has been steadily gaining market share of visitors among real estate Web sites, cracking the Hitwise Top 10 in December and rising to fifth in June. HomeGain, by comparison, has been around for more than a decade, but is in danger of slipping out of the Hitwise Top 10, falling one position to ninth in June (see story).

"I’m fond of saying, a lot of these companies have a lot of content, but so does the public library, and it doesn’t make a profit," Cammarosano said of sites that grow by offering free content.

Sites that give content away don’t make a case to consumers that they need the services of a real estate agent to buy or sell their home, Cammarosano said.

"We prompt them to realize they are going to need a real estate agent," Cammarosano said of HomeGain. "We have content designed to connect consumers to real estate agents."

Inkinen said that while Trulia has yet to turn a profit, the company’s revenues are in the "eight figures" — meaning more than $10 million but less than $100 million a year — and growing 10 percent a month.

During a panel discussion Wednesday, Tom Tognoli, a founder and the chief operating officer of Intero Real Estate Services, said the company has cut spending on advertising from $3.2 million a year in 2004 to a projected $500,000 this year, using a strategy that includes syndicating listings to Trulia, Zillow and other sites.

Intero has also adopted blogging and social networking to create its own marketing channels, Tognoli said, allowing it to eliminate spending on not only print advertising but cut back drastically on online banner ads and enhanced listings (see story).

Panel moderator Brian Boero, a co-founder of 1000Watt Consulting, asked Inkinen if he was worried that if brokerages are able to create "killer destination" sites of their own, and prove capable of "nailing social media," they might have less need for sites like Trulia.

Inkinen said he was "not concerned at all" about such a possibility, and that Trulia provides brokers with free content, tools, widgets and consulting because "I want the brokers to succeed, and to build super-fantastic Web sites."

Consumers, he said, will always have a need for a "nonaffiliated service giving you a full spectrum of viewpoints," such as Trulia.

Boero posed a similar question to Cammarosano: If agents and brokerages get their acts together and are able to generate their own leads, why would they need HomeGain?

Cammarosano said HomeGain is like a co-op for agents — if they don’t want to manage millions of keywords and other marketing techniques, HomeGain "provides automatic traffic to your Web site so you don’t have to do that."

The problem with companies that use lead forms to generate business for real estate agents is that consumers often end up dissatisfied with the process, Inkinen said, and can’t be counted on as repeat customers. …CONTINUED

"The challenge of that model going forward, is the consumer experience with a lead form is pretty much non-existent," Inkinen said. "The consequence of that is if the experience is lethal, no customer will go back, so the acquisition cost of leads is very high."

Businesses that can’t attract visitors with content must buy traffic, Inkinen said.

"We pay practically nothing for acquiring consumers, apart from the cost of engineers and running the company," Inkinen said.

It’s a business model that can be "extremely profitable" for the biggest players, Inkinen said — but not for the 10th biggest company in the category, he warned.

Trulia’s strategy for staying on top is to be "the most customer-centric" and "innovation, innovation, innovation," Inkinen said.

"Running a business is not like baking a muffin, (where) you figure out the recipe, put the dough in the oven, and it’s done," he said.

"It’s always day one," Inkinen said, quoting founder Jeff Bezos. "The day you think you’re done, somebody comes and eats your muffin."

Cammarosano agreed that it’s not enough to just "put a lead form up," and said HomeGain has learned from Trulia and added features designed to attract consumers.

Boero wondered whether the business model of the future could be a hybrid of the consumer-centric, agent-centric approaches that Trulia and HomeGain could be said to represent.

"My take is we haven’t figured out the winning model," Boero said. Listings powerhouse Move — operator of, the official site of the National Association of Realtors — "leads by a lot of measures, but nobody has really blown away the category," he said.

"I still think the answer here is TruGain," Boero concluded — a remark that generated chuckles from the audience, but not Inkinen and Cammarosano.

"Sami and I have talked, not about a merger, but working together," Cammarosano had said earlier in the discussion. "The problem is, once (the consumer) has received so much free information, the real estate agent is out of the picture."


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