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Takeaways:
- The two portal-related scenarios that affect the individual broker or owner.
- The likely outcome for Zillow, Move and Upstream.
- The actions that brokers who want to attack their local market will have to take.
This will only be the last article you ever have to read about this topic if you take very specific strategic actions.
There are just two portal-related scenarios possible that affect you, the individual broker or brokerage owner:
1. If you personally do very little to offer what the marketplace demands, you will become “sharecroppers” of the portals.
2. If you attack your local marketplace, you can pay little attention to the portals — they are relegated to advertising mediums.
Zillow Group has announced its intent to purchase dotloop. The desire to control all — advertising related to creating real estate leads, including buyer sides, seller sides, loans, automated valuations, home searches and so on — has always been the company’s agenda.
And now its action to control every aspect of every transaction from lead to closing to the perpetual CRM of the buyers and sellers has occurred.
You already knew this would happen.
Move’s realtor.com has been working to dominate the space that Zillow holds.
Here, Move’s $7 billion owner, News Corp., will position itself as the underdog and friend of the brokers.
The goal of playing the role of friend of the broker while the Zillow distrust grows might boost their advertising revenues several percentage points — but it will not make realtor.com the market leader.
Realtor.com will continue to grow market share marginally through presenting data and links on News Corp.’s other advertising venues (The Wall Street Journal, Barron’s, New York Post, etc.).
It has gained realtor.com a few market-share percentage points already — but realtor.com will reach a plateau at about 15 percent of total market share using these tactics, mostly by capturing users from smaller websites, not Zillow.
Greater distribution of the same data the marketplace ignored before the News Corp. purchase can take realtor.com only so far.
The ideal scenario for rapid growth would be an announcement of a new strategic alliance with NAR, striking a deal offering exclusive tools to members of this trade organization, thus building on the friend-of-the-broker image.
But really, realtor.com can’t do this. Well, it can offer the tools, but NAR is already involved in taking market power from realtor.com via the Upstream-Broker Public Portal deal, so it’s not a fair-trade strategic alliance.
This is ugly for Move, as it is still trying to appease NAR, thus tying its own hands in competing with Zillow — all while NAR attempts to tie its legs.
As part of the friend-of-the-broker image, realtor.com will not offer an automated valuation model (AVM) to compete with Zillow’s own, and it will not offer any transaction management services or CRM platform. But not doing so harms its competitive position against Zillow.
Therefore, the Zillow-realtor.com battle will ensue for years to come.
The whole portal scenario will be perpetually full of pivotal moves, incentives to brokers, great costs to brokers and, eventually, servitude of brokers.
However, your life will be simple and stress-free by choosing the first option. You then just need to do whatever the portals tell you, get your assigned business and pay any percentage of your commissions demanded — be a sharecropper.
On the other hand, if you choose the second option, you’ll take great risks.
You’ll have to either innovate on your own or piece together your best options from outside companies and invest your own capital — with the rewards of your efforts coming down to either the marketplace loving or ignoring you. And it’s not a 50/50 gamble; it’s more like a 10/90 gamble.
Although most brokers will say they choose option two, they really won’t take on the cumbersome and scary burden involved to implement it. Instead, they will slowly default to option one — pretty much unwittingly.
The effort of innovation and truly standing out creates tremendous pressure. Unfairly, the difference between a genius and an idiot is often not proven by one’s intelligence. In business, it’s established by how the marketplace responds to your offering.
Two people can generate great ideas and work seven days a week for years to create what they believe is the best solution to the market’s problems. They can invest their life savings to bring it to life.
It’s not the effort or elegance in the design that makes one a success and the other a failure; it’s whether the marketplace loves, adopts and tells its friends all about your offering.
The marketplace is selfish and will gravitate only to those products or services offering the greatest benefits to them.
That’s too large of a risk for most people.
Knowing that the vast majority of brokers will unknowingly elect option one, here are the gut-wrenching actions the few brave brokers choosing option two must undertake:
- Walk away from the broker hierarchy, however you perceive it, and how systems have always been, and honestly focus on what your marketplace truly desires. Do this by watching the actions in the market, not according to what any survey or study says. Think about your industry and how your market does.
- Invest in the Internet-based infrastructure that offers what your local market niche most desires.
- Differentiate your offering by relating only to one particular market segment. You can always choose multiple segments, but make your offering speak to each segment as no one else does. The Internet probably has 2 million real estate websites, and they are mostly generic and boring. Connect only to your niche the way no one else does and offend everyone else.
- Build out your back-end support systems based on your front-end offerings. Implement only what you know you will use. Don’t overwhelm yourself.
- Blast your niche with your unique offering and, eventually, dominate it. Do what no one else does or can do. Become a monopoly to your niche.
Changing how you perceive the real estate industry is difficult. Investing years of effort and money is terrifying. But being a 70-year-old sharecropper out in the sun and dirt 12 hours a day destroys your soul.
Creed Smith is living the creation and implementation of innovation via QValue.net and DemonOfMarketing.com.