This article was originally published on Inman News:
Clichés are commonplace in real estate. The simple, repetitive statements are supposed to make complex topics succinct. But more often, they create trite answers instead of strategic thought.
“A real estate portal is just another advertising platform.”
“They’re selling our leads back to us.”
“Portals are no different than newspapers.”
“My listings, my leads.”
There’s a reason why so much animosity toward the portal sphere exists. Lots of money is involved, and very few participants are speaking thoughtfully about how that value is distributed. When we avoid the shallow surface, though, there are ideas for the new arena that might be better for the industry.
Here’s one: MLSs (multiple listing services) and brokers should be paid by portals for listing feeds. Portals would continue reaping significant profits. Sellers’ homes would still be exposed to buyers. Brokers and MLSs would offset the costs of creating the content.
Before defending this blasphemy, let’s dispose of a couple of clichés that muddy the waters:
“A portal is just another advertising platform — like a magazine or a newspaper.”
Would people stop reading newspapers if the advertisements went away? Would magazines lose significant readership if the ads disappeared? Would TV viewers change the channel if a network stopped showing commercials? Original content is traditional media platforms’ value to the consumer. The ads, on the other hand, are just a necessary evil.
Real estate portals are very different. Much of what drives their viewership is the advertising itself. The listing advertisements are content. Portals create a wealth of analysis and statistical window dressing around properties. That content is valuable, but its true real estate buyer and seller attraction becomes fragile without listing advertisements attached to it.
A real estate portal without homes for sale is just like a Macy’s with pretty product description pages taped to empty shelves. The store may be attractive, but the aisles are going to be empty.
Even while setting aside the costs of direct competition online that brokers experience, it’s clear that a portal is not just another advertising platform or partner. Portals should be approached differently.
“They’re selling my leads back to me. My listings, my leads.”
Listing agents represent sellers. Every opportunity to interact with a potential buyer is a lead. Leads belong to those who acquire them.
Listing agents can and should attempt to forge agreements with advertisers and create marketing plans that funnel those leads toward themselves. Listing agents deserve proper attribution but have no reason to believe they implicitly deserve buyer leads. Buyer leads created by portals can be yours — if you negotiate for them or pay for them. If you did neither but still advertised your listings on that portal, then the leads were never yours.
Should we create a new model for a new platform?
Why not pay the broker creators and the MLS distributors for the highly valuable advertising content that they provide to a portal?
This idea doesn’t have to incite hysterics. It doesn’t mean boycotting portals and reducing seller exposure. It doesn’t mean disregarding agents’ fiduciary or statutory duties.
It’s more like an exceptional football player negotiating a new contract with team owners. If the two sides come to an agreement on a value-for-value basis, the world goes on as it did before. The content-producing athlete makes more money because the value of the league and its owners’ values continue to rise. Everyone wants the athlete on the field, and while it may take time to hash out the right contract, the league’s owners will eventually come to terms with the athlete — unless the athlete finds more money for playing in a different arena.
Holding out for the value of a listing isn’t foreign to real estate. The NWMLS in the Seattle market seems to have taken the stance that portals should pay for syndication or a direct feed if they want to profit from its use.
This MLS has never directly fed listings outside of IDX (Internet data exchange). The big portals have significant gaps in their listing volumes in the Seattle market (up to 30 percent, according to some studies). Homebuyers visit portal sites, but they also heavily rely on broker IDX sites. Homes are still selling. In fact, they’re selling at a faster rate than they have in many years.
The rate of sales has more to do with the market inventory than the portals, but that’s the point. Real homebuyers will find listings, even if it requires the back-breaking task of seeking out any one of the 5,000 other broker or agent IDX sites on the Internet.
If buyers and sellers are already finding one another, the question of sending content to a portal then becomes more about real estate enthusiasts and window shoppers. Can brokers and MLSs monetize the traffic from these entertainment consumers who prefer the portal’s style? Is that financial benefit commensurate with the value being delivered? Is the negotiation taking place strategically with eyes wide open, or is it happening in a panicked rush to appease squeaky wheels?
Paying for listing feeds
Getting “paid” for a listing feed to a portal doesn’t necessarily require an exchange of money. A broker may decide that links directly back to its listing pages on its own site provide a traffic or leads benefit. An MLS might have custom rules about data protection and display that benefit their agents and brokers to the point that they feel they’ve received value in return.
Agreements could differ between portals. A more favorable MLS or portal agreement might originate with a partner who promotes the Realtor brand in a responsible way. A less favorable broker-portal agreement might be appropriate for a portal that doesn’t like to play nicely in your region’s sandbox. Alternatively, agreements might simply be dynamically priced, across-the-board monthly subscription fees based on the traffic produced for each portal.
There’s also room for middle ground. Many of us came from the extremes of this portal conversation years ago when the online real estate world was just beginning to form. Today, financial investments in real estate are overwhelming, and we’re getting cautiously comfortable with the new landscape of players.
As a great real estate coach once said, “Stop wasting time worrying about your competitors. Work smarter, find better partners and sell more. There’s enough money out there for everyone.”
Brokers and MLSs, it might be time to take that advice. Listing feeds have high value, and their creators should seek a return on that value, whether in the form of data protections, promotion of a shared brand, leads or money. Portals aren’t charities, and neither are brokers. Negotiate from the position of power that your content creates.