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, or
2) If you attack your local marketplace you can pay little attention to the portals—they are relegated to advertising mediums.
Zillow has announced their purchase of DotLoop. Their desire to control all advertising related to creating real estate leads including buyer-sides, seller-sides, loans, automated valuations, home searches, etc. has always been their stated goals. And now their action to control every aspect of every sale from lead, to transaction, to closing, to the perpetual CRM of the buyers and sellers has occurred. You already knew this would happen.
Move’s CEO Ryan O’Hara, possessor of Realtor.com, is set to announce their plans to dominate the space that Zillow holds at the forthcoming Inman Connect San Francisco. Here the $7 Billion dollar owner, News Corp, will position itself as the underdog and friend of the brokers.
Their goal of playing the role of “friend of the broker”, while the Zillow distrust grows, may boost their advertising revenues several percentage points—but will not make them the market leader.
They’ll continue to marginally grow their market share through presenting realtor.com data and links on their other advertising venues (Wall Street Journal, Barron’s, New York Post, etc.). This has gained them a few percentage points already—but will reach a plateau at about 15% 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 them only so far.
The ideal scenario for rapid growth would be an announcement of a 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 they can’t. Well they 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 they are still trying to appease NAR, thus tying their own hands at competing with Zillow—all while NAR attempts to tie their legs.
As part of the friend-of-broker image, realtor.com will not offer an automated valuation model (AVM) to compete with Zillow’s own, and they will not offer any kind of transaction management services or CRM platform. But not doing so harms their competitive position against Zillow.
Therefore the Zillow/Realtor.com battle will ensue for years to come.
The whole portal scenario will perpetually be 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 option #1. 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 option #2 you’ll take great risks, 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 you or ignoring you. And it’s not a 50/50 gamble; it’s more like a 10/90 gamble.
While most brokers will say they choose option #2, they really won’t take on the heavy and scary burden involved to implement it. Instead they will slowly default to option #1—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, work seven days a week for years to create what they believe is the best solution to the market’s problems, and invest their life-savings to bring it to life. Yet it’s not the effort or elegance of the design that makes one a success and the other a failure: it’s whether the marketplace loves and adopts and tells their friends all about your offering. The marketplace is very selfish and gravitates only to those products or services offering the greatest benefits to them.
That’s too great of a risk for most people.
Understanding that the vast majority of brokers will unknowingly elect option #1, here are the gut-wrenching actions the few brave brokers choosing option #2 must undertake.
- Walk away from however you perceive the broker hierarchy and systems have always been, and honestly focus on what your marketplace truly desires. Do this by watching their actions not by what any survey or study says. Think and believe about your industry how your marked does.
- Invest in the internet-based infrastructure offering what your local market niche most desires.
- Differentiate your offering by relating only to a very specific 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 all generic and boring. Connect only to your niche the way no one else does and offend everyone else.
- Build out your backend support systems based on your frontend 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 seventy-year-old sharecropper out in the sun and dirt twelve hours a day destroys your soul.