Wrap-up of recent posts: I'll post micro for awhile
Saturday, April 5, 2008 at 05:11PM I would like to make clear that my recent discussions which involve, tangentially, Zillow's mortgage marketplace is not a slam on what they're offering. It might be useful for mortgage players and I'm pretty sure it will be useful for consumers. The doubts I have are larger than a particular offering by Zillow, and it might be that zillow leverages all this to increase revenue for a while. My concerns are more specific to RE companies and RE agents in relation to web 2.0, if, indeed, web 2.0 is the highway the real estate market in general will be taking.
It's clear that buyers and sellers are utilizing the internet in ways they never did before. Are they using it as a mere tool that adds only a little value to the whole buying and selling process, or is it becoming THE WAY to do business. Redfin has bet it's THE WAY, but so far they haven't proven a successful strategy. There is a lot speculation right now. There have also been questions lately if web 2.0 is particularly useful for agents and companies -- many believe there is more hype than solid evidence. I've heard anecdotal evidence of internet networking success, and I have experienced success in my own business through my internet network, but I haven't seen anything convincing that it's a profitable strategy across the real estate board. Most of the agents and companies in Savannah are using the internet sparingly with the majority of their business developed through traditional marketing -- local connections, franchise referrals, or relocation arrangements large RE companies have with local industry, friends, families, newspaper ads, local print magazines, etc.
In spite of the lack of real evidence that internet business is growing rapidly, I have to believe it's presently viable for those utilzing it properly and it's the future for growth in RE. This market slowdown we're in has skewed the results and it's hard to tell what will happen during the next boom. I do expect a boom, and like I've said, I think it'll be fueled by baby boomer movement and the fact that employment opportunities are spreading across the country. Texas is hot right now, and I expect to see hotspots all over the country. It seems to be a good bet that those RE players connected to the larger real estate community will get the exposure necessary to be successful locally.
If this holds true and big RE companies see the benefit, they will increase their online presence and this will shake up the whole industry. As web 2.0 ideas infiltrate the boardrooms, and innovative minds recognize the potential, it could drastically change the way companies do business thereby transforming the whole web landscape.
How small players like me will fit in is uncertain, but I suspect we'll find a niche for boutique, personalized service more on the high end of the markets, a very small chunk of it. I expect the low-end market will utilize FSBO innovations via the web, and the mid-price and high-end will continue to be serviced by large companies.
The interesting aspect of all this will be if the Redfin model can be developed in such a way that changes the compensation model. If service continues to be discounted, I doubt the Redfin model will last much longer, but due to the public pressure for RE reforms and the opening up of listing information there might be a hybrid of the online model, strengthened with traditional RE services, that provides something innovative and different. I don't think it's a safe bet to say nothing will change.
Another interesting potential development will be competition between RE sites such as Trulia/Zillow/CyberHomes/Roost (not to mention the competition between themselves) and large RE companies for the center stage on the web if web 2.0 does prove to be the battleground. And to add to the excitement, how will NAR fit into and react to all this? How will the government react? Could a Microsoft/Yahoo combination become a major RE player on centerstage once their problems are resolved (RE is a large carrot) creating avenues for vertical search, marketing and semantic web possibilities that many haven't considered.
Whatever evolves it appears it'll have to be more Biz 2.0 related when it comes to RE and will have to involve valuable service offerings that people are willing to pay for. Free information might be a good draw for traffic, and some RE sites might successfully leverage traffic for creative advertising, but for us, the agents and companies, we'll have to feed off it or lead the way, but it'll have to be profitable or it'll all be for show.
That's my take.
Reader Comments (2)
Mike
I take the point that FSBO is best suited to new technologies.
The web is a great enabler for people who want to do things for themselves.
Over at the bhb I made the point that people use "disintermediation" services like realtors or homegain when they
have neither the
time, inclination, resources or expertise to do it themselves.
Yes, I think there will a need for Homegain. Most agents who eventually get connected will want to do in a way that is already set up.