The case for an industry led property data platform
In what follows I propose a road map for real estate agents to regain control of property marketing on the Internet. I explain why an industry owned national listing portal won’t succeed and I outline a property data platform that has the potential to level the competitive playing field, provide more exposure for agents’ listings, and improve the quality of information available to buyers and sellers.
Round and round and round we go
The Internet is an important tool for agents. It’s important because it’s important to property buyers. Put simply the Internet is an essential ingredient in the sales recipe.
Big business worked this recipe out long ago. Where once the eyeballs of buyers found their way to newspapers today they look at property web pages. Today the rivers of gold are the vast incomes generated from the pockets of real estate agents who buy the Internet advertising dream.
In the days when print media was dominant agents mustered up their courage to hate on the papers. They’d meet as collectives and agree to swap from one to the next. They made their own papers and industry magazines. But nothing much changed. They out-advertised one another and, at the end of each month, quarter and year, they bemoaned the cost of advertising and conjured up new ways to solve the problem.
For a moment the Internet was their knight in shining armour. It was cheap and often free and presented the opportunity of a lifetime. But big media aren’t big media for nothing. They know the value of a big audience.
Agents too wanted access to that growing audience. The problem was that the audience never turned up on their websites. Rather they went to where the properties could be found on the portals. More properties and sharp SEO practices brought the portals more traffic, and increased advertising and subscription prices.
So today the industry is once again on a “hate on big media” band wagon. And realestate.com.au is squarely in the firing line.
Hating was never this easy!
Real estate agents hate realestate.com.au. With a passion. They advertise their properties and themselves on the portal. They earn, in some cases, big money from the leads the site generates. But still they hate on REA. Maybe hate is too strong a word, but not by much. For, after years of escalating subscription prices and extortionate charges for premium ad placements, agents are wounded and angry.
As if to rub salt into those wounds, REA CEO, Greg Ellis, recently announced his company’s intention to form a direct relationship with prospective property sellers. At an address to the ASX Emerging Growth Conference in London asserted that his company’s near-term strategic imperative was “building a direct relationship with the consumer.”
He went on to claim that REA would soon be in a position “…to tell every household what the value of their property is.” Indeed their strategy is already being put into effect through their subsidiaries ozhomevalue.com.au and homguru.com.au, who offer free appraisal reports to people wanting to know the value of their property.
The reason behind REA’s strategy is clear: sell leads to agents and advertising direct to home owners. And while most understand the business imperative to increase sales revenues few could see past the institutional hubris and arrogance of the announcement. In many ways Ellis’ speech has become the flash point for much subversive action by the agency community.
Prior to the Ellis speech REA was seen as greedy and uncaring but since then they were seen to be actively subverting the relationship between agent and client. In many ways Ellis had positioned himself as the embodiment of everything that was bad about his organisation.
We shall rise up and build ourselves a portal
Agents share a belief that a property portal is the peak experience for prospective buyers. For a long time now they’ve been receiving inquiries from the big portals in numbers far outweighing those achieved from their own sites.
It’s therefore understandable that the franchise and marketing groups are in discussion to form a portal to compete with REA and Domain. Imagine, a portal where agents aren’t charged exorbitant subscription fees, where a premium ad placement doesn’t require a second mortgage, and where the property is the central focus and not the portal’s income-generating ads. It’s a thought that’s alluring and attractive.
It’s also understandable that agents are deliberately reporting zero dollar sales in an attempt to blunt REA’s ability to provide meaningful sales price data to prospective sellers.
Both strategies have appeal. One promises a future that’s free from manipulation by REA, the other neuters one of REA’s key strategic initiatives.
Hang on, who’s framing this debate anyway?
The industry owned portal solution emerges from a debate framed by the portals, particularly REA and Domain.
Let’s look a closer look at how this occurs.
Both REA and Domain have deep ties to big media. REA’s majority shareholder is News Corp., the world’s third largest media empire. Domain.com.au is a Fairfax media company. It’s not surprising therefore that the business model of the portals are based on mass media.
That business model involves the usual recipe of creating lots of content, collating it into a single place, getting lots of people to consume it, then charging advertisers for access to the eyeballs. Free-to-air TV, newspapers, magazines and radio have used this recipe since their beginnings and now it’s the turn of the portals.
As long as the portal receives sufficient web traffic the business model works. It works for the portals who stand to make lots of money and it works for the agents who benefit from the buyer inquiries that are generated.
And while it works the success it achieves constrains people from imagining other models that also work. The portal, then, becomes the only available strategy to compete with another portal.
Why an industry owned portal won’t work
Creating a national, industry owned property listing portal is possible, but not easy. History shows that unifying agents around a single objective involves hard work and commitment to a long, drawn out political process.
Like never before the industry would need to be crystal clear about what it sought to achieve. In other words, why does the industry want a national portal? Rallying calls about revenge and rebellion, although warranted, are simply insufficient as the basis for a unifying vision. Sure, they stir short-term unrest but they do little to address operational tensions in the long-term.
Take for example the issue of house and land package advertising. For a national portal to be profitable it must earn an income; and that’s achieved, in the main, by selling subscriptions and advertising. Although builders and developers are an obvious source of advertising revenue some agents take the view that it’s akin to giving a competitor a free kick. They would have house and land package advertisers banned without considering the implications of the loss of revenues on subscription prices.
Then there’s the issue of relevant lead generation strategies such as REA’s home appraisal reports. If the new national portal was to create competitive offerings the inevitable question would be: Who gets the leads and why? Without a clear, commanding vision every part of the portal canvas becomes a place to contest competing values and political agendas.
Yet these are just two of the many obstacles faced by the agents of Australia to get a national portal off the ground. There are plenty more:
- REA delivers results and that won’t change in a hurry. Agents won’t stop advertising on REA when they’re consistently receiving buyer inquiries.
- If one franchise or marketing group breaks rank – as Ray White did in the past – then everyone will be back to listing on REA. If that happens agents will be worse off than where they started thanks to an extra subscription fee.
- Franchisors can’t tell their agents where to list properties. Agents will list where they get the best results. That, for the moment at least, is REA.
- A portal that’s substantially owned by franchises and marketing groups will be viewed with great suspicion by independents. Even though REA may be expensive at least they’re not my competitor. The enemy of my enemy is my friend.
- Listing portals are expensive beasts to start and run. Where are the funds coming from?
- Sellers will demand to be listed on REA. Agents who don’t will risk losing business to agents who do.
- Sellers are paying for the advertising. While they’re paying agents don’t care where their properties are advertised. If the owner wants it on REA great. So long as I’m not paying for it give them what they want.
Suffice it to say there are plenty of reasons why a national portal is unlikely to succeed.
There is an alternative, one that recognises the industry’s desire to self-determination and, at the same time, one that provides a viable, cost effective counter to the dominance of the portals.
The property data platform solution
The solution I propose is an industry led property data platform (PDP) designed to improve the quality of real estate data in Australia and encourage the distribution of real estate content.
How the PDP works
Agents currently load their property listings to the web either via a CRM service, to an REI portal or direct to the portal. If they load to a CRM or an REI portal their listings are then forwarded to the paid and free services to which they’re subscribed.
In the PDP model listings would continue to be loaded to CRM and and REI portals but would then be sent to the PDP for distribution to both paid and free portals.
Property data contained within the PDP would be available by way of an API the use of which would be governed by terms of service that would protect the integrity of the data and ensure that subsequent display of the data reflected the relevant wishes of the copyright owners.
Agents not connected with an REI could load properties direct to the PDP, which would then handle their listing data in the same way as those coming from CRM’s or REI’s.
The API terms of service would require that agents, as the original copyright owners, be given control over where and when their data was shared. For example, agents may wish to load to their own site first, then to an industry portal, then to the other portals over a period of 7-10 days. This would give their site privileged position within a marketing campaign and reduce reliance on paid advertising.
To maximise improvements in data quality and portability the PDP would require the input of a broad cross-section of industry stakeholders including CRM providers, portals (both free and paid), REI’s and search companies (Google, Bing).
PDP income streams
There are a number of income streams available to the PDP including:
- Sale of pre-packaged real estate information e.g. sold data, suburb profiles, property research.
- Subscriptions from agents and developers wanting to load properties direct to PDP.
- API license fees from organisations wishing to access the API to build out a portal.
- XML feed management and maintenance on behalf of smaller portals.
How the REI’s will benefit
There are a number of benefits for the REA’s to get involved in a PDP:
- At the moment each institute employs people whose sole responsibility it is to sort out problems with data feeds and that’s because institutes feed to so many locations. Under the PDP model they would only have a single feed to manage and that’s the one to PDP.
- Over time the PDP would be able to create additional income streams from the creation of property information products to compete with services such as PriceFinder and RPData.
- The PDP would position the REI’s as proactively working in the interests of their member agents to blunt the impact of the paid portals.
- The PDP would allow the REI’s to take control of the debate about the future of marketing property on the Internet.
- The PDP would support the development of a future industry owned national portal if ever that became a politically viable solution. Indeed the development time-frame and cost of such a strategy would be greatly reduced by having access to the vast majority of Australia’s listings via the PDP.
- Ability to understand and predict industry trends thanks to improvements in data quality.
How agents will benefit from the PDP model
- Reduced subscription fees as a result of the REI’s cost savings.
- More control over where and when their data is shared. Agents could time the release of their listings to various web properties – their site, an REI site, a portal – to emphasise their website as the first place their listings are available.
- Easy access to all free portals. All the agent would need to do is sign up for an account and let PDP do all the work uploading their listings. In fact given the right terms of service agreement PDP could automatically start loading to new free-to-list portals as their access to the PDP API was approved.
- Access to live sold data via their API licensed data provider (CRM, REI, other).
Where to from here
There’s no doubt agents no longer see the big portals as genuine value for money. The groundswell of negative opinion demands change. But an industry owned national listing portal is unlikely to attract the broad political support required for its success. A property data portal has a far more likely to receive industry support in that it requires only the co-operation of those who stand to benefit from its success.
What happens next is largely in the hands of those in positions of leadership on REI councils across Australia. If the tone of conversations in online forums reflect the sentiment of the agency community then the REI’s have a mandate to act immediately.
With that mandate a property data portal could be operational within months and the effects of its implementation would be felt by agency almost immediately.
What you can do
If you believe the idea of an industry led PDP has merits there are a number of things you can do:
- Email this proposal to the head of your local REI. Explain why you think it has merit.
- Email it to your local REI councillor or representative. Ask them what they plan to do.
- Share it on Facebook and ask your fellow agents for their thoughts.
- Add a comment below and share your thoughts on the plan.
- Join the Real Estate Industry group on Facebook and discuss the plan with other agents.
Photo credit: pitzyper! on Flickr