Mariwyn Evans writes about commercial real estate for REALTOR® Magazine. You can reach her at email@example.com.
Innovator Series: Technology Roundtable
SECOND IN A SERIES: If you expect to build your business for long-term prosperity, you occasionally have to step outside the here-and-now. REALTOR® Magazine's 2007 Innovator Series lets you sit in on freewheeling discussions with thought leaders in brokerage, technology, marketing, and customer service.
June 1, 2007
In little more than a decade, technology — especially Internet-based listings and online lead generation — has transformed many aspects of the residential real estate industry. Today it seems that the amount of real estate marketing information online is infinite. How much is enough — or too much? What’s the next step in the technology sea change affecting real estate? We asked 10 tech innovators to tell us what you need to know about the online world — now and tomorrow.
Transparency and content depth
REALTOR® Magazine: From a technology standpoint, what has been the most significant change in the real estate industry in the last year or so?
Sami Inkinen: I would say transparency of information, the industry’s willingness to make more information about properties available to consumers in more places, particularly on the Internet. When Trulia started posting listings in 2005, many brokers working with us didn’t want to show property addresses, for example, because they wanted consumers to call them. Today, practically no one is asking us to not post the address. Consumers are so used to feeling as if they can empower themselves and get instant access to all information online. Real estate brokers and sales associates need to offer consumers that access if they really want to engage them.
Mike Montsko: I agree. Data transparency, to me, has been by far the biggest innovation over the last 18 months. The success of vertical sites like Trulia — and sites like Zillow and Fidelity’s Cyberhomes, which offer property data — prove that customers were craving this information. The tremendous growth of video is another big change that’s only going to be bigger in the future. We’ve discovered that our listings on the Optimum Homes Web site (www.optimumhomes.com) that had video attachments received 16 times more use than those that did not. That’s part of the reason Weichert decided to partner with Cablevision and create a way for buyers with digital cable to browse for homes on their TVs.
Michael Yang: I checked right before joining this call, and I found more than 30,000 videos associated with the search query “real estate” had been indexed into Yahoo! Video recently. The vast majority of them were uploaded by real estate salespeople.
Inkinen: Video and audio online are just the start. Content will become so much richer with more and bigger pictures, higher resolution, different kinds of video and virtual tours. Already there are millions of people spending half their time on virtual reality sites like Second Life, where you can do almost anything you can in real life, including buy and sell real estate. (See “The New Land Rush,” April 2007, page 14.)
Yang: In terms of what’s the most significant change, I can answer in one word — search. Search isn’t monolithic any more. It comes in all flavors — vertical searches, video searches, image searches, and so on.
Ken Meyer: One thing to remember is that with the new, vast amounts of content that are now being made available to consumers comes the very real possibility of confusion. How do you as a consumer actually aggregate all the information and find what you’re looking for, whether it’s listing blogs, property photos, or videos? Search capability is really what’s going to enable consumers to navigate what is otherwise a giant library without any cataloging mechanism.
Data quality as well as quantity
Char MacCallum: I agree that consumers want more information, but I believe that both consumers and real estate practitioners need to feel their data is accurate. And that’s one thing that’s not happening a whole lot online. For example, often the home values consumers get through a site aren’t accurate. Even MLS data may be skewed because every state and every data system is different. Some of this innovation needs to be directed towards solving those issues.
Phil Dawley: Absolutely. As more data becomes available, the real estate consumer is going to demand that the data be accurate, reliable, and timely and come from a trusted source. That will be a big shift.
Casey Reagan: What’s also important to the consumer is the completeness of the data set. At the end of the day, home buyers want to know that they didn’t miss their dream home when they searched online.
David Therrien: I don’t think the best use of technology is going to be as a data policing authority, especially at the national level. Accuracy of MLS and online data is always the responsibility of the sales associate and broker who input and maintain the data in the systems.
More innovation, lower costs
Mark Lesswing: The most significant change over the last 18 months has probably been the drop in the cost to actually play on the Web. Thanks to more mature software and hardware technologies, what used to take a $15,000 server now can be done for a couple thousand dollars. Connecting with the consumers is a lot easier and a lot cheaper. This lower cost allows real estate companies and sales associates to design their Web sites in ways that demonstrate their value.
Reagan: I agree. What’s driving this change is the tremendous investment capital and innovation by real estate companies in order to deliver better Web sites and extranet applications that help consumers and sales associates interact more productively online. All this activity is driving down costs through economies of scale.
Inkinen: Costs are also dropping because many more online services are now sharing their data through application program interfaces. This free access to software source code is lowering the cost of launching new services and accelerating the pace of innovation. When we launched Trulia, for example, we were able to leverage Google Maps’ application programming interface.
Now we’ve opened the Trulia API for other developers. In a matter of three or four days, we saw amazing things that some people had built. Yahoo has launched Yahoo! Pipes, which lets you drag and drop different data feeds; you can create online services in just a matter of minutes.
Lesswing: It’s the same idea of transparency we talked about earlier; both the real estate industry and the vendors serving the real estate industry are embracing the idea of sharing more information with consumers. For example, the Real Estate Transaction Standard API was used by fewer than 20 percent of the MLSs 18 months ago. That adoption is well into the 60 percent range now. When an MLS adopts a standard like RETS, brokers can select from a variety of tools to run their businesses. They can focus on the feature sets of the tools, not the form of the data feed.
Dawley: This service virtualization that we’re seeing is a big change in the way we’ll all build applications, and it will make it easier for us to build them.
How much is too much?
RM: All the things that you’re describing — lower costs to develop new applications and greater content depth — are exciting, but they also seem to add to the problem of how to find relevant content. How do real estate consumers and practitioners keep from drowning in a sea of information?
Yang: There’s definitely the sense of information overload, of too many Web sites out there servicing the real estate population. It seems like every day more and more crop up. The challenge for the providers of this information, whether they’re Web site publishers or real estate brokerages, is finding ways to leverage search.
If you look at other vertical markets online — booksellers, travel sites, and so on — you find that over time audiences tend to migrate to a core set of sites. Maybe it’s two, maybe it’s three, maybe it’s five, and maybe it’s only one. We have to allow Internet users to find their way to the right sites, and, over time, they’re going to find the ones that best suit their needs.
Dawley: Over time the world that we’re living in will allow all those sources of real estate information to be pulled together into one accurate and trusted source.
Jorrit Van der Meulen: There may be a settling-out period for some types of sites, but it’s my belief consumers have an insatiable appetite for more and more information. We’re just at the starting point. We’re going to continue to see a proliferation of different Web sites with different components and different pieces of information, sites with things like ratings of salespeople or user-generated comments on salesperson performance. And I think consumers are going to flock to those sites to find the real estate professional who’s right for them.
Also, as the market has slowed, consumers have more time to do research and look for a lot more information about the market and individual properties. At Zillow we’re finding that people are coming back more often and looking at more houses now. On the professional side, sales associates are also looking for more places to market their properties, be it Zillow, REALTOR.com, Trulia, Google Base, or Craigslist.
Therrien: Consumers are getting the information they’re looking for online. But once they have it, they’re turning to the real estate salesperson to help them with the next phase of the transaction. Sales associates will continue to be at the center of the transaction but will become more guides and consultants for the consumer, rather than the source of information.
Meyer: The sales associate really needs to understand the virtual neighborhood to be able to validate and analyze the volumes of data and then present what’s pertinent to the client in a way that makes sense. That’s the added value that practitioners are going to bring.
The next tech thing
RM: What new technology tools will real estate practitioners be using in the next couple of years?
Montsko: One neat tool that will be available this year to consumers and sales associates with GPS phones is Smarter Agent (www.smarteragent.com). It lets customers press one button and get all the listings or rentals nearby. If they see a property that interests them, they can just click on it and see the price. Click another button, and they’re connected to an associate.
MacCallum: A friend of mine, James Nellis II at RE/MAX Allegiance, just introduced me to a product called VocoEvent.com. It’s a business answer for planning events like a buyer’s tour, open house, or client party. It also allows you to send e-invitations, track response, and post a photo album on your Web site, which makes your site the centerpiece of the social event.
Meyer: Buyers, at least younger and more tech-savvy buyers, are going to be looking for instant messaging alerts to their cell phones or their PDAs as listings become available. It’s the same sort of technology that airlines use now to alert you when they’re changing your flight. It’s relatively easy to automate. A salesperson would just enter a buyer’s profile into a system that was programmed to send out a text message, and the system would alert a buyer.
Inkinen: Online relationships are the reality today, and sales associates need to be ready for that. I recently spoke with the office manager of a brokerage who was frustrated in trying to get her sales associates to cultivate more customer relationships online. She ended up telling them a true story about a woman in her early 40s who met her husband online. She said it showed her salespeople that relationships aren’t just built face-to-face as they used to be.
Montsko: It’s a natural evolution. Social networking sites like ActiveRain are the new venues for sales associates to network and share information, just like they used to do after an MLS meeting.
Yang: A lot of blogs and social networks today tend to be commercial- or professional-centric: real estate practitioner to practitioner or practitioner to prospective client. True user-to-user or peer-to-peer conversations — buyer to buyer, seller to seller — are still kind of in their formative stages. You’ll see more and more blogs focusing on, perhaps, a couple going through the home-buying process and documenting their trials and triumphs in an almost diary-like format. Other folks in their community going through the same thing will commiserate or offer advice.
Van der Meulen: We’re just seeing an explosion at our site of consumers and real estate practitioners who want to contribute meaningful content and photos. We opened up the site in December to allow home owners and listing agents to post homes for sale. In the future, we plan to open it up further to user-generated content.
What’s your online return on investment?
RM: How can real estate practitioners best participate in this new social online environment? And how will they find the time?
MacCallum: That’s my question. I agree that we have to communicate with online consumers; I try to blog once a week. But I’ve also got to run a business — I’ve got to sell houses; I’ve got to service my clients. What I’d like is one place where I can go to that would combine all this technology information, that would make it available to me and to other practitioners, and that would help us plan.
Yang: Practitioners need to determine where people congregate and where you can get the most bang for your time. Which are the right blogs, the right social networks, the right search engines, and the right portals to reach your clients. An easy way to start is to use an already structured online community to interact. For example, I checked today, and there were 687 open questions in the Renting & Real Estate space on Yahoo! Answers that needed a response from an expert. Real estate practitioners can leverage opportunities such as these to connect with potential clients.
Van der Meulen: I agree. Sales associates are going to be critical in this type of social network. They’re the ones, really, who have the most information on homes and neighborhoods in their heads, much more than the average person has. The more sales associates share, the more they reinforce their expertise to current and potential buyers and sellers.
Over time, practitioners will discover where the best ROI is on their time spent, and they’ll start to live there and market themselves there by providing information. At Zillow we’ve added page counters to almost every page so that anybody who comes to a page can see how many consumers have visited that page versus other pages in the same ZIP code.
Montsko: Sales associates have to stop being afraid that technology will replace them in the transaction; those fears are completely unfounded. The 2006 NAR Profile of Home Buyers and Sellers found that 77 percent of buyers used a real estate professional, which was really only slightly lower that it was 10 years ago.
MacCallum: Practitioners have to change their mind-sets. They really need to think about this as a business where they’re facilitating, they’re coaching, they’re consulting with consumers to make that next purchase a satisfactory one. Those practitioners have nothing to fear from technology; rather, they should embrace the advantages technology brings to servicing and building relationships between them and their clients.