Monthly Archives: April 2008

Big Brand Blogging

Should the Big Brands in real estate start blogging?

Joel Burslem over at FOREM thinks so:

Even with its obvious bias, the blog is actually a fantastic resource for anyone interested in staying on top of the beer wars. Several years ago I worked for Molson, before it became Molson Coors, so the brewing industry is still of interest to me (both professionally and socially).

But I think there is a lesson here for the real estate industry. Often when I speak to brokers, I hear a lot of them complaining about the negative press the real estate industry gets in the mainstream media.

One thing I suggest is for them to create their own blogs to counter this noise. Not fill the space with meaningless marketing platitudes like “Now is Great Time to Buy…” but actually contribute meaningfully to the conversation and to debate the issues.

The big real estate brands would be wise to take a lesson from Miller; create a real estate blog and hire a full time blogger. It could be an agent – but they’re (hopefully) too busy selling real estate. Rather, carve out some dollars from that bloated print marketing budget and hire a social media guru or a cub reporter fresh out of journalism school, then let them off the leash a bit to create stories that are relevant to the conversation but maintain your brand integrity. (Emphasis mine)

It’s an interesting idea, and I’m sure that at least some folks in Big Brands are thinking about it and experimenting with it.

For some reason, however, the idea makes me sort of queasy in the belly.

For one thing, the Brewblog itself referenced in the WSJ story that sparked Joel’s post makes me sort of queasy in the belly.  For Miller, and for the limited purpose they’re trying to serve, the Brewblog works.  Basically, the Brewblog exists to piss off Anheuser-Busch.  I didn’t read the WSJ story as being all that complimentary to what Miller was doing with Brewblog.  It’s not exactly a trusted source of information, and its biases are plainly obvious.  (Although, I suppose the plain bias puts Brewblog ahead of things like the New York Times and Washington Post… so that’s saying something.)

But it does seem relatively clear to me that the Brewblog is not adding to Miller’s own brand in any significant way.  It’s an industry blog for the brewing industry, aimed at industry insiders.  And its goal is more or less to be an ankle-biting annoyance to Anheuser-Busch.

Does that hold true in real estate?

Would, for example, Re/Max spend a bunch of cash for an industry-focused website that trashes Century 21 or Keller Williams for the sake of annoying their competitors?  What purpose would that serve in our industry?

Furthermore, I’m afraid there’s an even bigger issue for the Big Brands.  As I’ve highlighted above, if a Big Brand is going to do nontraditional PR via blogging, then it has to let official blogger(s) create stories that are part of the conversation while maintaining brand integrity.

But brand integrity is the one thing that is honestly lacking from the Big Brands.  Seriously.

What is the brand image of Re/Max?  What is the brand image of Century 21?  Of Coldwell Banker?  Of Keller Williams?  Of Long & Foster?  Of anyone in the business?  How are the brands different and distinct from each other?  Say you take a survey of 1,000 real estate customers.  Put the logos of the top ten brands in real estate in front of them and asked them to write a sentence next to each one describing the brand image of the logo.  Could they actually do it?

Besides, do you really get the sense that the Big Brands actually compete against each other if the media?  I don’t.  If anything, I think it’s more of a Us vs. Them mentality, where it’s the real estate industry (particularly the brokerages) vs. the Media.  I don’t know that you’d get serious disagreement between the Big Brands or between real estate agents of every stripe and market about the treatment of the entire topic of real estate in the media.

That being the case… I think it might be smarter for the Big Brands to let the RE.net worry about messaging, and for the brand themselves to worry about creating distinctive brand identities.  Here’s how I’d handle it.

Rather than hiring a corporate blogger, hire a corporate blog PR person.  Make sure that you have a guy or gal whose job it is to reach out to the RE.net constantly.  Every good, bad, or indifferent thing that happens should be publicized to the RE.net as soon as possible.

They all already do this with the dead-tree media.  Why not the RE.net?  Don’t just think about press releases; think about getting word to Joel or to Dustin or Greg Swann or Pat Kitano or any one of the numerous industry-focused RE.net bloggers.

We’re all hungry for the inside scoop.  The RE.net has blogs that are industry-focused with an audience that is primarily industry participants.  The Big Brands could start to leverage this fledgling online trade media by a coordinated effort to keep us informed and up-to-date.  Some of us will knock them, and others will defend and praise them.  But they will be part of the conversation.

Add in an executive or two who may be willing to post comments, and I think you have the recipe for success in growing an alternative media.  No need to hire a blogger and let him go out on the limb under the company name.

Simon Baker of REA Group recently stopped by my little corner of the Internet.  Frankly, I was shocked.  And he provided some good detailed information.  Frankly, I was shocked again.  That’s amazing outreach.  Even if I were to go on and trash REA Group, Simon has a fan.  If some dead-tree media type wanted to find out about REA Group, my post may show up, with the conversation Simon and I are having about international real estate.

Imagine if Alex Perriello did that.  Or Dave Liniger.  And not on just my tiny blog, but on the big RE.net blogs.

Don’t become the media.  Don’t try to convert the dead-tree media that hates you anyhow and has no idea what the @&*% it’s talking about anyway.  Grow the media instead.

-rsh

Condomania! Wait… That Sounds… Hrm…

If you own a condo, or if you’re just interested in the kind of really top-notch writing that is possible on RE.net, head on over to RCG and check out Ardell’s post on Condo Reserve Studies.  I own a condo, and I have to say, that was some really good information that I intend to raise with my board.

This is even as I cringe at these words:

I am so happy about this new law I could stand on my head and spit nickels.

Generally speaking, I find it odd to celebrate the loss of freedom that is entailed in every single law ever passed… but in this case, I think Ardell’s enthusiasm for more regulation and laws and paths to tyranny can be forgiven.  ^^ (<– that is an Asian smiley face)

-rsh

Metrics of International Real Estate Business

In a recent post, I complained about the dearth of data when it comes to talking about international real estate. Even though I was a bit cheeky, Simon Baker of REA Group actually posted a comment on that with some actual estadistica:

For example, around 12% of the traffic to our Australian site (www.realestate.com.au) comes from outside of Australia. For our UK site (www.propertyfinder.com) around 15% of the traffic comes from outside of the UK. It gets even more pronounced for our site in the UAE (www.propertyfinder.ae) where around 70% of the traffic is from ourside of the emirates (not surprising really).

Now our total network of sites have 9.4m UB’s per month.

[Anecdotally] we hear that in some segments of the US market, 10% of the buyers are coming from overseas – perhaps these are people looking for a great deal.

Now we’re getting somewhere. I’m going to assume that “UB” referred to above in “9.4m UB’s” is something like unique visitor?

A couple of questions these statistics raise.

First, as Simon notes, it isn’t surprising at all that 70% of the traffic to the UAE site is coming from outside the emirates given the incredibly rapid expansion of the UAE as a global business and financial center. I do wonder if the same analysis holds true for the UK in a way. What I mean is, places like Australia and the United States, separated geographically from the rest of the world even in the age of air travel, may have very different patterns of international interest than the UK — very close to the Continent — or the UAE.

I would love to see some more detailed analytics on REA Group’s traffic. What percentage, for example, of the Australian international traffic is originating from Asia — especially Singapore and Taiwan?

Second, and this is the part where I need to exhort the rest of the industry to start producing some numbers, what REA provides is web traffic stats. We need to be able at least to correlate that to transactions. Interestingly, just today, I run across this post touching on international investors:

15. You can work with investors from across the world. Jonathan Dalton does business with Canadians investing in Arizona. I just did a deal for over a million with a client from Kuwait. The Internet has created a massive pool of probable clients.

Sounds right; feels right; smells right. But is it right? We need numbers.

I am calling on all real estate brokerages — especially the big brands who have a global marketing presence — to start compiling data on their transactions by buyer nationality. Maybe Simon has some data for the markets where REA is active? That would be a good start.

Without reliable transaction data, it is difficult if not impossible to make any sort of reasonable judgment about how important or unimportant the international market really is. Let me illustrate.

In the absence of reliable data, here are some really bad calculations on the back of a dirty imaginary napkin (therefore, completely unreliable):

Realtor.com gets about 7m visitors a month. Let’s say Simon’s anecdotal evidence is correct, and 10% of that originates overseas. That would be 700K visitors. I have no idea what the conversion rate is for Realtor.com, but let’s say it’s in line with the average conversion rate of 2.3% (according to Clickz.com). That gives us about 16,000 people who ‘converted’ — presumably, meaning that they contacted an agent/broker in some way.

As far as I know, real estate does not boast a 100% close rate — meaning, an inquiry turns into a transaction. What’s the appropriate close rate? I don’t know. It probably depends on the company, on the market, etc. But let’s just use some assumptions (which makes an ass out of you and me, I know) and say 10% of those convert. That’s 1,600 transactions a month, or 19,200 per year.

Let’s say the average international transaction is $700K (much higher than median home price to reflect the possibility that international buyers are into luxury properties, etc.) and the agent/broker gets the full 3% commission. That’s $21,000 per transaction in revenues.

19,200 transactions per year x $21,000 average commission = $403M per year. Nice chunk of change.

Now… Realtor claims 1.3 million members. Say there are actually 2 million licensed real estate agents total in the U.S. But that would mean only $200 or so per licensed agent. I’m going to once again perform the self-ass-making maneuver and say that only about 25% of the 2 million licensed agents can/want to handle international clients at all.

That only works out to $800 per agent per year.

How much money are you willing to invest in a sustained international marketing campaign in order to earn $800 per agent every year? That is pre-split as well, so if you’re on a 50/50 split, the house only gets $400 a year per agent. Is this really worth an investment of time and resources for a brokerage? How much time and money?

Yes, I know you can poke all kinds of holes in this “logic”. But it is logical at least. And we need reliable data. For example, perhaps what we find is that international inquiries have a much higher close rate, becaues the people are overseas, they’re not just tirekicking, and they’re very serious with very serious ready money. Maybe the average transaction size is closer to $1M instead. Maybe only 10,000 agents in the U.S. can work with international buyers — that means average revenue is $40K per agent. Lots of maybes.

When I called for more statistics as it comes to international real estate, the end goal is so that we can evaluate the opportunity and prioritize it. Simon has done his part, IMHO. It’s now time for the industry as a whole to do its part.

-rsh

Spartans and Redfineans

As most denizens of the Re.net know, there was a recent kettlestorm (tempest in a teapot) around some mean and nasty things said by some blogger at Redfin. Glenn Kelman, the CEO of Redfin, took immediate action and posted an eloquent appeal for harmony and peace.

Glenn — you’re a class act, and a brilliant guy.

So when you write:

We all know that Redfin’s business model is different than yours: we try to get customers via our search site, we pay our agents salaries and customer-satisfaction bonuses, we want to put the escrow process online to avoid talking so much to our customers, and we refund part of our commission. This makes us freaks perhaps, or even fools if you like, but not an enemy.

I know you mean it. And I believe your appeal for understanding and peace is genuine:

So maybe there’s hope that we can work things out. This isn’t a promise to be boring. But at least we can be civil. We weren’t today. We are sorry for the post about Kris Berg. We wanted to say to everyone else in real estate talking about this post that we hope there can be peace between us.

But because you’re such a smart guy, I know that you will understand when I invoke Thucydides:

The real cause I consider to be the one which was formally most kept out of sight. The growth of the power of Athens, and the alarm which this inspired in Lacedaemon, made war inevitable.

There can be no peace between Redfin and traditional brokerage. Like the Lacedaemonians of old, the traditional brokers have cause for alarm at the growth of the power of Redfin. That makes war inevitable.

It’s great that Glenn and the folks at Redfin are so civil and open to working with others and so on. But Redfin has embarked down a path that represents a serious threat to traditional brokerages. It has done so effectively, and should be applauded for its execution. Consumers have and may continue to benefit from Redfin’s model. But calls for peace strike me as a bit… I don’t know… naive perhaps.

Just a bit further down on the Redfin blog, you find the post entitled, “The Redfin Advantage“:

Last spring, Redfin analyzed the MLS data available to all brokers to show that our home-buyers negotiated a better deal on a home — saving an extra $4,000 off the list price — over and above our commission refund. We called the total savings, of $14,080, the Redfin Advantage.

The post then goes on to detail how the Redfin Advantage has widened since then.

Unlike other traditional competitors who like to boast some advantage or another (“We have the best agents” or “We care about you like no one else!” or some such), Redin can boast numbers. $14,080 as a matter of fact.

If I’m a competitor of yours — and all brokerages in the areas where Redfin is active are competitors — and you’re offering the same service I am for $14K less… well…. On the one hand, kudos to you and your team, and we can be civil to each other and make nice and go have a beer. But let’s not pretend like you’re not taking bread off my table, and doing it in a way that I haven’t yet found a way to combat.

Since I’m not a competitor of Glenn’s, as a neutral observer, I can only marvel at the job that Redfin has done and is doing. It’s innovative, and so far, extremely well-executed. Every traditional brokerage company has reason to be afraid of Redfin, and reason to be hostile to Redfin. I don’t see co-existence as a possibility here: either Redfin’s model and method of salaried agents + web-based self-service + refunds will win and dominate the industry, or the traditional model and method of commissioned agents will. Consumers want choice, but when one choice offers $14K… that ain’t much of a choice.

None of this, of course, excuses She-Who-Shall-Not-Be-Named’s behavior toward a fellow agent and blogger. None of this takes anything away from Glenn’s apology or his sincere appeal for civility and peace. But what it does do, I believe, is to expose the fact that what Glenn should be asking for is not peace with his peers, but civilized combat with honor.

-rsh