Upon graduation from the Fordham University School of Law, I worked at Cravath Swaine and Moore in New York and London. I spent most of the 1990’s as a corporate Mergers and Acquisition and securities attorney working in London, Paris and Warsaw.
Cravath, Swaine & Moore is one of a half dozen law firms in the world that routinely goes by a single name: “Cravath”. Everyone in the legal industry knows who you’re talking about. (The others, incidentally, are Wachtel, Skadden, Sully, Cleary, and Latham. Granted, there are firms that use two names and are as well-known, such as Paul, Weiss or Davis, Polk… but I digress!) In every survey I have ever read, as well as personal conversations, Cravath is generally considered the best law firm in the country (and therefore the world). Certain firms are stronger in some practice areas (e.g., Weil, Gotshal is generally conceded as having the top bankruptcy department), and Wachtel would give Cravath a run for its money in overall prestige, but all-around, Cravath is simply the best law firm in the world. It equates to McKinsey & Co in management consulting and to Goldman Sachs in investment banking.
Cravath lawyers are known for their incredible brilliance combined with an incredible fortitude. A friend of mine worked at Cravath for a couple of years, until after a particularly brutal two week period of work, he came home to find a strange woman in his bed. Naturally, he asked her who she was. Whereupon she replied, “I’m your *#@$()&% wife, and you’re quitting that (#@&)(%@ firm.” You simply do not spend ten years working at Cravath unless you’re very very smart, very very hardworking, and very very dedicated.
Louis is such a man.
Therefore, it is no surprise that the latest offering from HomeGain — AgentView — reflects those smarts. Others have written about what’s good about it already, and as I tend to agree generally, I want to focus on something else. (Oh fine, I’ll quibble and nitpick later on.)
As I see it, with AgentView, HomeGain throws down the gauntlet to the major brands in real estate brokerage.
This may not have been their intent, but it is the impact.
Consider what services a brand provides to a real estate agent:
Except for the “flag”, AgentView and HomeGain now provides everything else. If HomeGain starts to pick up brokerage licenses, it can provide a “flag” as well. I see no reason why a HomeGain yard sign would be any less effective than any other yard sign.
In terms of national advertising, Brian Brady rightly points out that HomeGain is a Google Rank 7/10 site that is going to be funneling traffic to these AgentView pages. Should I point out that Coldwell Banker is only 6/10? That Remax is only 6/10?
In fact, AgentView is also something larger brokers ought to be concerned about. It seems we’re in the age of brokers treating their agents like independent businesses. If that’s how your business works, then great. But then you’re going to have to do some serious thinking about the price those independent businesses are willing to pay for your services.
HomeGain is charging $29/month per zip code. Brian thinks the average cost for an agent will be $40-$50 a month. Let’s go with Brian and call it $600 per year for the agent.
What does the brokerage charge the agent? 30% of the commission on each transaction as a split? 40%? Some charge desk costs plus expenses. Some charge agents referral fees for each lead sent to them.
For that matter, what does a brand charge the agent? The broker isn’t going to eat the whole cost of the royalty fee — not for long anyhow. 6% of the GCI?
Yes, I know — you need a broker’s license and take on liability and all those fun things to become independent. Honestly, I have to ask… is that hard to do? If an agent’s only need is to have a broker’s license and buy liability insurance, since she will have no employees, and work out of her home, and use HomeGain for all her marketing needs… well, you do the math.
This is a great move by Louis and the HomeGain people. It is also a challenge to the entrenched powers in real estate.
Resist the temptation to dismiss HomeGain’s transformation. After all, Trulia and Zillow have agent profile pages with listings. Trulia has Trulia Voices and the new blogging platform. What’s the big deal?
The difference between the three companies lies in how they see themselves, and how they view their relationship with agents.
Trulia and Zillow see themselves fundamentally as real estate media plays. They have home search and content and AVM’s and such, but their business model is all about advertising. Their customers are advertisers — consumers are but eyeballs, and agents are but free content producers. Again, I know the good people at Trulia/Zillow (and they’re all good people, at least the ones I’ve met) don’t think of things that way — but I do, because I tend to focus on essentials.
In contrast, HomeGain sees their customers as the real estate agent. In that comment I linked to, Louis wrote:
Key metric here is not top of funnel visits but delivered visits to agents. If our click through rate goes up 50% we can make the same money on 1/2 the traffic. If that happens we can cut out non profitable sources of traffic and make the same money at a higher margin.
This, ladies and gents, is not how a media company thinks. It is how a brokerage thinks. It is how national franchises think.
Okay, so I promised a bit of quibbling and nitpicking. Keep in mind that I think AgentView is really solid; it’s a great extension of the HomeGain platform. I expect it will be successful.
Nit #1 to Pick: Buy a zip code? How… charmingly antique! Louis — call me at my dayjob if you guys need neighborhood boundaries. I know realtors tend to know zip codes really well, but I would think that a company with the technical competence of HomeGain would let agents buy neighborhoods (like “Soho” and “Greenwich Village”) that cut across Zip Codes (or are a small part of one zip code), as well as MSA’s, parts of towns, etc. Relatedly… where’s the map?
Nit #2 to Pick: The agent profile box at the top of the AgentView page (click here) strikes me as rather ‘undesigned’. Considering the importance of that information to the whole value proposition, I think it might merit a slight redesign to emphasize the information. Maybe leverage Flex or other technologies to sex it up a bit. Or just throw a designer at it.
Nit #3 to Pick: I love that the Agent Profile mentions how many HomeGain clients the Agent had. It would be awesome (for consumers, and for good agents) to add an Ebay-style feedback section here. Nothing works better than testimonials from actual clients — and if you were horrible, you deserve the black marks.
So… About that Gauntlet
For what it’s worth, I’m glad to see HomeGain throw down the gauntlet. This is a challenge that the big brokers and major brands can’t afford to ignore for long. I hope, I believe, that it will spur another round of innovation from companies that aren’t thought to be particularly innovative. Will they pick up the gauntlet and finally start flexing?
It’s a fun time to be in real estate technology.