Notorious R.O.B.

One of the great things about conferences, especially one that features bloggers as the main attraction, is that you meet some incredible people and find out some incredible things. Some of them are so fantastic that they make you scratch your head and go… “Eh?”

The Believer is one of those things.

Despite the name, this is not the blog of the World Evangelical Alliance. Nor is it an Obama supporter site. It is a site about Swedish real estate, but written in English. (!)

The author, Magnus Svantegard, apparently thought that maintaining an awesome blog filled with pictures, screenshots, and compelling content is too easy and boring. So he thought to do it in a foreign language. C’mon, which of us bloggers hasn’t felt that way, where constantly updating a blog with interesting content gets so easy we sleepwalk our way through it unless we did it in Urdu, or ancient Swahili, or in Braille. Oh yeah… none of us… that’s right.

So that fact alone would make Magnus my shoo-in for Blogger of the Year. But wait! Not only does he blog better in a foreign language than you do in your native language, he’s also a handsome Nordic fella. But wait! Not only does he bear a striking resemblance to Aragorn, but he also works for a company that has a yacht. And takes said yacht to Cannes. To events where they apparently have so many yachts that they have to have separate yacht registration:

So… when are we gonna have yacht registration at Inman?

In any event, I know that real estate is local. And real estate blogging can become hyperlocal, sometimes intentionally, sometimes because that’s just what happens when you have a bunch of folks interested in immovable assets like land and houses talk to each other all the time. There is, however, much to be learned by looking at practices in an entirely different country, under different legal and cultural regimes.

For example… I learn from The Believer that there is indeed a darkside to not having 23095214098 MLS systems and 2350921 listing websites:

However, earlier this week Lars Kilander, CEO of Mäklarsamfundet (the Association of Swedish Real Estate Agents), made it easy for many papers this week to create selling headlines with the quote (my translation) “We don’t believe it is better with more listing services, it just gets more complicated for the buyers“.

Insight like this is simply unavailable here in the United States for the simple reason that we don’t have a single listing service for the whole country. Yet. (Although… give the boys and girls at Trulia and Zillow some more time….)

In any case, if you’re at all interested in some of the meta-issues in real estate, technology, and marketing, then you owe it to yourself and your readers to check out The Believer. Blogroll it. Read it. Learn from it.

And see if your boss is amenable to the idea of yachts as a sales tool.

-rsh

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

You know what I’d love to see when international real estate companies make grand pronouncements about globalization and its effects on local real estate? Numbers.

Joel Burslem profiled REA Group over at FOREM, and this passage jumped out at me:

Bottom line however, his [Simon Baker, CEO of REA Group] advice to agents to begin think of the local market as really being international in scope these days, as more and more consumers around the world are moving online to research real estate and looking at properties in other countries. To that end, there are all kinds of marketing and online advertising tools (including those offered by REA Group, natch) you can use to reach out to potential buyers beyond US borders.

‘ey Simon… d’ya think you could maybe define that “more and more” term a wee bit?

I mean, are we talking about a steady increase from three Singaporeans to four Singaporeans over the course of a year? Or are we talking about millions of international buyers here?

When you advise agents to utilize “all kinds of marketing and advertising tools” to reach out to these international folks of mystery, got any kind of a market size estadistica handy?

It’s hard to know whether American real estate companies should be investing hundreds of millions or like fifteen bucks to the “international” market without some idea of what ‘more and more’ means, y’know what I’m sayin’, homie?

-rsh