SAN FRANCISCO – Next year at this time real estate executives will be talking about how much the housing market has changed with significantly slower home sales, and how much more involved traditional, full-service companies will be in trying to capture the online consumer – if comments from a panel of industry participants give any indication.
“I think there’s going to be some turns in the market – and some more than others,” said Harley Rouda Jr., CEO of Real Living. Rouda used the term “housing burst” when asked what the industry will be talking about at this time next year.
Glenn Cohen, founder and CEO of Expert Realty, agreed that the market is heading for change, saying, “I don’t think things will go up forever…things will level off.”
Cohen joined Rouda and four other industry leaders during a panel discussion at Inman News’ Real Estate Connect 2005, an event focusing on innovation and technology in the real estate industry. The speakers discussed what’s next for the real estate industry, predicting change, opportunity for new business models, and a much deeper seriousness about online business than in the past.
“The real estate market is so large and growing – it’s inevitable that you’ll have more people coming in with new models,” said Richard Sommer, CEO of HomeGain, an online lead source for real estate companies. “I think there’s plenty of capital available out there for people looking to do something big in the real estate space.”
There was some talk about the Seattle startup Zillow, backed by the founders of online travel giant Expedia. Not much is known about Zillow’s business plan for online real estate, but many of the panelists acknowledged that the company is led by a sharp group of business people who know the Internet.
“They play to win,” said Tom Reddin, CEO of Real Estate for IAC Financial Services and Real Estate. “They don’t get mired down in industry issues.”
Reddin said it’s difficult to say what will happen when Zillow is up and running, but he expects they’ll create a strong consumer-facing business.
Reddin heads IAC’s RealEstate.com, a one-stop Web portal for consumers shopping for real estate services. LendingTree bought the domain name less than two years ago and Reddin describes its progress to date as “leading,” with 21,000 transactions closing in its systems. He said the company, headed by media mogul Barry Diller, is thinking in terms of “‘B’s not ‘M’s – we’re talking billions, not millions,” in terms of revenue opportunity.
Times are definitely changing in the industry, with big brokerage companies making major shifts in advertising spend from print to online.
Real Living, for example, was one of the first to drop its advertising in the newspaper’s Sunday real estate section, according to Rouda. The company in 1997 instead was looking for a strong technology-based platform. “They were burning me for that,” said Rouda. “But now you’re seeing more (brokers) giving up the heroin addiction of the Sunday paper.”
Justin McCarthy, who heads Local Sales for Google, said the search-engine giant is seeing much more traditional full-service brokerages engaged in online marketing compared to last year. When Google first started offering pay-per-click advertising, many aggregator companies such as HomeGain were using it and individual real estate agents also were early adopters, “but we didn’t see big brokerage brands,” he said. “We’re seeing that now though.”
Sommer predicts the online space will continue to be important for real estate companies. “Online branding will be just as important as online conversion.”
Craig Newmark, founder and customer service representative for online classifieds giant craigslist.org, also sat on the panel. Asked whether he’s been seeing an explosion of more consumers trying to sell their homes themselves, he said he is seeing more of that.
“More and more people are just doing things for themselves,” he said.
But that doesn’t mean that people are no longer looking for an agent’s services. McCarthy noted that Google had done some research on the kinds of searches people conduct for real estate on Google, and more than half of all searches were seeking listings and sales comparables. More than a third were looking for agents, he said.
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