The Bear Case for Industry Search & IDX
[Editor’s note: We’re trying something new–collaborative thought pieces written by the Geek Estate Mastermind community. The goal is to make the absolute best argument possible, derived from the collective expertise of members. The first two articles are bull and bear arguments for industry search and IDX, a topic initiated by Greg Fischer over a year ago.
Bull: The industry must not cede search to the portals. Meeting Buyer Expectations and Owned, Perpetual Lead Generation Are Table Stakes to Agency.
Bear: The portals have already won the minds of buyers. Search is an undifferentiated lost cause. If you can’t “win,” why play at all?
Without further ado, here we go with the bear argument…]
There’s simply no way for the real estate industry to compete in search against Zillow and other established portals with years of brand and SEO headstarts, particularly with the growing cost of providing a killer search experience across mobile and tablets. Even if the industry invested the needed capital to build a portal, the cost to reach buyers is too expensive.
Let’s define real estate industry search as any agent or brokerage website, MLS, or tech initiative majority funded by those parties. It’s worth noting that while Redfin is a brokerage that who has cracked the top three, that’s a unique situation that started at the beginning of “online real estate portals” and has unfolded over 15 years.
To change, buyers need motivation/incentive: Why in the world would a home buyer visit a brokerage’s sub-par IDX site to search for homes, when a better search experience on Zillow or Redfin is one click away? Agent and brokerage websites are all cut from the same mold; very few use their virtual real estate to differentiate on client experience and service opportunities.
The industry’s core competence is not consumer technology. Never has been, never will be.
The agent’s value proposition is about more than helping clients find a property. It’s about overseeing the entire transaction and making it a seamless experience from end to end. Helping buyers find a home with their own technology is not required to maintain relevancy.
HOW THE PLAYERS ARE FARING
A list of the top 20 real estate websites in September 2019 shows largely the same incumbents as those that graced top 20 lists a decade ago when I was at Zillow. From a 2013 top 10 list, Yahoo! Real Estate, FrontDoor, MSN are no longer. No new entrant has meaningfully broken through the ranks.
According to SimilarWeb, here’s the landscape with October 2019 data:
You can see the full rankings for the real estate category here.
Zillow Group: We can keep this short and sweet. Complete domination.
Redfin: I am beyond impressed with their slow, steady march up the rankings–now, firmly cemented as a top three search portal. They are the only brokerage anywhere in the list that benefited from an early start and deep tech/engineering roots.
Realtor.com: They keep coming out with ad campaigns and have grown their traffic, but I haven’t seen much product innovation for several years.
Yahoo! Real Estate: A top three site for over a decade that is no longer. Somehow, I didn’t notice when Yahoo! shut it down in 2016 (along with other major verticals). It’s absurd they didn’t even take advantage of the massively powerful domain they had. Why not at least keep the landing page up, and funnel organic SEO traffic to a partner for a fee? That’s what AOL did. I guess I’ll never know.
Compass: Everything I’ve heard and read says they are focused on creating leverage with unique supply, aka coming soon and exclusives. That strategy seems at serious risk with the recent Bright MLS decision.
Broker Public Portal / HomeSnap: Gaining traffic by getting agents to email listings to their entire sphere? Cool. Anything differentiated or strategically defensible? Nope. I understand the broker’s perspective, I just don’t buy it.
Consumer MLS Websites: I didn’t understand the consumer MLS portal strategy nearly a decade ago. I understand it even less today. I’m scratching my head as to why the flawed strategy is being tried again. There is still no way a buyer would switch to a website like this when the alternative is Zillow or Redfin. Remove HAR.com from the equation, and the entire category is a colossal failure.
ABANDON THE GHOST TOWN
I spoke with agents 10 years ago without IDX sites who still found a way to sell millions in real estate. Greg Fischer launched FWLocal.com in 2013 without one. If you think it’s a requirement to serve clients, you’re sorely mistaken. Even those who pay for and advertise IDX solutions know consumer usage rates are abysmal. Most IDX websites are, in fact, ghost towns sitting idle in their tiny speck of cyberspace.
Beyond that, IDX perpetuates the long-standing confusion surrounding online real estate search: buyers don’t understand who the agent showing up on the listing detail page is (it’s not the listing agent). It reinforces the status quo under the guise of innovation and stymies competition by encouraging parity in a crowded market. The mass-implementation of IDX has diluted the value prop of the end user experience, further driving home browsers to the major platforms.
Clients are already using Zillow, Trulia, Redfin, or Realtor.com to search for properties. It’s possible to pay for My Agent, getting all the branding that you get with IDX solutions without the hurdle of figuring out how to drive traffic and compete on user experience. That’s likely why Zillow got out of the game–they sold Diverse Solutions. If they were bullish on IDX, why would they sell their IDX company?
Traditional lead funnels are a waste of time. Why not wait until the buyer is ready to talk to you. Wouldn’t you rather speak to buyers when they are actually ready to speak to an agent, not six, nine, or even 18 months prior to that.
Disassembling IDX in its current form would provide increased transparency around buyer and seller agency, as well as the stage in the process a consumer should seek agency, and from whom. Only then can the industry rid itself of its decades-old obsession to clone the portals and focus on places where it is proving real value with differentiated offerings–alternative/innovative financing, trade ins, and packaged ancillary services (discounts with moving vendors, utility/service transfers, school searches, community/lifestyle amenities).
OPPORTUNITY IN THE MIDST
Agents and brokers can’t compete in search against the established order of portals: The audience lead is simply too big, the capital investment requirement too great, and customer acquisition too challenging. The money, incentive, and patience to battle Zillow for a decade is simply not in the cards. Not to mention, a core competence in consumer tech is lacking entirely.
Search is not dead. Opportunity exists in curation (green homes, modern, etc), fixer-uppers, and teardowns when structures become irrelevant.
Breaking through in search is incredibly unlikely for anyone–but not impossible. Successful execution is far more likely to come from an outside entrant. But a search solution by the industry is even more far-fetched, having the added nightmare of 1099 contractors at every turn, years between consumer use cases, and being built from the perspective of “helping the agent.”
By abandoning a hopeless fight, the industry saves itself from throwing away capital better spent cultivating relationships and, more importantly, the mental bandwidth that is better spent serving clients. Don’t cede the fight? Regardless of who the perceived opponent is, that war is over and has been over since Zillow acquired Trulia. Checkmate, real estate industry search–and IDX.
Thanks to the contributors to the thinking behind this bear argument:
The bull argument (spearheaded by Ted Adler from Union Street Media), which has already been published for members, will be republished publicly here in the next week or two.
If you’re interested in learning more about membership in the Geek Estate Mastermind, which I usually describe as a think-tank for real estate tech, have a read here.