With the recent acquisition of ListHuB by Move, Inc, the possibility and in fact likelihood that the landscape for moving real estate listing content around the Internet will change is very real. Sami Inkinen C0-Founder and COO of Trulia.com recently blogged about this topic and made some very clarifying observations. I agree with his observations about the risk associated with the data syndicator now having another, larger agenda.
Interestingly, he went on to talk about how this might accelerate the movement of marketing dollars from offline to online. I don't see that, as fifteen years into the Internet revolution for real estate marketing, the relative value and inherent qualities of offline media and online media for keeping the Agent and Broker front and center in home seller's and home buyer'smind is quite clear. I have posted Sami's original blog post and then my comment so you can see the larger discussion in more complete context.
Sami makes some very valid points. Consolidating any part of a market into too few hands increases costs and discourages innovation as the leader has a lot to lose by introducing better and less expensive solutions.
But I part ways when Sami concludes this will further accelerate the offline to online movement due to the inefficiency of offline. Not sure I get that.
Leads from hyper local real estate magazines, like The Real Estate Book and others, far outweigh (4 to 1) leads from a online only sources. This is not only true in traditional single family home sales, but also in the apartment world. Pick up a copy of a local rental magazine in your market, like the Apartment Finder, for example. In major cities these magazines are 400 or more pages in spite of the audience being young and very comfortable with technology. Why hasn't this business migrated completely online? Because these property owners faithfully track their leads and put their money where it gets them the maximum return. They do online too, it's just not powerful enough on its own.
NAR research indicates the median move in 2009 between original home and new home was 12 miles, supporting the hyper local nature of real estate once again. Local home shoppers use the magazines to see which Agents have homes listed that look and are priced like theirs and to contact Agents that are still in the game. Online is very valuable, no question, as it allows the shopper to go deeper, but print interrupts the shopper in a good way and a way that online only hasn't been able to replicate.
It's my belief that the movement from offline to online has been driven more by the scarcity of marketing dollars available as total commissions have dropped 45% from peak, than by the effectiveness of online only advertising. Research shows that for every ten listings online, 1 to 2 leads will be generated each month. Not bad if it's free, but certainly not enough to sustain a serious Agent who is working hard to keep their home seller happy.
Below, I've copied the content of Sami's blog post dated September 21/Move on ListHub-Is American Airlines now going to sell fuel to JetBlue, Virgin America and United?
By now we have all read the news that Threewide Corporation, the creators of the third party listing syndication platform ListHub, has been acquired by Move Inc, which operates Realtor.com, the official website of the National Association of Realtors.
ListHub sits in between the originators and owners of listings - MLSes and brokers - and online real estate sites like Trulia. ListHub became known as the unbiased and impartial third party to both syndicate listings cost efficiently and provide fair and accurate performance statistics to the listing owners. Consequently, whether you are a franchise, broker, MLS, or real estate agent it's likely that you or one of your close friends use ListHub to syndicate your listings or use their aggregated performance reports. And if you operate a real estate listing site of any significance it's likely that ListHub provides a portion of your listings on behalf of your partner brokers and MLSes.
In short, most of us - if not all - in the real estate ecosystem are either directly or indirectly affected by the change of ownership at ListHub. As co-founder of Trulia and long time partner of ListHub, I would like to share some thoughts and more importantly, start a conversation with our industry partners.
Here are a few of our candid observations about how this change could impact all of us:
- Listing syndication becomes even more mainstream and encourages all brokers and agents to consider the benefits of listing syndication to sites like Trulia. Given Move, Inc's existing MLS and broker relationships, Move and ListHub together could quickly increase ListHub's reach. This would bring services to more agents and brokers across the country, which would also give the consumer a better experience on the listing sites.
- Further accelerates the shift of inefficient offline marketing to online in real estate. Move.com is likely to be incentivized to promote the value of listing advertising investment online vs. inefficient spending offline which could help all real estate websites as well as the marketers themselves, agents and brokers.
- Force all online real estate sites to deliver true value, objectively measured. This acquisition could force all online real estate sites to deliver real quantifiable value if they maintain the integrity of the syndication and reporting platform that compares sites apples to apples. This would spur innovation and creativity among different sites.
- Pricing power aggregated into fewer hands means bigger bills. Move, Inc could use this power and data to help Realtor.com extract more money from the industry without having much alternative: pay and syndicate - or die.
- Potential lack of objectivity in performance measurements. Nielsen is an independent, unbiased third party for a good reason. TV Channels and advertisers like that. The previously independent ListHub platform (some called it the Switzerland of listing syndication) for listing reporting is now owned by one of the largest "channels". What happens if there's a dip in performance and Realtor.com's numbers drop below those of its competitor sites?
- It is difficult to imagine a world where JetBlue and Virgin America would be buying fuel from American Airlines in a fair and independent marketplace where American Airlines has full visibility into the demand from their competitors. Listhub owned by Move Inc, essentially creates this situation.
Since Trulia's launch five years ago, we've built our business by trying to find the best possible solutions for the industry and consumers. So consider this proposal - one way to ensure the ongoing independence of the Listhub service is to create a committee made up of brokers, MLSs and major online real estate listing sites which will provide accountability to all customers they serve. This would help ensure accountability of the merged entity, and directly address "the concerning" factors from my list above.
What is your opinion? How would you ensure that the market remains open for innovation and a great experience for both industry and consumers?
We look forward to hearing from you.
Sami Inkinen, Trulia