As a follow up to Dave Platters excellent, well articulated post on why anyone “is dreaming” that they can beat real estate.com.au, it made me revisit an idea I had a few years back. I think for the most part Dave is correct, however there is something that needs to be done about property content origination.

To me it has always been about control, if you go back to the early days on business2.com.au I wrote passionately about how agents will pay a price for putting all of their eggs in one basket and relying on one company for their web, marketing and portal needs, and it has pretty much played out in that manner. REA are top dog in many regions of Australia and can rightfully state their number one position. Agencies online property marketing budgets today are pretty much controlled by realestate.com.au and domain.com.au, annual fee increases continue at a clip and the limitations of each agents plans are pretty silly to say the least!

Realestate.com.au is all powerful because they have the listings and consumers will of course go to where the listings are. Consumers also know how to play with realestate.com.au and for the most part it is their favourite tool for browsing for real estate, domain certainly have the numbers on mobile devices but the browser is still king and this will not change in the short to mid term.

REA can pretty much do what they like with pricing, they are the market leader in an industry that is one of the most popular search pastimes in Australia, if you are an agent and you do not list on REA you will pretty much lose listings to other agents that are and REA had a brilliant strategy for agents early on, almost blackmailing agents into going for bigger packages. I lay much of the blame for this with real estate institutes who accepted ‘donations’ from REA in the early days to endorse their portal and put them in front of an eager audience – you!

The REA XML has also become somewhat of a de-facto standard for listings and pretty much all portals accept an REA XML feed to list with them.

If agents and competing portals want to to take that control away and place it back to agents they must do all of these things listed below pretty much in their entirety. Will they do this? Almost definitely not, but it is worth revisiting.

Open Source Listings System

Domain.com.au and all other portals, franchise groups, private agencies and private listing portals (yes they MUST be included) should band together and finance an open source system for managing property data. This must be fully inclusive, and that means REA can also use this system.

It must be built on open source infrastructure, be W3C compliant and define every single element useful to todays real estate agent. The system must have no stakeholders and be open to anyone. The system must be simple to sign up, simple to use and built on an open framework that can have multiple contributors. This would be controlled by a board of developers that have a wall of separation between them and any interested parties.

Agency
Agencies simply register with the system and are given a few tabs to work with (My Agency, My Portals, My Developers, My Apps). They manage all of their staff and can import their current listings into the system and the system takes care of the rest. They select what portals they want to be involved with, can give access to their web developers and can login and manage this information from their desktop, tablet or phone device.

Portals
Portals simply join the system and offer their portals with their standard terms and conditions clearly set out in the system. This will allow any agency to simply check a tick box to allow their data to be shared by that portal. If the portal is free then it simply starts the data transfer and updates instantaneously once changes are made to the data. If it is paid for then a simple code would need to be added to the system.

Developers
Web Developers are given tools to develop websites using this data and be given everything needed to do this effectively, including plugins, sample codes. Agencies can assign web developers to manage their web development by simply ticking a box next to that developer and that developer will have interface access to all they need to develop websites and applications for that agency.

Apps
Any product or service can offer their applications to agencies, be it, mobile phone apps, tablet apps, CRM software services etc. These apps can be free, paid or subscription based. Think of it like the Apple App store.

Cost + Revenue

Yes, to build this and maintain this service would be expensive, but nowhere near what agencies currently pay for the same services. The Real Open Source Community (ROSC) would be funded by annual verification. Initially it would need to be funded by portals and franchise groups with no strings attached (tall order) for two years from launch, but once launched each agency, portal, web developer, app would be encouraged to become verified, this verification would be a community trust system.

The annual report and all expenditure would be open and annual verification fees determined by the previous years revenues. This would ensure that the system was always in the black. The system would also have a constitution drawn up that can only be amended if 75% of all verified users voted up for that amendment – in other words each verified member has an equal vote.

ROSC Constitution

Part of the constitution would be that the data is owned by the listing agent and the text, photos, videos etc would be the copyright of the original author. Any breaches to this constitution would have impacts for any of the members. The terms and conditions that each portal, web developer and app developer disclose would be standardized, so agencies know the pricing, annual increases, sold data information etc from the beginning and as it is standardized there is nowhere to hide little clauses

Private Listing Portals

These would be treated just like anyone else. Yes, I hear you say this is a bad thing, complete nonsense! Over the next decade more and more people will list privately, it will take decades for this to become a powerful movement, and by this time agencies would have adapted their business models to suit It is important because they are an important part of the potential market for all agencies.

Original Sin

The reason for this system would not be too knock off any of the leaders, it would simply be to open the originator of the content and give control back to the agency, the people who create the content. REA and Domain would have access to the system just like anyone else and it is highly likely they would still be the dominant players in the market for the foreseeable future.

So, do you think that portals would get involved, do you think franchise groups would get behind this, even though not one of them will own one snippet of the system?

I’m talking to you.

Yes, you.

The person who thinks you will start an Australian real estate portal that will shoot right past domain, dethrone realestate.com.au and become the new number one.

Or, maybe you’re an agent who for some reason (perhaps because you have to send them a check every month?) doesn’t like realestate.com.au and wishes the industry would start a portal as a realestate.com.au killer.

I have a message for you: you’re dreaming.

I tell you this because of a very interesting discussion that developed in the comments of Ryan’s excellent post on FarmBuy.com.au. I thought I’d pull out the topic and expand on it.

Face it. realestate.com.au is the dominant market leader in online real estate listings in Australia. It would be very hard to beat them at their own game. What’s more, you cannot expect to copy realestate.com.au and win without their help, in the form of massive, ongoing self-destructive behaviour. They are not likely to give you that help.

All those hopeful entrepreneurs trying to create a new website to knock realestate.com.au out of its top spot and take it for themselves are on a fool’s quest. That goes for everyone from domain.com.au and on down. Domain can aspire to a profitable second place. Smaller, later comers can aspire to make a living, maybe, but certainly not to kill the giant.

The plain truth is realestate.com.au is the leader and will be the leader in online real estate listings in Australia as long as there are online real estate listings in Australia. There have been instances in business history when a player with a dominance similar to realestate.com.au’s was displaced by a competitor, but not many.

I say this as someone who has worked at realestate.com.au and with other real estate related web businesses on three continents, and as an entrepreneur.But, if you think I am missing something here, please enlighten me in the comments.

How to Make Money

Tell them they're dreaming!

Instead of leadership, go for a niche and establish a strong brand as the first and best in that niche. Here are some niches that are already in play, with varying degrees of success:

• Farms: FarmBuy
• Rentals: Rent.com.au
• Regional: AllHomes
• Premium property: Million Plus
• Free listings: The Home Page
• Chinese buyers: Juwai.com (a client of mine)

If you can be content with a niche, you could possibly be profitable, or at least one day sell out at a profit. It will be hard, because the Australian market is so small, but it seems possible. A niche could also be an add-on to another real estate-related business, giving that other business strategic advantages — like domain.com.au does for Fairfax’s newspapers.

Still Dreaming?

If a niche is not enough for you, and you want to beat realestate.com.au, there is only one credible strategy. You must dominate a new niche. This new niche by definition cannot be dominated by realestate.com.au and must be able to grow big enough to one day eclipse realestate.com.au. The flaw in this strategy is that you have to be riding a wave of history for it to work for you. Those waves don’t come along often.

For an example, look at realestate.com.au’s own history. The major media businesses had print real estate classifieds locked up prior to the realestate.com.au’s rise. They were unassailable. Classifieds were so reliable and profitable that analysts called them “rivers of gold”.

Then, three friends in Melbourne registered the domain name realestate.com.au and began persuading skeptical real estate agents to put their listings online. They chose a real estate classifieds niche the big players had overlooked: online. And they made themselves the leader in that niche.

(It is true that News International has a stake in realestate.com.au today, but that only goes back to 1992, when Simon Baker in his wisdom convinced News to buy it. realestate.com.au was a pure, independent startup in the classic mold. I reckon if you did the numbers, you would find realestate.com.au has been a much more profitable investment for News Corp than myspace.)

Over time, little realestate.com.au grew and grew by riding the growth of the internet. realestate.com.au won online and rode the internet’s historic growth into the very backbone of our economy and culture. The big media companies still dominate print classifieds, but print is sliding into irrelevance.

As of today, realestate.com.au has reported record revenue for six consecutive half-years, while the newspapers are struggling.

The lesson to draw from this history is simple. real estate portals should not take on the established leader head-on. Find a new niche and become the leader in that niche. You can make a living, and you may even get lucky enough to ride a historic trend into great riches.

The essential elements of  Domain’s email to PropertyNow, is that Domain intend a price increase (after approximately 6 years at the current rate) of something in the order of 53,000% ( based on the current clients using PropertyNow)  If the calculation of the percentage increase were based solely on new clients to PropertyNow from February onward, then the increase is still in the order of 3,000%.

PropertyNow has naturally put its point of view to Domain and to the credit of it’s management, negotiations may take place. I will comment further, but for now here is the letter sent to my business (PropertyNow) on December 15th 2012.

Start of email communication:-

Changes to you Domain advertising rates

We are writing to let you know about some changes to your Advertising Sales Agreement with Domain.com.au.

Ordinarily, we require all private advertisers on Domain.com.au to take out advertisements on a single buy basis. However, we recognise that you are a high-volume private advertiser and we have therefore created a special product to allow you to use Domain.com.au on a subscription basis.

Effective from 1 February 2012, your account will be migrated on to a Domain Flexi Subscription, which means that your rates will change to the applicable monthly State-based subscription rate set out in the table below plus a flat rate of $220.00 incl. GST per Sale listing and $165 incl. GST per Rental Listing.

Each listing will be in Priority Placement format for the first 2 weeks on Domain.com.au.

End text content of Domain email:

PropertyNow’s Viewpoint

From the point of view of PropertyNow, such an increase is the equivalent of filling ones petrol tank today for $60 and then going to the petrol station tomorrow and being charged $1800. The net result will be that PropertyNow will be forced to no longer offer Domain to its clients. This obviously impacts upon hundreds of individual property sellers (eventually many thousands) very directly.

PropertyNow intends to discuss this with the General Manager of Domain, while reserving the right to once again appeal to the ACCC to investigate a potentially anti-competitive practice. Propertynow will also explain to Domain management that it is at error in defining the nature of the PropertyNow business.

It is interesting to myself and no doubt would be to the ACCC, that PropertyNow will be charged massively more than other agents, despite charging its own clients a smaller fee than those agents. I would have thought this to be the absolute definition of an anti competitive practice.

I am interested to hear the thoughts of  Business2 readers in relation to Domains intentions, which were initally mooted back in January 2011.

Andrew Blachut

Director and Licensee PropertyNow

www.propertynow.com.au

Viewproperty.com.au aim to be a new “industry-owned” real estate portal designed to provide agents with an affordable alternative to the current offerings of Domain and Realestate.com.au. Apparently, the site is the result of 14 months planning and preparation by a group of Australian real estate agents and IT developers.

View Property Australia CEO Ross Bulman said:

www.viewproperty.com.au will allow all Australian agents to present their listings direct to the public within hours of them coming to market.

The agent group behind this project have a common focus and purpose, that is to give the industry more control over increasing online costs and providing an affordable, user friendly portal where members of the community can view every Australian listing in one place

This is an exciting initiative where agents may at last have the opportunity to actually own and control their internet presence and future costs.

Although the portal is busily receiving property listings they will not go live until they obtain 50,000 listings. On their site they say they’ve reached 40,000 listings and have now indicated a public launch date of Tuesday 10th November 2011.

It’s unclear who the consortium of agents are behind the portal nor its financial or ownership structure. The site has little information about this only saying that:

Once viewproperty.com.au is launched and has met set KPI’s in regards to listing numbers, traffic and search engine optimisation Industry members will be invited to become shareholders.

The portal has just released a statement indicating its proposed charges, stating there will be a “6 month awareness period” for the industry and public to explore the site. Then in month 7 a levy of $79 per office will be imposed on those members wishing to continue to list with the portal. In year 2 they are looking to increase this fee to $149 and then $199 in year 3 followed by ongoing CPI increases.

The portal must be expecting a large uptake by property seekers within the first 6 months or they’ve revised their revenue plans. As from a previous statement released about when fees will be imposed:

Only after it is attracting the required traffic and search engine presence, a fair monthly service charge is paid. A service charge that is a small fraction of what has come to be expected.

I feel that before the industry as a whole can jump on board and support this portal the following questions will need to be answered:

1. Who is behind the portal?
2. What agents are currently subscribed?
3. What is the exact ownership structure, who is eligible and what are the costs?

There could be reasons for this non disclosure, such as maintaining a competitive advantage or protecting the identity of supporters from competing portals. However, these are questions most agents would naturally have as they need reassurance they’re not simply feeding another Realestate.com.au

What are your thoughts, have you subscribed your listings to Viewproperty.com.au yet?

The directory is powered by another Fairfax owned company, OMG a digital advertising company. OMG have over 30,000 Australia domain names and active websites, with 60 + of them being key industry categories. A  few examples include:

• Realestateagent.com.au
• Painters.com.au
• Lawyers.com.au

With specific industry based domain names all running a directory powered from a central database, makes OMG quite successful at connecting customers with their client’s businesses.

Businesses can pay as little as $19.95 pm for a basic subscription on 1 site through to $97 pm for a premium subscription on 20 industry sites. Each business receives their own page which displays the usual business details including description, images, operational hours, testimonials and reviews.

From Domain’s perspective the Directory adds another aspect to their portal and an additional feature for property seekers. It’s also a good experience using the directory, as the layout is quite functional and the predictive search is very intuitive.

Fairfax often state they can deliver better results for their clients and this integration of their two brands is example of how they can drive enquiries to their businesses.

I’m hoping Domain can incorporate this directory into their real estate agent search which will provide users with a much more useful and enjoyable experience when searching and comparing agents.

Over the last week it appears Realestateview has launched itself up the Google search results for the term “real estate” now ranking number 2 behind Realestate.com.au. Domain which was number 2 has now been pushed down to the 4th result below PropertyNow.com.au

This is quite alarming for Domain and they would surely be seeking answers to why this has happened. Could this be due to a blunder by the Domain SEO team resulting in Google punishing them?

What’s interesting is, that Page Rank doesn’t appear to be influencing rankings too much as Realestate (PR=8), Realestateview (PR=6), PropertyNow (PR=5) and Domain (PR=8).

Could it be that Google have changed their algorithm and this has affected the results. Perhaps using the terms “realestate” and ‘property” have more weighting now than before. That said Realestate1 don’t appear on the first page.

Anyway, it would be great to hear from some SEO gurus. Andrew B any ideas?

Spokesman for AAMI Reuben Aitchison told ABC news that it is not worth keeping the branches open because such a small number of people use them.

“There’s been significant growth in the internet channel,” he is quoted as saying. “The amount of business and transactions that is now going through our branches has dwindled to the point that it now represents less than 2 per cent of our revenue.”

Reading between the lines just on this above quote – it is clear that most people do not go to AAMI branches to join the company – however this does not tell us the full story, how many people go into the branches for customer service? Far more than 2% I would guess.

This could be a fatal mistake from AAMI and its parent company Suncorp. I would hazard to guess that retirees are the bain of their existence and suck up most of their customer service time in branches across the country. Young people however, historically are immune to customer service and expect to be treated this way.

Customer Service

Customer Service is now seen by many large companies as a pain in the derriere. Ever tried contacting Google, Yahoo or the Microsoft web services team? The truth is customer service is a thing of the past. Most web companies today cannot afford to service clients who want direct conversations and you will find that as years go by – those wanting to talk to a customer service representative will pay a premium.

Google as an example have always handled enquiries online and you would be hard pressed to speak to a customer service representative unless of course you spend a great deal of money on Google Adwords. The success of Google comes from their software being relatively easy to use and backed up by community support and pretty extraordinary online resources.

If you ever contact Google with an enquiry it will simply redirect you to a help file and in many cases will not even respond directly to an inquiry. It is up to you to learn or be left behind.

These companies also affect small web development firms such as ourselves as we have found a large spike in phone enquiries on how to use 3rd party software like Google’s web services.

Annoying trends

Realestate.com.au has always annoyed me because they charge clients a fee to feed from companies like Agentpoint, HubOnline (now owned by REA), Portplus and other feed providers – when we basically take over their customer service and save them time and money. You can only do this when you are a monopoly or a duopoly. Competition not only breeds better quality software but also great customer service!

Recently, we as a small company have found that less than 5% of our customers take up to 90% of our customer contact resources with many enquiries are relating to services and software we do not own and should not have to support. We like others will no doubt in the future separate our customer service to web, email and make these users pay a premium over others.

Another annoying trend which has come into existence is having to purchase warranties for the so called quality products we buy. In the past companies backed up their products with great warranties trying to prove to you that they are better than their competitors because of the quality of those products. You only need to go to the likes of Harvey Norman to see this play out. I always make it a point to let the service representative know that this is not the way to do business, although I think Harvey Norman and the like make a killing on these ‘value’ added fees. About the only industry that now still thumps their chest about multi year warranties are car companies and this is because competition is fierce and customer expectations through past experiences are high.

In short we are all to blame because we collectively have created monsters that are shareholder graded only on revenues and profits and rarely customer service. This again is why I (and you should too) will always support quality real estate portals that compete with the likes of REA and Domain.

Currently our company (and most others like Portplus) support our customers by feeding to a multitude of portals – even though each one costs us time and money to continue to support.

What you can do?

In short, nothing much, more and more companies will direct you to online support and help and you will need to learn how to use software or services from these companies yourself. You will find that most web companies are already web based only with support and you will need to learn the software you use.

Learn or Pay your Front Office

I have made it very clear in the past that your front office person is probably one of your most important team members and you should start to pay them accordingly. These are the people that are on the frontline, more often than not these are the people that update your website and real estate systems. The turnover of front office staff is often high and you can only look at your company to blame for this. Get someone great and add these sites (most should be relevant) to your manual for front office personal – even better still take some time to learn what these services do and how they can improve your company going forward.

• Google Webmaster Tools
• Yahoo Web Services
• Bing Web Services
• Google Analytics
• Facebook
• Twitter
• Feedburner
• WordPress

Though this won’t be cheap, as to be considered as a potential TLD purchaser you must lay down a USD185,000 deposit and then pay an annual renewal fee of USD25,000. This does sound like a lot of money but when you think of the potential revenue (through the sale of domain names) then it could be a very good investment.

If we look at real estate the most searched term in our industry then .realestate will be the most highly prized TLD. Whoever succeeds in purchasing .realestate will then be able to sell domain names like www.australia.realestate, www.sydney.realestate, www.london.realestate, www.cheap.realestate, www.beach.realestate, www.luxury.realestate and so on. The potential revenues are extraordinary but this will come at a cost, as these domains are likely to be auctioned to the highest bidder. Meaning the likes or REA and Domain are tiny fish in a worldwide pool of potential purchasers for .realestate.

So how significant will the introduction of TLDs like www.anything.realestate or www.anything.properties be to the real estate industry? Some analyst suggest that people’s reliance on search engines will be diminished as instead of typing in “Sydney real estate” into google they can go to www.sydney.realestate. The same could be said for real estate portals as why would you go to REA or Domain to look for real estate in Sydney when you can simply go to www.sydney.realestate. In theory this could well be the case but in practice this does not always happen. It relies on the purchaser of these domains to hold all the content in that area/type eg Sydney. If all available property in Sydney does not appear on www.sydney.realestate then property seekers will have no choice but to continue using Realestate.com.au and Domain where they’re assured the largest representation of Sydney real estate will appear.

One thing is certain though. Those real estate agencies who get in first and purchase their suburb.realestate will have a significant advantage over their competitors, as these domains will certainly drive web traffic to their business.

Despite making it clear that it will take time, some industry heavies quickly began commenting on how little effect Google was having on sites like realestate.com.au with increased share prices /revenues traffic figures. The most vigorous of these was writing on just about every single notable real estate blog (including his own) how it wasn’t making a jot of difference, I thought at the time, it was pretty short sighted from a person who should know better!

I also made it clear that it will take time for Google’s impact to occur. Only when Google Real Estate has similar volumes of listings and only when they include the searchability of these listings directly within the search engine will it begin to have an impact on the majors.

Now it seems Google is stepping it up a gear……..is this an aggressive phase for Google?

During a session at the 2010 Inman Real Estate Connect conference in New York, Sam Sebastian, Google’s director of local and business-to-business markets, was quoted as saying “We’re actively looking to acquire one to two small real estate companies a month.”

Read this again………
“We’re actively looking to acquire one to two small real estate companies a month.” This statement speaks volumes of just how important Google thinks real estate is to their overall search strategy. It tells me they really do think it is one of the most popular search markets. Many people are talking of Google purchasing the likes of Trulia, Roost and some other independent companies. Personally, I think they will buy into products that compliment and drive traffic to their search and real estate website rather than buy other search engines and portals, they will also more than likely delve into products to compliment their Andriod operating system and new phone offerings.

Life without Realestate.com.au and Domain.com.au?
One thing is for sure, in a few years the real estate landscape will be completely different. Once Google has comparable listings and if it is confident it has a faster way to search then all that needs to happen is for consumers to become aware and use the systems and things will get tough for the portals.

Realestate.com.au and Domain.com.au continue to provide a decent service to agents, however it is the control that agents are wary of – no one likes having monopolies or duopolies, it only serves the few and each and every time hurts too many businesses and stifles innovation. Google’s involvement in any major industry allows a fair price to be charged for services, forces innovation and will make companies like Realestate.com.au and Domain.com.au offer better support and services for their money.

On a slow news day late last month an eagle eye reporter of the Dominion Post newspaper in New Zealand reported on the shocking crime of turning the sky blue! The local Open2View real estate photographer had the temerity to use the same cloud formation on different photos and the Dominion Post caught them in this despicable crime.

Showing there is not much bigger than a politicians ego local MP Clayton Cosgrove chimed in on the issue when approached by the paper for comment that agents should show the property in “its ordinary environment” and “I just think it’s a bit on the nose. The more straight up you are, the better you are.”

Showing what a hypocrite he was, the MP who apparently proposed the recent real industry reform bill to parliament seemed to have no problem when he said that photoshopping photographs  ”could make me look slimmer and give me more hair”. Seems this kiwi pollie thinks misrepresenting his own looks is fine, but changing a sky blue is a little smelly!

Nobody suggested that the house was changed in anyway nor its surroundings. Nobody removed power lines, blotted out a bus stop at the front of the property,  added a garden that wasn’t there or anything else that misrepresented the property in anyway. They turned the sky blue, thats all.

The whole sordid affair started doing the rounds here in Australia after a local blog picked up on the story and it was retweeted on twitter.

Lets all put this in perspective shall we.  Nobody seems to want to hold Domain to task for altering photos that clearly misrepresent the property but everyone gets up in arms over a blue sky.

Domain does not display photos in the same aspect ratio that they are provided in and will warp the images.  Now when the photo is in landscape the differences are only minor and unless you see the original image side by side it is often difficult to tell. It is a little like when you go to your friends place and they have a fancy widescreen tv displaying a 4:3 or letterbox picture. It looks pretty close but everybody seems to have put on a little weight. So a small house appears bigger and a crowded room appears a little more spacious.

It’s when photos are provided in portrait orientation  things really start going astray.  Lets look at the same property on three different portals.

Domain's display of 352 Edgeware Road, Newtown

Realestate.com.au's version. Not quite so spacious as Domain's is it

Myhome - Again, it is tiny compared to Domain's offering

Domain need to clean up their code and stop distorting photos because its a dangerous game to be misrepresenting properties these days with some government departments looking for scalps… even big ones that can afford to pay big fines.