Google to Close the Door on Real Estate Search

Back in 2009 Google launched the ability for property seekers to search for real estate via Google Maps. Today they’ve officially announced that from February 10, 2011 this service will be discontinued. From their press release:

In part due to low usage, the proliferation of excellent property-search tools on real estate websites, and the infrastructure challenge posed by the impending retirement of the Google Base API (used by listing providers to submit listings), we’ve decided to discontinue the real estate feature within Google Maps on February 10, 2011.

This is a huge win for the Australian subscription based portals like Realestate.com.au and Domain.com.au who were threatened by Google and their model. While for the smaller free subscription based portals like Homehound, Watersidepropertysales, TheHomepage and all the franchise networks, it is one less source of free traffic to their websites.

Looking at it from an Industry wide position, I guess it reflects how competitive and innovative the real estate technology sector is.

Google Base API, Google Maps, Google Maps real Estate, Google to Close the Door

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About The Insider

Ryan has been involved in the real estate industry for a number of years. During this time he has operated web based real estate businesses along with provided consulting to the real estate software development industry. Ryan operates Agentpoint.com.au and is actively involved with the design and development of real estate systems, software and web sites in the United States, Australia and New Zealand.

83 Responses to Google to Close the Door on Real Estate Search

  1. Nick January 27, 2011 at 9:12 am #

    Very odd. I didnt see that one coming.

    The amount of traffic some of our clients gets from Google Maps Real Estate is non-trivial.

  2. snoop January 27, 2011 at 9:22 am #

    Was never going to be a flyer
    Tools yes
    Search yes
    Vertical portals No

  3. Simon Baker January 27, 2011 at 9:25 am #

    We have been tracking Google over on http://www.propertyportalwatch.com for some time and it was not a surprise to us that they have walked away from this.

    Our view was always that the model was challenged.

    They were able to source listings easily as everyone was happy to send them listings. However, there were a number of challenges:

    1) Without inclusion on the main search result, driving of serious volumes of traffic was going to be hard

    2) The interface was less intuitive than the approach taken by property portals

    3) There was a challenge in managing the quality of listings with many old and potentially fraudulent listings on the site

    4) Monetisation was never clear and replacing lost AdWords revenue was always going to be hard

    5) There was not clear owner of the product inside of Google meaning that without a powerful champion internally, it was always going to struggle.

    Overall, an interesting experiment that shows that while google can do anything, that doesnt mean it will be successful.

    Simon Baker
    CEO
    Classified Ad Ventures
    Publisher of http://www.propertyportalwatch.com

  4. A mastermind January 27, 2011 at 9:29 am #

    “I guess it refelcts how competitive and innovative the real estate technology sector is.” <- Lol

  5. Vic January 27, 2011 at 9:38 am #

    Not surprising at all. Since google made its announcement last month that it was moving out of APIs for real estate, jobs etc it started to become clear to us that it meant that it felt uncomfortable in trying to operate in a field to which its major clients (Domain) or former clients (REA) were not happy about its presence. Certainly it gave it a good go and even dipped its foot into the fully fledged portal arena. Refer to posts Andy did on the subject late last year.

    As you rightly point out Ryan the SEO value, from google that have enabled new free to list portals to get a presence, will now be significantly diminished. The existing established subscription portals will be laughing all the way to the bank.

    The challenge ahead is SEO.

  6. Peter Ricci January 27, 2011 at 9:45 am #

    Disappointing. Google have shown that when it does things half heartedly it is as poor as any company out there.

    I would have liked them to get into the systems for agents listings as this is where it begins and where I see it failing all over the world.

    Simon is right about not including the data in search results, seriously some thickies roaming the corridors on that one.

    Simon – where are you from again? πŸ™‚

  7. Robert Simeon January 27, 2011 at 9:54 am #

    I guess it also means that Google will be back having another crack at it too. Maybe they will get Steve Jobs in this time around to get it right.

    I was never a fan – it was way to busy and impossible to navigate.

    They will be back – real estate is an enormous category and too big to ignore or realise its true online potential.

  8. Glenn Batten January 27, 2011 at 11:08 am #

    Snoop,

    The problem was they never made this a Vertical solution. Real Estate was only ever added into the greater horizontal search of Google Maps.

    They were going to integrate the Real Estate listings into into the general SERP’s but that never happened and as Simon pointed out without that extra exposure/traffic it was only limited to a dropdown box on the Google Maps pages.

    They did not close the door on Real Estate though when they said.

  9. Glenn Batten January 27, 2011 at 11:10 am #

    Simon

    Three links back to PropertyPortalWatch…??? πŸ™‚

  10. Robert Simeon January 27, 2011 at 11:38 am #

    Simon,

    Have you been tracking REA also? Perhaps you could explain why they have surrendered market share across Sydney metro areas?

  11. Vic January 27, 2011 at 11:46 am #

    Hi Ryan,

    Googlemapsrealestate will affect those who depended primarily on it as their main source of referals. From where we sit we are delighted that they are out of the picture. Googlemapsre gave us only miniscule visits and we never really depended on this as a main source.
    In addition visitors via this source were only using up one page per visit. Our strength comes from being a niche in properties ON or Near the water and our SEO strategy has been focussed on key words relating to this niche.

    Piggybacking generally is not a good strategy and we have tried to keep our eggs in many baskets in an endeavour to keep growing. Our growth stats will hardly feel the google decision. In fact I’m hoping that the decision to change to wordpress (thanks to you guys) will more than make up for any small loss of visitors.

    Vic Del Vecchio
    CEO
    http://www.watersidepropertysales.com.au

  12. Vic January 27, 2011 at 12:22 pm #

    REA rankings have dropped 3 places in Australia since mid Nov ’10, whilst Domain have also dropped 3. The winners have been homehound,, thehomepage and myhome. All free to list. Will be intersesting to see if REA and Domain recover at their expense.

  13. max January 27, 2011 at 12:47 pm #

    Ah here we go…REA haters couldn’t hold back.
    Now we’re back to homehound and myhome to save the day.

    The truth is the Google plan never ever made sense. I had plenty of convos with people on this site who really couldn’t see the following

    1) google has REA, Domain etc etc paying them truck loads for adsense and the like, a successful google real estate would eat away at this revenue.

    2) This would mean google having to charge or shut down.

    I never stopped being mazed at people refusing to understand this.

    ”oh but the ad space around is what they would have made money from” Great, you’ve read Chris Andersons FREE, I’m happy for you but there was never going to be enough traffic to again, support the loss in revenue from the big portals.

    Robert, in your market Domain is stronger than REA for most people, we get the point.

  14. Bill January 27, 2011 at 1:38 pm #

    3) There was a challenge in managing the quality of listings with many old and potentially fraudulent listings on the site

    If they could have solved this problem there is nothing they couldn’t have achieved. Google are big on algorithm controls and not having humans moderating content. So they were unable to control the quality of listings therefore they were never going to be a serious portal contender.

    I wouldn’t discount them coming back on the scene with another model though. Real Estate is huge worldwide and they have buckets of cash to fund their experiments.

  15. Vic January 27, 2011 at 1:49 pm #

    Bill,

    You’ve hit the nail on the head. Our own investigations showed that generally Google results were unreliable in both accuracy and and currency and as Simon B says they never had a “champion” managing this section of their business. The closing of google will not affect us as we were averaging less than 10% traffic and very low page views. Being a niche, I guess, will work in our favour as we have had to strongly SEO with keywords relative to properties on or near the water and this has been getting traffic direct to our site.
    If there are sites that depended on googlemapsre to give them traffic then it may be that they will have to crank up SEO and even adwords to maintain their traffic.
    I can definitely see both REA and Domain picking up- with the big proviso that they do not start gouging.

  16. Charlie January 27, 2011 at 2:23 pm #

    It’s been a fascinating 18 months since Google chose real estate (and Australia) as the first such classified advertising industry/market to enter with their mapping/search tool. All points above very valid – all I’d add is that in large companies like Google there would a competition for resources (what projects to do, which to press forward on) and someone internally lost the argument here.

    Strangely, I thought they were getting closer (with their recent integration of Google Places, Maps and their organic search) to spreading their real estate search into the normal search. Then, it would have been interesting. But, as some of you remark, they may be back with a different version one day.

    What’ll some of the free listing sites do now (I’ve found quite a few that just scrape Google Base to get listings, and little/no content from elsewhere)?

  17. Robert Simeon January 27, 2011 at 2:27 pm #

    Max,

    If you read my comment again you will note that I said “Sydney metro areas. REA lost our market years ago – now it is happening in the Eastern Suburbs, Inner West, Lower and Upper North Shore of Sydney.

    When a property portal charges agents/agencies to appear and very little happens in terms of public participation from what happened previously – one could safely say that is another clue!

  18. Glenn Rogers January 27, 2011 at 4:13 pm #

    More likely there wasn’t enough money in it plus pressure from real estate portals word wide.
    If they start to undermine their customers their customers may disappear.

  19. Brad January 28, 2011 at 3:59 am #

    Clap…clap…clap for all those who now claim ‘of course Google was never going to work’. You are the same geeksperts that were beating your chests about how google was going to rule the world, while at the same time bashing legitimate portal businesses that had been delivering us quality leads and value for money for most of the last 10 years.

    I haven’t heard you no-it-alls acknowledge how wrong you were, even though you were ademant 2 years ago that Simon Baker should cash in his many hundreds of thousands REA shares because the company was destined to fail now that the Google genie had been rubbed.

    Good on you Simon for having the clarity and understanding of the online world to know the difference between ‘fingers crossed’ and business fundementals.

  20. Peter Ricci January 28, 2011 at 4:35 am #

    Hi Brad

    Thanks for the comment. As you should know I am wrong about many things on this site.

    Creating success online the the real estate field is tough business. What Google did a few years back excited many of us, but it was only the beginning of what they needed to do, I spoke about integrating search results for listings within actual search results which they never did and was a poor move.

    I think Google have shown over the past few years they have pea hearts in some areas and are aggressive in others (search, mobile, video)

    As for your glee with REA and Domain, yes they do provide a great paid for service – however, control is all with these portals and not with an agent. REA could raise fees by 50% tomorrow and all agents would have no choice but to pay. This is where I will support agents in giving them a real choice and no one could deny Google was a choice.

    This website is all about informing real estate agents and what we think is good for them. If we get it wrong from time to time then so be it, however we will never stray from the goal of better informing agents of what we believe is great technology and keeping them up to date with all of the goings on.

    Will REA and Domain keep control well into the future? I doubt it, the web is where innovation happens and no one knows what is around the corner, but one thing I know for sure – is that nobody else knows either.

    As for Simon’s warnings, yes he was pretty spot on, but even he will tell you that the real estate technology game is not an easy one and anyone who ventures into the space of REA and Domain better have some teeth for the long run.

  21. John Property Investment Advice January 28, 2011 at 5:14 am #

    This will somehow affect the Real Estate Marketers but I believe that they can come up something better soon.

  22. Simon Baker January 28, 2011 at 9:31 am #

    Robert

    To answer your question re why REA has surrendered market share across NSW, i think it comes down to a combination of things.

    Firstly, the new site launched last year wasn’t great and this created a moment when people explored other options, thus some consumers moved to Domain

    Secondly, it is a competitive market and domain is focusing most of their efforts in Sydney while REA has multiple fronts to fight on – there is nothing like focus to eat away at the multi market leader

    Thirdly, the aggressive movement in pricing has meant that agents are paying more attention to where the leads are coming from and, in NSW, from what i hear Domain is generating more leads. Therefore agents are questioning the value of feature properties, premier listings, and other premium products. There is no use spending on these if they are not delivering the results (ie leads).

    Finally there has been massive turn over in staff at REA and with turn over there is a loss of knowledge and experience and, perhaps more importantly, relationships with the industry. The loss of Bill Russell in NSW is a good example of this. Getting close to the customers takes time and REA probably doesn’t understand its customer base as well as it used to.

    I was once told that death in search does not come quickly but comes through a thousand cuts.

  23. Curious January 28, 2011 at 9:32 am #

    It would be interesting to see if there will be any falls in traffic to the portals/agents who fed listings to Google real estate?

  24. Simon Baker January 28, 2011 at 9:54 am #

    Peter

    You said something interesting … “control is all with these portals and not with an agent”

    I dont know too many businesses in which the business controls everything. Most businesses have to work within an ecosystem and the smart ones invest their time on maximising their returns around the things that they control and getting the most out of their partners.

    So, in real estate for example, REA and Domain control access to internet based buyers. So instead of fighting this, the agent should be getting the most from these services … ie making sure that they stand out from the crowd, make sure their listings are well presented, and ensuring they dont overspend on buyer lead generation.

    Where agents can exert more control over is seller lead generation. This is where the agent site comes into its own. A good agent site should be targeting sellers not buyers. Through great SEO optimised content around sellers and through seller targeted SEM, the agent should be able to position itself, on the internet, as a leader in helping sellers. REA and Domain dont really compete here … so they dont control this market!

    Also, another area agents should focus on is lead management. This is where REA and Domain dont operate and where most value is created or destroyed. How many leads go unanswered or unmanaged?

    Therefore, why fight for control over sourcing of buyers (what REA and Domain do) while you can win the real fight over control of sourcing sellers and then managing all leads.

  25. Glenn Batten January 28, 2011 at 10:48 am #

    Brad,

    The good thing about Blogs is that it is all on the record years later.

    I think if you review past posts and comments you will see a few things, amongst them a desire pre launch by most for a true vertical solution of a Real Estate Portal from Google which would have competed directly with the portals.

    That did not eventuate and instead it was rolled out as a bastard son to Google Maps and Google Base and you had to access it via a drop down. It still had potential to generate better traffic for agents if they would have just integrated it into the normal search engine results page which they indicated they would do.

    I can specifically remember writing somewhere that Google will not put a subscription portal out of business and it would not be realistic to expect agents to stop using paid portals.

    Care to share where somebody claimed that REA would fail? or that Simon should sell his shares? I certainly might have said that shareholders would be nervous with the launch of Google Real Estate but thats the same when any major competitor is announced but I can’t remember giving advice to anybody to sell their shares.

    Don’t let the truth get in the way of your position though! πŸ™‚

    Google has played a big impact on the industry but it has primarily been indirectly through their sheer presence and potential. They have chosen to close the Base API down and a victim of that is Real Estate because it was built on the base listings however don’t count them totally out of the Real Estate space.

    The announcement also said “Yet we recognize that there might be better, more effective ways to help people find local real estate information than the current feature makes possible. We

  26. Robert Simeon January 28, 2011 at 1:49 pm #

    Simon,

    Thanks for your articulate response and I concur one hundered per cent with what you say. The redesign of the website has obviously driven away consumers given its poor design and convoluted navigation.

    I had heard that staff turnover was huge and the case of Bill Russell is an excellent example as whenever we had a problem he was our go – to – man (I am umaware if anybody at REA fills that role anymore).

    One valuable lesson we all learnt during the GFC was the value of running successful online operations especially when VPA funds all but dried up. Very few real estate businesses excelled during that crisis – which would explain your comments that real estate agents now spend much more time exploring the source of enquiries.

    Whilst we remain inundated with getting connected to social media and the like – it is imperative that agents/agencies concentrate on their core business and that starts with the website and database.

    If consumers don’t like your website – they don’t like your business. Charging clients to use it when it is widely acknowledged that it is losing market share becomes an entirely different matter.

    If REA continue to lose the Sydney market – because it is focused on other demographic markets will not stop the bleeding just fewer cuts.

    Cheers

  27. Peter Ricci January 28, 2011 at 2:38 pm #

    Hi Simon

    Competition is what drives innovation and keeps prices low, one only has to look into any industry where there is a monopoly or duopoly and you can see this playing out in the favor of the large organisations.

    We only have to look into markets where newspapers had absolute power. An example being Hobart Tasmania. It cost a lot more to advertise for a full page in the piddly Mercury than it did for a full page in SMH Property Guide, why? No competition.

    I think you get my point. I am all for REA and Domain making good returns on their products and services and their current pricing is about right, but this site is for agents and my first thought is always what is better for agents. Not portals.

    As for lead generation, you have a good point. But it all comes back to organisation and effort.

    The best software in the world is useless unless systems are in place for people to input data and use the software to get the most out of it.

  28. Vic January 28, 2011 at 3:03 pm #

    Peter, how dare you call our piddly Mercury a piddly paper. Having lived here in Tassie for 8 year It never ceases to amaze me that a State with 500,000 people can have three major “er piddly” newspapers. All are on sale throughout the State. Not so, lack of competition; it is the parochiality of the North versus South. Pay more to stop the bastards up North getting a leg in. Quite the opposite to competition:)
    However, that is changing as Tasmanians, and in particular agents here, now understand that there is a market beyond its shores.

    And you say your’e only interested in agents. Well if you haven’t noticed portals play a vital part in the agents marketing strategies and many of your readers and contributors also know the value of portals to agents, particularly those portals who are free to list and working hard to get a presence in the market place for, yes, your agents.

  29. snoop January 29, 2011 at 5:16 pm #

    I struggle with all this Portal bashing, by agents and the complaining.
    Are they getting complaints from vendors?
    At then end of the day Vendors fund them,agents use Vendors money to list on them.
    Would I accept a small charge to list on REA ..reluctantly becuase they are Number one.
    But should I pay 350 bucks when thats all an agency pays a mth for the base service?
    Would i pay a fee on be on a franchises site…No way,thats in the commission.
    As a vendor I would want my property across as many sites as possible as cheaply as possible, so these new free portals are good news to me,as long as agents arent trying to charge me to be on them.
    The agent who gets my listing charges me the least for the best exposure.

  30. Greg Vincent January 29, 2011 at 7:38 pm #

    Does anyone know if Google has notified or will notify agents that their listings will no longer appear on their site? That could be highly embarrassing for agents who have promised this service within their marketing (especially if an agent wasn’t notified and offers it to clients after the service has disappeared from the web).

    It looks like SEM for property related keywords will become a lot more expensive & SEO is going to become even more important than ever.

    It will be interesting to see if (or should I say ‘when’???) REA & Domain react with increases to their subscription fees?

  31. Glenn Batten January 30, 2011 at 11:34 am #

    Snoop,

    It does not mastter how long you hang around here you just seems to ignore the agets perspective. Vendors paying for base portal costs is still pretty rare. I would love a dollar for every advertising solution who when queried on price said it did not matter because sellers would pay for it’s Well it does matter.

    But irrespective of who pays for it agents have a fiduciary duty so they have to treat it like it is their own money . If an owner has only $ 1000 to spend an agent has to ensure it is spent in a way that maximizes the return for an owner. So massive price rises and massive drops in property views and enquiry levels by any advertising medium is very important and a topic for discussion.

    We also get plenty of vendor complaints about the rising costs of feature properties.

  32. Chris January 30, 2011 at 3:29 pm #

    Snoop, Australian Agents have it better than most, probably don’t realise it and they still complain.

    1) Vendor paid advertising
    2) Exclusive agreements (rather than open listings)
    3) Buoyant real estate market compared to any other Western Country. In the US, the number of transactions in 2010 was the lowest ever recorded.

    So what’s left to complain about? Let’s have a crack at our number 1 source of leads – Portals.

  33. Glenn Rogers January 30, 2011 at 5:14 pm #

    The portals I’m told are now just simply charging too much and will continue to gouge their customers, it’s like having a partner in the business rather than using a service.
    If a viable alternative came along you might find some portals suddenly empty of content.

  34. Vic January 31, 2011 at 8:23 am #

    All very interesting that the subject of the fairness of portal charges seems to come up regularly on this blog.
    REA and Domain are the only two credible advertising platforms in this country and they will not be going away, certainly not in the short term (say 5 years). They are dominant because they know how to price according to what the market can afford and they market themselves according to the revenue they need to maintain their prominent position. But more importantly they know where the buyers are.

    The past two years has seen a proliferation of new portals emerging in the industry and mostly free to list. In all these new portals share amongst them around 20% of the market.Excepting for Review, which is now an amalgam of what was already there in the first place, and Myhome (now owned by review), there has been little or no dent to the REA and Domain domination.
    In the market place it is general rule that market leaders of such dominance will remain so and that others can only hope to exist in niche areas. Try getting more than 10% of the market share and you will have the market leaders respond and crush the threat. This what happened with myhome and to a lesser degree what you see with REA action against realestate1.

    Back to why REA and DOmain will remain the first choice of vendors/agents. It is the value of the price per unit for the reach. Firstly on unit price :A reasonable agents listings at anyone time is around 30. That is 30 vendors paying no more than $50 pm to cover monthly advertising through these two portals. This is more than enough to cover the agents subscriptions for both.Secondly: These two have a reach from 80% of the market place (potential buyers) A good agent would then have in his marketing plan, The dominant players and a selection of at least 5 additional free to list portals. The smart ones will look to niche portals to be included (ie those that specialize in a particular property type or particular region).

    Where agents generally fall down is that they treat all their vendors marketing as a one shoe fits all. They set up a standard approach ie “we will market your property on REA and Domain, we will do three print media ads, we will print brochures and we will put up a sign board. It will cost you $x” Agents are good at understanding why a seller wants to sell then lsiting the property with images and text that generally massage the sellers ego, but they are hopeless at knowing where and how to source the buyer.

    Buyers are a different breed to sellers and they will thoroughly do their homework and research and because of the internet are much more sophisticated. They are far more willing, by economic necessity, retirement or work opportunity, to to look beyond their precincts.

    Smart portal managers know this and spend a lot of their research energy to position their portals to where the buyers are.

    So, to all the agents who whinge about the unit price I say do a lot more work for your individual vendor. Reasearch the options available, understand where the buyer is likely to come from and tailor individual marketing packages for each vendor. Let your vendors know the way portals position their property lists and what options are available for higher exposure in each. Cost the plan and don’t assume a vendor will not pay. If it is logical and will help them sell quicker why would they refuse.

    Now using this approach, I will bet there will be no vendors that will quibble about REA and Domain costs (to them) nor the selection of niche portals that will supplement the marketing approach.

    Google did not consider any of the above and that is why they could not gain a credible hold.

  35. Trevor January 31, 2011 at 8:45 am #

    A fascinating discussion, from people who really know their businesses.

    My favorite quote was in Simon’s first post however:

    “Overall, an interesting experiment that shows that while google can do anything, that doesnt mean it will be successful.”

  36. Bill January 31, 2011 at 9:17 am #

    I’m not writing Google off because real estate search is too big and they are in the search business. I have no idea what their ultimate model will look like, but I just believe there will be some kind of Google Real Estate Search.

    I think Google have just retreated to the command centre and are assessing results from their initial attack.

    I think it’s logical, for them to succeed, they need to get agencies onside and uploading listings to the Google servers and disallow non agencies. That would solve the spam issue. And when you have billions available I’m sure that could be arranged because every problems solution starts with a $ sign in front of it

    Google have billions to play with, they will be back.

  37. Tatiana Mijalica January 31, 2011 at 9:44 am #

    Vic, your pricing is way of with 30 vendors paying $50 per month to cover both portals.
    Both REA and DOM base price in Victoria is over $1000 per month, not sure what it is exacly going up to with the new FEB price rise. With base price, I look at the Platinum subscription, as the Standard sub has no logos and no real value.
    General internet schedule cost in Victoria is around $350 – $450 per vendor, going up to $1200 – $1500 per vendor is some cases.

  38. Vic January 31, 2011 at 10:22 am #

    Tatiana

    Even if it was a total of $2000 divide this by 30 = less than $70 per vendor (not way off). And if an agency has 60 clients that would be $35 pm. The point is whether it is $50, $70 or $35 it is a piddly amount when it comes to selling a median price house of $500,000. And the further wider point is that agents (in general) are not doing their vendors a favour in the way they currently present marketing propositions to them.
    By the way not every agent is paying $1000 per month to both portals. Doesn’t your figure of $1000 per month includes rentals and commercial? I was only talking house sales.

    Cheers

  39. Tatiana Mijalica January 31, 2011 at 10:31 am #

    Rentals yes, however commercial is a separate subscription and cost across both portals.

  40. Vic January 31, 2011 at 11:01 am #

    Ok Tatiana- but I hope you haven’t missed the point.

    And I disagree with Bill. Why would google come back into a market place already dominated? They may come in with support for the major players but not in competition. Just doesn’t make sense try try and kill off two big clients.
    History is littered with big organizations trying to make killings outside of their proven business model. I think we were all hoping that google would make a go of it but in the main this was only wishful thinking. So now, lets see what we can do to work within what we have got.

  41. Tatiana Mijalica January 31, 2011 at 11:25 am #

    I don’t think I have missed the point.

    I have a friend at the moment that has fallen into financial difficulty and needs to sell his approx. $850 000 home. He has absolutely no money for advertising. We have gone through all the ad schedules for the agents in the area. Even taking out the print component – board, brochure, photos, copywriting and internet are well over $1000.

    As most additional products on REA/DOM are purchased on an all property bases (feature properties, ebrochures etc), he actually does not have the flexibility to remove these products from his schedule as the agent will be charged for them regardless of whether the vendor wants to take them or not.

    His only options are to go with a no brand no sale no charge agent or a Jenman agent and trust them with the biggest asset he will probably own.

    Trust me, if his internet cost was only $30

  42. Vic January 31, 2011 at 2:39 pm #

    Tatiana,

    I can’t believe what you are saying. Do agents really charge that for internet management and are they really going to increase this to $1200/1500?
    Glenn B tell me this is not the case in QLD. I know that it is not happening here in Tassie.
    If it is generally the case then agents have no-one to blame for the REA and Domain increases, afterall they just follow the fat.

    And if it is only pertinent to Victoria, any wonder Peter Mericka is doing what he is doing.

  43. Bill January 31, 2011 at 3:02 pm #

    Vic wrote:

    Why would google come back into a market place already dominated?

    And he could be right.

    But then:

    Yahoo are a major client of Google yet Google compete aggressively against them.

    Paypal/Ebay are a major clients of Google a yet Google compete aggressively against them.

    Apple are a “major” client of Google yet Google compete aggressively against them.

    etc, etc, etc.

  44. Vic January 31, 2011 at 3:37 pm #

    Point taken Bill, but they are all competitors and clients in the “same field”. Real estate is not their game.

    Time will tell.

  45. Glenn Rogers January 31, 2011 at 3:40 pm #

    Google will only stay out of the real estate market as long as it suits them.

    If/when they come back and if they are serious they have the funds and ability to wipe the floor with the local offerings here, don’t underestimate Google.

  46. Tatiana Mijalica January 31, 2011 at 3:49 pm #

    Vic, portal cost at a platinum subscription in VIC (minus any additional products) across all 3 portals (REA, DOM, REV) adds up to min $2750 per month.

    In the more trafficked areas this cost is higher, in the less trafficked areas it is a little lower.

    This is without the confirmed rate increase coming through for REA in FEB and unconfirmed reports of DOM and REV increases this year.

    Add in a board ($350 – $850), floor plan ($100 – $175), copywriting ($125 – $300), photos ($300 – $400).

    At bare minimum it adds up to approx. $1000 to have the property internet ready.

    I think it is important to remember that Agents are unhappy about price increases not because they have to pay it as it is paid by the vendor in most cases, but because they see the pressure it puts on the average Australian home seller they are endeavouring to assist.

    Out of the 245 000-odd properties sold in AUS per annum, only 12% (or 29000-odd) are priced over $1M.

    This means that 88% of Agents business comes from the average AUS home seller to whom it is not easy to spend $1000 or more on advertising, regardless of whether the property sells.

    Also, your take on VIC agents is unwarranted, even Peter Merricka charges a fixed fee on $4400 -:)

  47. Peter Mericka January 31, 2011 at 4:07 pm #

    Can someone enlighten me on why you real estate agents don’t just snatch the ball from REA and Domain? From where I sit you’re a gutless and tribal lot who whinge and whine about about being controlled by these portals, and yet you lack the resolve to do something about it.

    All of the real estate institutes now have a stake in http://www.RealEstateView.com.au. If you had a lick of sense you would all get together, subscribe en masse to your own portal, unsubscribe en masse from the big portals, and then AFTER having made http://www.RealEstateView.com.au the leader, allow some trickle back to the withering REA and Domain.

    Is it because you lack effective leadership, or because you’re like cats and prefer to hunt alone. Whatever it is, you’re the authors of your own misery!

  48. Vic January 31, 2011 at 4:47 pm #

    Tatiana,

    Don’t be so sensitive. I’m am not giving “a take” on Victorian agents.

    I’m not here to advocate Lawyers real estate, but you shouldn’t mislead in this regard. His fees are $4,400 total and includes advertising on Domain and REA. He has no fallback on a commision. But what you are saying is that it is ok for a Victorian agent to charge more than he needs to cover his internet costs then still get a commission.

    I spoke to a couple of really progressive agents this morning who both could not believe the charges, but were of the opinion that the agents concerned, and I don’t know that it common practice for Victorian agents, are living in dinosaur land. They probably refuse to shed old high cost office structures, systems and management practices and continue to raise funds from vendors to cover their overheads.

    The market in Melbourne has been lucrative for agents in the past ten years and the result is what you’re describing now. But the world is changing and new innovative and lower costs of doing business is the way to go in the future. If agents keep up the practice you refer to then Peter Mericka’s model may be where vendors will gravitate to.

    As I said before, and if I don’t hear to the contrary on this blog, the practice you’re are talking about is not widespread, and those using it should be prepared to take the consequences and don’t whinge when the consumer starts to be more discerning.

  49. Peter Mericka January 31, 2011 at 5:00 pm #

    REA and Domain will do whatever they can to keep you lot attached to their nipples.

    By snatching VPA cash from your clients, instead of providing value for money you keep the portals rich, your clients poor, and your own growth retarded.

  50. Tatiana Mijalica January 31, 2011 at 5:15 pm #

    As you are aware, it is against legislation to charge over and above for advertising. Agents in VIC do not make money from advertising and it is silly to imply that they do.

    Most ad schedules are painstakingly costed out every year, not just with subscription costs but with all additional products as well.

    Any agent that buys additional products on REA, DOM and REV or even Waterside Property Sales will be charging for the extra costs and their schedules will be significantly higher.

    To say they live in dinosaur land because they understand the fundamentals of online branding and brand consistency doesn’t even make sense.

    But we regress, let

  51. Peter Mericka January 31, 2011 at 5:23 pm #

    Tatiana, there are plenty of real estate agents out there who charge their clients fees for portal listings, and the portals encourage it. Surely you’re not that naive.

    But the real issue here is why you all prop up REA and Domain, and then whinge when they shaft you.

    Can anyone offer an explanation for real estate agents failing to make http://www.RealEstateView.com.au the leading industry portal?

  52. Vic January 31, 2011 at 5:46 pm #

    Sorry Tatiana, but you took it away from google- and dinosauer land is a progressive agent’s quote.

    Final thing- tell me please how you calculate a vendor cost to advertise on REA and Domain at $1000?

    Really, just wanting to understand.

    ps I would never call “you” silly πŸ™‚

  53. Tatiana Mijalica January 31, 2011 at 8:03 pm #

    To get basic per property cost: Subscription costs for the year : number of properties sold last year.

    Add all additional products you may have to the basic per property cost.

    Featured Properties: $140 -126 per listing (DOM & REA)

  54. Vic January 31, 2011 at 9:01 pm #

    You are a good sport Tatiana.. thanks for the info.
    Now can I ask you to go back to my original post that started all this and reread it. You will find that what I was espousing is that there must be a start price and that is the agent covering the subscription costs fairly across their portfolio and this would be no more than $70 max. Then I said that one shoe does not fit all and that agents need to treat each individual vendor according to what level of exposure they want and what they are willing to pay for that exposure. Therefore all vendor charges will by necessity be different. To suggest that a fee of $1200/1500 as a starting point is reasonable would be to suggest that the agents are using a one shoe fits all approach and thereby not providing the “tailored” service that their clients are wanting. It also suggests that some vendors will end up subsidising others all to make it easy for an agents accounting.

    An old saying in sales and quite simple one that works all the time “Never assume that your client knows whats good for them- it is service malpractice not to research the options and to give it to them”

  55. Glenn Batten January 31, 2011 at 9:37 pm #

    Vic… I was referring to just the basic subscription costs and looking at the industry as a whole. If you were to contact all 10, 000 or so agents in Australia I beleive that the vast majority will not charge you.

    I think there are a few reasons to this. Firstly many agents have a commission rate that allows them to include everything and charge nothing extra for advertising. Secondly, nobody seems to know how you calculate what you charge without risking making a profit and therefore a potential fine. There are plenty of opinions but no clear directions from Fair Trading. Thirdly, most agents have only one paid portal and the competition for listings means that agents will often give away a portal listing to compete because they are going to pay for a subscription whether they have 1 or 100 listings.

    Feature properties and other addons are a different story.

  56. Vic January 31, 2011 at 10:21 pm #

    Thanks Glen, makes sense.

    Having bought and sold many properties across three States, Sth Aus, Victoria and Tasmania, most I have dealt with carry the cost of internet advertising but will offer (or sometimes I have had to squeeze it of of them) the addtional features and advertising costs (that I willingly pay) that will give my property the marketing edge.

    That’s why I was querying Tatiana’s proposal that her friend had to pay so much up front. Seemed unfair and I wondered whether it was a trend creeping into Victoria or was it now widespread.

    Agents have made really good money whilst the climate was good- past ten years- and the way not to go now, as the market gets tougher, is to try to recover inefficiencies, or archaic overhead structures from your vendor.

  57. A Buyer February 1, 2011 at 1:00 am #

    Hi

    I’m a buyer.. the one who gets a loan and pays the money for your listings, which gets you your cut, keeps your doors open, and the lease on your BMW afloat. I’m not quite sure you’ve heard of me.

    I find every single solitary home i inspect via REA or Domain.
    Not your website.
    Your website offers me a wonderful selection of.. your stock.
    I want a wonderful selection of everyone’s stock.
    Your website may be nice, don’t get me wrong, but talk it up as much as you like, it doesn’t give me the cross section i need. Never will. Ever.

    Some of you really can’t see the forrest for the trees. The online space is about the consumer experience, specifically information. It isn’t about you, it isn’t even about your vendor, it’s about me.

    If you want to find me, I’ll be at a portal. I might even see you there.

  58. Simon Baker February 1, 2011 at 7:24 am #

    I find this a fascinating discussion but probably misses the bigger picture …

    Now imagine you are an agent in the UK where the commission rates are 1.25%, there is NO vendor paid advertising and there is a market dominant portal called Rightmove that charges the same as REA. Oh … and their market has declined dramatically over the last 2 years.

    Somehow the agents survive and thrive in that market. They find other ways to become more efficient and effective in what they do.

    Taking this into account, what lessons can we learn about making money in tough markets that can be applied to the Australian market.

  59. Glenn Rogers February 1, 2011 at 8:12 am #

    “Can someone enlighten me on why you real estate agents don

  60. Glenn Rogers February 1, 2011 at 8:13 am #

    Peter can we please have the basic function od being able to quote and edit posts.

  61. Vic February 1, 2011 at 9:03 am #

    Peter M,
    You are stirring again. With all the chest beating and free promo that Review have got since announcing their national presence, their traffic ranking has gone down 117 places between 15/11/10 and 27/1/11 (Alexa ranking report). REA and Domain also moved downwards during the same period.
    There is an opportunity here and I think it will be a well organized free to lister that may do it. (Myhome- cometh the hour, cometh the man- but are you led by the right people?) Perhaps Homehound?

    Simon,
    Whilst the industry (agents) still stays with the view that this is cyclical and prices will improve and the demand will come back, nothing much will change.
    The smart ones(the ones that do not rely on the pack mentality), will adjust and thrive and the ones who rode on the back of a bouyant market will fail. The law of the jungle prevails.

    The climate is right for some major rationalization in the portal industry.
    Homehound seems to be the portal best positioned to make an impact. It needs capitalizing and some a new vision an agressive takeover/merger mentality, great management and a strong salesforce; and watch if soar.

  62. Ian February 1, 2011 at 9:35 am #

    Dear Buyer,

    I hear you, I think we all (agents) hear you, even over the loudness of our ego’s, we know the portals are the way to find and help you !

    And Peter M, it goes against all my grain to admit a Lawyer can make sense, but we need to, as an industry take control of our destiny. Where do we start, probably on blogs like this that creates awareness to the problems we all face individually. The solution is within our control, so why can’t we see it ????

  63. Glenn Batten February 1, 2011 at 2:39 pm #

    Simon,

    I tried to check your claim that UK agents only charge 1.25% but I am having some trouble. Home.co.uk states that the commission is “between 2 and 3.5 per cent”.

    http://www.home.co.uk/guides/selling/estateagents.htm

    http://www.telegraph.co.uk/property/buyingsellingandmoving/5452886/Rise-in-estate-agent-fees-the-hard-sell.html

    This 2009 article states “Britain’s best-known chains have raised their commission rate or, at the very least, “firmed it up” making it much less likely that a vendor can negotiate deals of less than 1.5 per cent that have been common during the frenetic competitiveness of the boom years”

    and that Foxtons and Strutt and Parker are on 2.5%.

    So just how is this different from Australia? There are agents in inner city Melbourne and Sydney who are selling for 1.5% and then there are others that go much higher.

    It seems that saying that agents in the UK are on 1.25% is as accurate as saying that in Australia agents charge 1.5%. Some do, most don’t!

  64. Vic February 1, 2011 at 6:12 pm #

    Whilst the numbers statistics on numbers of houses sold in UK are rather cloudy, some data shows that the sale numbers have reduced by half from 2007 to 2010. This would be more than sufficient reason for Rightmove’s drop in traffic.

    The Australian scene is nowhere near as bad during the same period. However, much depends on how the world economy (sovereign debt, oil price increase in particular) will flow to our own economy.
    Local agents are telling me that buyers are holding off buying, waiting for prices to drop and sellers are holding off listing, waiting for prices to rise.

    Who is going to be right???????

  65. John February 2, 2011 at 8:41 am #

    “As you are aware, it is against legislation to charge over and above for advertising. Agents in VIC do not make money from advertising and it is silly to imply that they do.”

    Of course they do. There are many ways around that legislation.

  66. Alistair Helm February 2, 2011 at 10:54 am #

    I have in the past looked for UK sales figures and not had much success. However I would be happy to share the NZ residential property sales figures for the past few years – these are all calendar years

    2005: 104,459
    2006: 102,042
    2007: 92,101
    2008: 56,071
    2009: 69,629
    2010: 56,303

    That is a pretty serious adjustment for the NZ real estate industry to make. In terms of agents in 2006/7 there were around 17,000 agents whereas today there around 11,000 – that means that the sales per agent has fallen by more than the overall sales – a lot of NZ agents are part time and existing on far less income than 3 to 5 years ago. Our industry has painfully had to adjust to a new reality.

  67. Vic February 2, 2011 at 11:26 am #

    Thanks for that info Alistair.

    Simon Baker talked about rightmove’s subsantial reduction. But he does not mention whether he is referring to reduction in market share or reduction in traffic numbers. There is quite a difference between the two.

    The good operators be it agents, portals or google would take into account the decining pie and will do one of three things, try to increase the share of what is left of the pie, maintain their share of the pie or get out of it. Google has chosen to get out. There are now decisions to be made by agents and portals as to which of the three choices to make.

    Each choice naturally would be differently strategized and in most cases the decisions to maintain share will be made. This will require significant readjustments including, pricing, cost cutting, more efficient/productive management practices.

    The portal industry is in flux at the moment and a real opportunity exists for the well funded aggressor to grab an increased share of what is left of the pie.

    Agents should stay out of the publisher /advertiser game and concentrate on attracting sellers and leave the portals to concentrate on the buyers. This would be mutual beneficial strategy to improve efficiency/productivity for both arms of the industry.

    Google was smart to get out- they were neither agents nor advertisers.

  68. Simon Baker February 3, 2011 at 2:17 am #

    Glenn

    I spend a fair chunk of time in the UK and Europe and what you read on a website and what is reality are two different things. Agents in the UK will quite happily tell you what they are yielding and it is not 2.5%.

    In Australia, where you have vendor paid advertising, the net cost to a vendor is around 3% … 2.2% (including GST) plus the advertising on top – say 0.8% to 1%

    Suffice to say … a very different market to the UK

  69. Simon Baker February 3, 2011 at 2:22 am #

    Vic

    I never talked about rightmove’s substantial reduction. In fact they are gaining strength every day and have just hit their all time highest share price. The real estate market has declined but the online market is fine – especially for rightmove.

    Interestingly, the #3 player, Zoopla, is profitable after acquiring the propertyfinder business from the REA Group. Looks like Alex Chersterman has done a great job with that asset.

    Finally .. the portal industry in Australia is not in flux. People like to think so but it isnt. Look back 3 years … what was the market structure. Then look back another 3 and another 3 … can someone please point out the difference? REA is leading but a mile, Domain is #2 but really only strong in NSW, realestateview has strength in Victoria but no where else … and then there is homehound and myhome etc …

    Even in the ACT allhomes continues to dominate and they charge $300+ per property.

    A new day, more talk but nothing has changed.

  70. Simon Baker February 3, 2011 at 6:33 am #

    Glenn

    Just a bit more on the UK market …

    Here is a direct quote from a friend of mine, the CEO of Marsh & Parsons in central London … the equivalent of the Hocking Stuart in Melbourne

    “Most of our competitors are 1.25-1.75% and as there is very little stock on the market, there is still downward pressure.”

    BTW I wouldn’t believe everything i read on the internet … if you did, 18 months ago you would be believe that Google was going to change the Australian portal industry and that REA was fundamentally dead … now where did i read about this view?

  71. Vic February 3, 2011 at 11:07 am #

    Unfortunately Simon it’s all in the words.”Oh…and their market has declined dramtically over the last two years” I took this to mean rightmove’s market share… you obviously meant the market they were operating in has declined.

    And yes, there is no doubt that the good operators will flourish in a declining market. If they read it correctly and do something about it, which is obviously what right move has done.

    Talking further about words “state of flux” definition and the way I used it is: “state of uncertaintyof what should be done ( usually following some important event) preceding a new direction of action”. The australian portal industry IS “in a state of flux” due to a number of important events occuring in the past two years namely:
    1. GFC
    2. proliferation of portals into the market
    3. googlemapsreal estate venture into the market
    4. ditto – exit from the market
    5. real estate view pathetically trying to get a national presence
    6. my home not knowing whether it should remain free to list
    7. significant change in real estate sales (downwards)

    I think you know this and cannot see why you feel the need to argue otherwise.

    There is an opportunity for a smart cashed up operator to bring together a portal plan that threatens the dominence of REA and Domain.

  72. Simon Baker February 3, 2011 at 11:24 am #

    Vic

    I actually dont believe the property portal market is in a state of flux.

    I think many wish it was but in reality it isn’t. Just re-read the articles on this blog over the last 6 years … the same underlying sentiments and yet nothing has changed.

    Lets look at the players …

    The following were around before 2005

    realestate.com.au
    realestateview
    domain
    property (now owned by REA)
    homehound (previously propertypage)
    allhomes
    realestateworld (i think)
    justlisted
    reiwa
    myhome entered the market around 2007 (give or take)

    All have had a crack at market leadership and only REA (and allhomes in its market) has succeeded.

    There are always portals entering (and exiting the market). Just because you can set up a site doesn’t mean you will be successful or even remotely challenge the market leader. It takes a lot of things to come together – far more than cash – to even dent a market leadership position. How much has Bing thrown at Google, or Pepsi thrown at Coke, or McLeans thrown at Colgate?

    Why is that you think now is different for property portals?

    If someone is going to create an impact on the market and truly be disruptive, they have to take a different approach and one that is attractive to the consumers before it will be attractive to the agents.

  73. Vic February 3, 2011 at 12:18 pm #

    In my humble opinion the simple answer is “market has changed.”

    – the dream of owning your home is beyond most generation Y and some generation X
    – the internet has opened up for owner seller/renters
    – homes are overvalued world wide and in particular in Aust.
    – agents are in denial of the true state of the economy and how impact of sovereign debt will further change the market
    – land shortages within comuter distances
    – refugee movements
    – immigration policies
    – FIRB policies (these will dramatically change over the next few years)
    – dominence of China

    And the list can go on. The new portal proliferation basically followed the dominant player models in a design sense data and search function and all directed to the traditional market and the economic conditions prevailing over the past 10 years.

    Now, I’m not at all saying that an entrepenuer should throw heaps of cash at the old model and design for the “old market”. I’m saying that the portal industry has not revised to the “new market conditions” and the one that does will benefit.

  74. Vic February 3, 2011 at 12:19 pm #

    Simon, and I add, your last sentence seems to agree with this View.

  75. snoop February 4, 2011 at 3:49 pm #

    Glen
    This is a credible survey from 07
    http://www.macquarie.com.au/dafiles/Internet/mgl/au/business/documents/articles/real-estate-benchmarking-survey.pdf
    Seems 70% of agents are recovering advertising from vendors?
    I suspect its more in 2010?
    I wonder what your offices percentage is?
    One of my property managers tried to invoice me $300 for listing a rental property on two websites quite recently.
    All I am saying is you are right ,you have to steward the clients budget appropriately, but you need to admit in the main its NOT the agents money
    Perhaps a business2 survey?

    hehe and touche Mr Baker.

  76. Glenn Batten February 9, 2011 at 5:41 pm #

    Snoop,

    Firstly….
    I commented on agents charging for basic subscription fees. Not for other internet charges such as feature properties, banners etc etc.. not for other advertising like printing… So what has a survey about VPA in general got to do with whether agents charge the basic subscription fees.??

    Secondly….
    Because agents say they do VPA does not mean they recover 100%.. We charge VPA but we dont have a charge for the basic subscription listing.

  77. Glenn Batten February 9, 2011 at 6:08 pm #

    Simon,

    I have no problem accepting that SOME agents charge 1.5%.

    I have no problem accepting that in SOME market places all agents will charge at or around 1.5%

    But that really does not differ with Australia at all.

    I showed you a third party article from what appears to be a respectable newspaper that looked at the market in general, clearly did research, provided examples and quotes and your counter response is that a mate of yours is operating in an are where charges are between 1.25 and 1.75%.

    But I have a mate operating in Sydney that charges 1.75% and so do all of his competitors yet that does not mean the whole Australian market is at that level. The UK market seems to be just like Australia in that there is a wide range of charges depending upon location.

    I would go so far to say that in general the commission charges would be on average slightly under that of Australia but it does not seem to me to be the huge differences that you tried to paint.

    In general across both countries the higher the price of the average property the lower the charge. What the chance your mate operates in the inner suburbs of London or another major city and not in an outlying suburb or smaller town in the country ?

    What I have not seen is evidence of is a widespread rate of 1.25% across the UK which is what you seemed to suggest with your original comment.

    As to the state of the property portal market.. I disagree with you that nothing has changed… but probably in a different way than you might initially think. REA’s position has got stronger and stronger in that time both as a percentage of views and revenue generated.

    In the past 6 months two threats have emerged that initially appeared credible but in the wash failed to provide any real challenge at all.. that was Myhome V1 and Google. Their potential and the eventual reality has been discussed enough. The only solution that has ever provided any sort of challenge has been Domain.

    The sad thing (that will depend upon your perspective of course) is that there appears to be nothing on the horizon that has the potential to change the landscape in a big way.

  78. Vic February 11, 2011 at 4:51 pm #

    Just googled http://www.googlemapsrealestate.com.au and the site is still up.
    Did they miss the date or are they having second thoughts:)

  79. Nick February 14, 2011 at 10:50 am #

    Vic I’m scratching my head as well. Its not like Google to forget about it.

  80. Nick February 14, 2011 at 10:53 am #

    Actually….try clicking ‘For Rent’ or ‘For Sale’. All the properties vanish if you set any options.

  81. Vic February 14, 2011 at 4:52 pm #

    Nick,
    Click on my link above and see what you get. I now get a site called Open Realty. Does that mean they have highjacked googlemapsre’s URL????

    Ryan,
    On a related matter it would be interesting to see a poll of agents and portals as to how traffic has been affected- say at end of February.

  82. Nick February 15, 2011 at 10:33 am #

    Vic: No that was never the Google Maps url. The Google Maps url is http://maps.google.com.au and always has been.

    Its still there but only if you dont actually do a search. Feeds are also still being processed.

  83. Thrimble February 22, 2011 at 9:27 pm #

    Just wanted to respond to simon bakers post (i know this is a little late) but from a home owner perspective, I think the new REA site is a massive improvement over the old one. It’s certainely a lot speedier.

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