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Are you really investing in your real estate website?

6 minute read

Unbeknown to most real estate principals when they contract a web development company to build them a new website, they are not actually purchasing a website but rather locking themselves into a lease agreement for a site. Almost in all cases, the IP for the site (technology, code and even web design) belongs to the real estate software company and not the real estate agency.

All websites are based around a content management system (CMS) which is the platform that your real estate website is structured/built-on and which allows you to update website content. In real estate, basically all products offered by real estate web development companies are built from the software company’s own in-house CMS. A CMS they have spent years building and one they will not easily change and never hand the IP over to their clients.

From my experience the average real estate website costs around $6,000 to produce and then requires a monthly hosting and support charge of around $150 per month. If you decide you’d like to end your relationship with this company then your $6,000 is a sunk cost. Lets assume you stay 2 years with that software company then the actual cost of your solution is $400 per month. So you’re leasing (at a ridiculous price) a website from the software company indefinitely and at the end of the lease you receive nothing.

It does not stop there, as the web development company will find other ways to bleed money from you. If you require any type of change to the site then the company will quote what ever fee they feel fit (and some of the fees i’ve heard have been outrageous). As a site owner you either pay this fee or go without the site enhancement. As you can imagine this type of arrangement is very counter-productive for your online solution, as you can’t tweak SEO (or have specialist 3rd companies complete this), you can’t install 3rd party software on your site, and your likely to avoid enhancements because of the excessive cost involved.

So what are the alternatives? Unfortunately because of the technology involved in powering a real estate website and also maintaining the data exports means there are not too many solutions. However, there are a few companies in Australia who offer alternatives to an in-house CMS.

One alternative is to have the software development company build your own CMS. This way you own the IP of the CMS and have the ability to move your site if the relationship ever ends. In most cases your site will be build from a popular frameworks (eg .NET, PHP, ColdFusion) so finding another developer will not be an issue. The only downside to this solution is that it will be costly to build your own CMS system, in the proximity of $20,000 to $70,000.

There is one solution which is cost effective and will provide you with freedom and choice. That is to use an open source CMS which is free to use on a General Public License. These open source CMS are usually owned by a not for profit organization of web developers and designers, who’s goal is to share code amongst a worldwide community of developers in an effort to provide a free and powerful CMS for websites. PHP is an open source language and a few CMS build upon PHP include Joomla, WordPress, Drupal, CakePHP and Codeigniter.

Pro’s from using an Open Source CMS over an in-house CMS:

  1. It’s FREE – Open source CMS are free so you never have to pay for the core software which your website is built on. You then never need to pay for an upgrade to the open source CMS.
  2. You own your site – Because open source CMS are free means your website will work on any server located anywhere. This means once your site is build and you decide to end your relationship with your development company you can easily copy your website and install it on another server.
  3. Far Superior – Open source CMS systems have 100’s of developers and designers Worldwide who contribute code and ideas to the system. On a monthly basis the organisation running the CMS will decide on what pieces of code are to be added in the next update. In-house CMS usually have 1 to 2 developers who work full time on improving the software.
  4. Open source CMS are upgraded every 2 to 3 months – The best ideas from the 100’s of developers who have contributed code will be added to the CMS core, tested by the organisation and deployed in the next update. This means you can continually update your CMS with a stronger more powerful and feature rich CMS.
  5. Less bugs – All of the 100’s developers who have contributed by adding code to the core CMS will then thoroughly test the updated Beta version of the CMS and quickly find any bugs it includes. Once again an in-house CMS might have 1 – 2 people testing it before it goes to market.
  6. Endless Supply of Functionality – The way an open-source CMS works is that the CMS provides the core structure for the website. You then install plugins,  add-ons and widgets which provide additional functionality which the core CMS does not include.
  7. Endless supply of developers and designers – If you end your relationship with your web developer then you can easily find 1000’s of developers and designers who can take over managing your website.
  8. Freedom to Update – You or 3rd parties can have access to update the files for your site, meaning you can source cheap enhancements to your site through your existing developer or other developers.
  9. Choices for pre designed Themes – If you have a budget and require a website for less than $100 (with no ongoing fees) then this is possible through an open source CMS. Check out Woo Themes a CMS theme selling site.

My advice for next time you’re looking around for a new real estate website is to make sure you’re first question is…….Do you use an in-house CMS? If they answer yes then hangup, if they answer no ask…..Do I own the IP for our site and if we end our relationship am I free to take our website at no cost?

If they answer yes to the last question then you’re onto a winner and you are truly undertaking an investment when you purchase a new website.

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21 Comments

  • James
    Posted September 7, 2011 at 10:58 am 0Likes

    Is this post coming from a supposed indepentent blog perspective or is it self promotion. No angst mean’t just asking out of interest?

  • Ryan Mac
    Posted September 7, 2011 at 11:13 am 0Likes

    CakePHP and Codeigniter are frameworks, not an actual CMS.
    Eg: Expression Engine is built upon Codeigniter, and Croogo using Cake.

    Other options might be to leverage your current portal system, correct me if I’m wrong, but most do website builds which combines your property data.

    Although you’ll probably run into the same IP restrictions as mentioned, worth checking out?

  • Bill
    Posted September 7, 2011 at 11:15 am 0Likes

    I suspect the answer to the above comment is self evident.

    Different offices have different requirements for their websites, as is common in life (we aren’t all driving around in Ford Falcons!).

    There are clear advantages in both solutions and only one side is presented here.

    A much better article would have been to assist Agents to understand which solution is the best fit for them by explaining the pros and cons and each.

  • Brett
    Posted September 7, 2011 at 11:36 am 0Likes

    I have been looking at this myself and installed WordPress on our site. Even has a few features a lot of Australian sites don’t. I also found a lot of marketing features in the US Real Estate space. ZingDing is a great little product. The only issue is intigration with realestate.com.au etc.

  • Jayne Harwood
    Posted September 7, 2011 at 11:44 am 0Likes

    Very interesting article Ryan!!! As we are looking at creating a new website you have now given me a checklist of questions to ask! I don’t think many real estate agencies would be aware of the difference between In House and Open Source CMS! And whilst I understand why James is asking the question, I believe sometimes you need to work in the particular field to be able to provide relevant information to others via a Blog of this kind!

  • Stephen
    Posted September 7, 2011 at 11:49 am 0Likes

    Interesting read Ryan, are you doing a follow up article on the benefits of using proprietary code over open source (OS) ? (in the interest of full disclosure we do sell the proprietary model)

    There are many pros and cons for both options, there are some amazingly creative and interactive Real Estate sites built using open source, and some dog ugly (not interactive) ones using proprietary code. Although the reverse is also the case, I have seen countless sites built using OS that probably hurt the agencies look rather than help them.

    Your points are quite valid, but there are also many positives in using Proprietary over OS, and not just for Real Estate sites/systems. Saying that you should always hang up on a phone call when a developer/designer says they use in-house software, is not necessarily the best advice.

    The same goes for your pricing model based on 2 years, using a proprietary system does have a certain locked-in value, whether by contract or cost to move. So if an agency uses the same vendor for 6+ years and are happy does that mean they got good value or have wasted their $ ?

    In some cases I strongly believe that an OS model for an agency works perfectly, but it does depend on their direction, staff resources, commitment to their online presence and more. But that doesn’t mean proprietary is always wrong.

  • Peter Ricci
    Posted September 7, 2011 at 11:52 am 0Likes

    Hi James/Bill

    Using an in-house CMS maybe good for some people but I doubt anyone can come up with a good solid reason to choose an in-house CMS over a well supported open source one, particularly when open source gives so many more options for future events.

    Our thoughts for this blog and Ryan’s article are to inform real estate agents and make them at least think about their business decisions.

    This article may not make companies that create in-house solutions happy, but if they want, I am happy to do a feature comparison between say WordPress and any in-house CMS that currently offers its solutions to real estate agents.

    Continuing on……

    As an example if a real estate agent gets a website with an in-house CMS, what happens if they are not happy and want to leave? What happens if they want to add modules (plugins), what happens if they require wholesale changes, adding menu items, pages, articles, links, categories, photos, videos, audio.

    All of this with an in-house cms normally costs a lot money and to be honest, there are very few in house CMS systems that I have seen even come close to matching features, upgrades etc of the more popular open source systems such as WordPress.

    That is not to say open source is cheap, even getting a theme up and running on WordPress that costs only $100 could end up costing thousands once you customize and style it to your liking.

    But it is all about power and control and future proofing for me. I was once a partner in a web development firm that had it s own CMS, it was pretty good for its time, but it soon faded and now would look pretty ordinary in comparison to most popular open source systems and this is primarily because we had one developer working on it and testing it, popular open source systems have thousands of testers and hundreds of contributors.

  • Nick
    Posted September 7, 2011 at 11:56 am 0Likes

    James, Ryan was talking to me about this issue the other day. Probably a bit of both.

    Whether the solution is open source or not isn’t relevant I don’t think. The question is about control – if a agent has a disagreement with a company, do they lose everything or do they still have their website that they paid for?

  • Peter Ricci
    Posted September 7, 2011 at 12:00 pm 0Likes

    Stephen you raise some valid points, however I think we are mainly talking about real estate agencies here, not larger franchise groups, I would rarely advise a client to go with a proprietary system when creating a new site when their are so many options out there in the open source world.

    The trick as always is to find a great interface designer matched with a good solid developer and you can find them in both system types.

    In house CMS systems would be a good sit and stay if a client were happy with the current system. One other problem proprietary systems have is staff retention to keep the ball rolling.

    Good developers are always in high demand and not many companies keep good employees more than 5 years because of this.

    Our company contracts nearly all of our work out to outside developers, many of whom have been with us for many years.

    As a previous partner in a web development company I found keeping employees pretty tough, especially with them getting a little bored.

  • Ryan O'Grady
    Ryan O'Grady
    Posted September 7, 2011 at 12:09 pm 0Likes

    James/Bill, the article is based on what I have experienced through discussions with agents using in-house software. Some of the agents are now clients while others aren’t. It’s also the basis for the way the software is designed which my clients use, as my belief is that an agent’s website should be their IP.

    Stephen, I was going to following up on a similar topic (if it is not raised here) but not exactly the pro’s of proprietary software. I can but given you sell this software, you’re welcome to create the post.

  • Vic
    Posted September 7, 2011 at 12:18 pm 0Likes

    Love to see some responses from the owners/lessees. Seems the developers will all lean to the approach that they use ie open source or proprietary.
    From our own personal experience, with our portal, we definitely made a mistake in going proprietary and have spent the last six months unwinding from it, at our considerable cost. We are now with a developer who works for us and re doing our whole site on an open source method with all of the functions and plug ins that we envisioned from 2 years ago and at the end we will own it.

  • Peter D'Arcy
    Posted September 7, 2011 at 12:45 pm 0Likes

    Hi Ryan – what a great article – not because of the content ( I notice a reader lable the article as one sided) but becuase you are discussing the concept of people owning their own CMS / Web Site.

    This is indeed refreshing. I see we as an industry (from a Queenslander’s point of view) need to develop our independance in the online word. Historically we have given our collective assetts – Advertising both press & online, Data and some services to the corporate world who only aim is to rape us. No only are we being raped – we have lost control of vital aspect of our business.

    So I salute anyone who is promoting the idea of us developing our independance. Good on you and keep up the good work

    Peter D’Arcy

  • Stephen
    Posted September 7, 2011 at 1:09 pm 0Likes

    Peter, fair points. We have a slightly different outlook, but then we are also a small team who predominately take on clients via referral only. Very rarely can we assist small agencies of 1 – 5 staff (who normally also have smaller budgets, which often falls in line with OS being a perfect solution), but there are many agencies (independent and franchise) with 10 – 60+ staff who we do look after, and the proprietary model does/can work well.

    It does always come down to the individual needs of the end user.

    Ryan, I have been meaning to pen that article for some considerable time (not sure which todo list it fell off) so will put some notes together and submit it through. Naturally I can’t speak on behalf of all proprietary or OS systems but will find something to write, at least in the context of how it can benefit (or be a detriment) to a Real Estate office.

  • Bill
    Posted September 7, 2011 at 4:38 pm 0Likes

    Peter/Ryan,

    I think you have leaped to an assumption that I am a supporter of one technique over the other.

    My point was, and remains, a balanced article would have been a far better service to your readers.

    The pros and cons of open source versus proprietary software has long been thrashed out, with winners and losers in both camps.

    In my company we use both, because its not about whether its open source or not, its about how well it suits my particular needs versus total cost of ownership.

    The problem of importing property data (XML) from an office CMS/Management System into a wordpress or similar CMS driven website is normally where things get sticky.

    I’m sure we’ve all bumped into poor offices that have had a website built in wordpress or similar by someones relative or friend only to find out they’ll be double entering their properties or paying someone on a monthly basis to provide a proprietary software solution to fix it.

    So i guess its not all roses in either camp.

  • Glen Barnes
    Posted September 7, 2011 at 4:46 pm 0Likes

    I think both approaches are backward looking and not really the future for most small real estate offices. The future is clearly SaaS based models built on an affordable monthly subscription. I’m not familiar with the current crop of solutions available in the real estate space at the moment but a decent solution would have:

    * Themable with built in themes and simple to change basic colours, etc. Additional theming available via CSS.
    * Integration with Email list software such as Mail Chimp
    * Integration with accounting such as Xero
    * Automated upload to RE sites
    * Social media integration to such as Facebook, Twitter, LinkedIn, etc.
    * Integration to Google Apps/Gmail

    All available for one reasonable monthly fee and a low setup fee (if any). One of the problems with the install it yourself model is the ongoing support for any updates and hosting issues. As soon as you call someone out to fix things you’ve blown what it would have cost you to host with a decent SaaS product. You’ve also got the setup costs which if done right (say with WooThemes) can be affordable but then you still need someone to spend a few hours to get things tweaked properly. And if you want a custom theme then you are looking at 3K for a decent designer to come up with something half decent.

    Disclosure: On top of my job at Zoodle I also have a SaaS based product called My Tours (http://mytoursapp.com) which provides a solution to tourism agencies, museums, etc. so I’m pretty sold on SaaS…

  • James
    Posted September 7, 2011 at 6:14 pm 0Likes

    I totally disagree with this article and believe that Real Estate agents are better off finding a website (and back office/ CRM) provider with a fantastic in-house CMS and getting in to bed with them.

    I think its false economy to try to base your business on free opensource solutions – many features and plugins that you may come to rely on will cease to become supported and even the most basic updates (2 monthly as you say) can result in costs/ errors as you have to pay someone to upgrade if you dont have technical skills.

    Plus you will end up with lots of small jobs for a developer to continually add features and tweak rather than a fixed contract where you know you’re important to the person at the other end of the phone.

    A good in-house CMS website provider will also keep industry standards (for things like feeds) and push out updates regularly as needed.

    Build long term relationships with quality suppliers and you can focus on selling houses.

    If you double the relationship period you assumed above (from 2 to four years) your costs come down from $400 a month to $275 and all of a sudden it looks very reasonable. So what if you picked the right partner and stayed with them for 5/6 years?

    So for me the answer is choose the right firm/ solution first time and be happy to stay with them for 4 years+

    A lot less hassle and a continually fresh looking website with updates pushed out to you (rather than you researching, writing briefs, finding a developer, commissioning work, managing deadlines, testing etc…).

    If you’re a realtor, sell houses don’t develop websites.

  • Peter Ricci
    Posted September 7, 2011 at 10:31 pm 0Likes

    It seems as though we are all looking at this from our own perspective without thinking of the real estate agents.

    Those on one hand that offer open source solutions are advocating open source and those that provide in-house services are advocating in-house cms solutions.

    “If you

  • Ryan O'Grady
    Posted September 8, 2011 at 7:10 am 0Likes

    You need to remember I’m only talking about one aspect of a real estate offices online solution and that is their promotional website. We all know that there is much more technology needed for an agency to have a successful online presence. And it would be foolish and basically impossible for this to be rolled out into an OS hand over the IP solution.

    It’s time the big software companies stop forcing agents into their all in one complete solution and instead provide them with the choice to use other providers for certain aspects of the system. This way the agent can have control of their website and also use the industry’s best CRM and property systems.

  • Ben Stockdale
    Posted September 8, 2011 at 10:47 am 0Likes

    I think it’s more about data portability and the flexibility to do what you want to do as a business. Ideally an office could use any combination of providers and services to create a recipe that works best for their needs.

    My general experience with custom, proprietary solutions is that they’re generally not built to play well with other systems where Open solutions are based on more flexible frameworks because they have to be able to deal with so many use cases.

    It’ll be interesting to see what happens as databases become more abstracted and technologies like SPARQL & RFD evolve.

    BTW Why isn’t anyone offering a stand alone suite of plugins to deal with REA XML and integration with the other services like CRM? Seems like there’s a market for a WordPress, Joomla… REAXML input/output tool and then a range of display and search plugins…

  • programmer
    Posted September 13, 2011 at 12:25 pm 0Likes

    If your buying/renting a CMS for $x per month, why would you also pay for changes? Surely the point of the CMS is to allow agents/office staff to make their own changes.

  • Sal Espro
    Posted September 14, 2011 at 9:26 am 0Likes

    *L* You old fogies, get a grip! Want to own your own website? Do you own Facebook and Google+? Do you own WordPress and iTunes and HubOnline and …. ?! That’s the online World nowadays, guys.

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