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. [highlight]I lay much of the blame for this with real estate institutes[/highlight] 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. [highlight]The terms and conditions that each portal, web developer and app developer disclose would be standardized[/highlight], 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?

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33 Comments

  • Nick
    Posted January 13, 2012 at 2:24 pm 0Likes

    Getting the required critical mass is the tricky part. Once you have that then the rest is easy.

    One thing I’ve always wanted Agents to have is essentially what Facebook, Twitter and the like use to give your data to third parties. Its called OAuth and it is that little permissions screen you get when you play a new game on Facebook.

    Imagine registering with a portal, they send you to a screen hosted your provider that says “XYZ Portal would like a feed of your property data” with a accept or decline button. Hey presto your properties instantly transfer across with no emails, no calls and no mucking about with agent ids.

  • Jack
    Posted January 13, 2012 at 2:40 pm 0Likes

    I weaned myself off REA by simply monitoring enquiry over time and utilising a number of sites mostly fee free or close to it. This may not be for everyone but I’m comfortable and my ego’s still intact. Yes we get competitors telling our clients that their missing out but I’m still here as its about the mix not who can outspend.

    As a firm believer in an industry solution, let’s not try and build an ark as it may already be there.

  • Peter Ricci
    Posted January 13, 2012 at 2:54 pm 0Likes

    Yes, a great little idea Nick, I like that!

  • Peter Ricci
    Posted January 13, 2012 at 2:55 pm 0Likes

    The only problem is with industry sites, they cannot help themselves but give preferences to some and not others.

  • Dave Platter
    Posted January 13, 2012 at 2:57 pm 0Likes

    Nice post, Peter. Very interesting ideas.

    Do you think it is likely?

  • Dave Platter
    Posted January 13, 2012 at 2:58 pm 0Likes

    I love that thought, Jack: “Don’t build an ark as it may already be there.”

  • Dave Platter
    Posted January 13, 2012 at 3:00 pm 0Likes

    Jack, would you be willing for me to interview you about your web strategy and to discuss it (in general, without revealing anything you consider too sensitive) in a post on business2?

    Or, would you be willing to write a post yourself about it, explaining it in more detail? I’d love to hear.

    If so, email me at dave @ daveplatter . com

  • Peter Ricci
    Posted January 13, 2012 at 3:05 pm 0Likes

    Hi Dave

    Only likely if Domain and a couple of franchise groups got involved, but then we would have the problem of control, someone always wants to control or own these things.

  • solution on its way
    Posted January 13, 2012 at 3:21 pm 0Likes

    Hi,

    Interesting blog post this one. As was the last one.

    My partner and I are developing something to solve this but not in the manner you think. Knocking of REA is definitely possible and we aim to do it. 3 yrs in the making. (sideline project, just in the last 12 months getting serious)

    We have turned down several investors – we know we are on to something – hell even google couldnt crack this.

    The solution is not industry based, thats what got you all into this mess in the first place. Industry groups always have agendas – including remaining financial – which leads them to selling their souls to the highest bidder, every time.

    “”But, if you think I am missing something here, please enlighten me in the comments.””

    No one serious with ideas is going to share them with you in comments, im sure we are not the only group working on it.

  • Karl
    Posted January 13, 2012 at 3:29 pm 0Likes

    Hi Peter,

    I think you are over estimating the growth of Private Listings. I see the most powerful asset that the agent has it to be available to potential purchasers, do the inspection etc! Private sellers are not always in a position to be at the beckon call of the purchaser. Especially if they are selling an investment property.

    There will always be a position for agents. Web advertising is changing how they define themselves from other agents. The future is about service!

  • Sam
    Posted January 13, 2012 at 3:32 pm 0Likes

    Definitely make sure it is W3C compliant.

  • Peter Ricci
    Posted January 13, 2012 at 3:40 pm 0Likes

    Will be interesting to see, make sure you contact us when you are ready to launch πŸ™‚

  • Peter Ricci
    Posted January 13, 2012 at 3:47 pm 0Likes

    I never over estimate private listing growth, but there is a difference between private listings and private selling. Within 10 years more and more people with average suburban style homes under 500k will list privately, will they sell privately, that is another matter that probably will be pretty much determined if and when a Virgin style company gets into this market (or perhaps a struggling franchise group)

    As for the future, I think you will find that service has declined measurably in just about every sector of the market over the past decade, banking, finance, insurance, telephony etc etc etc.

    If service is the key, I would love to understand your thinking? In my opinion demonstrable results are always the key, people love great service, but always coupled with results πŸ™‚

  • Bill
    Posted January 13, 2012 at 4:33 pm 0Likes

    “There will always be a position for agents.”

    I for one am not sure about that at least when selling ones own home, agents certainly offer a valuable service but nothing that couldn’t be segmented to other service providers.

    I’m currently selling a property in the ACT and am using a wonderful agent who has performed in an exceptional manner, but breaking down his services he has.

    Presented me with CMA (I could have got that, no need for an agent)
    Arranged for a solicitor to prepare my contract. (I could have arranged that, no need for an agent)
    Arranged for a building inspection report and EER report. (I could arranged that, no need for an agent)
    Had quality photographs taken. (I could have arranged that, no need for an agent)
    Arranged for a quality sign to be made and placed on the property. (I could have arranged that, no need for an agent)
    Listed my property on several portals. (I could have done that, no need for an agent)
    I chose not to list in print media but could have done so and I could also arrange that.

    The service I really wanted was that of the agent scheduling and attending open homes. (I could have done that or hired someone to do it for me. I’m sure this is an industry waiting to evolve)

    So my point is although the agent does perform a great service it’s nothing that I couldn’t see disappearing as it gets easier for vendors to list properties on line and print media continues to decline.

    And again that’s why REA are driving a wedge between vendors and agents.

  • kane
    Posted January 13, 2012 at 4:50 pm 0Likes

    bill great to hear from an owners perspective.

    unfortunately as agents we are not very good at actually being able to dictate where our true value lies and you are correct all those things you mentioned are irrelevant and are not skills.

    we are of value for two reasons the time we can give to the process.

    but most importantly a good agents skill is being able to create the situation that will allow a great price to be achieved and exploit those events ie negotiating.

    selling a home is easy and we all know we could train a 12 yr old to do so. outperforming the market is not so easy

  • Peter Ricci
    Posted January 13, 2012 at 4:51 pm 0Likes

    Yes Bill, you are right. I think it comes down to how valuable ones time is. A ‘friend of mine’ is building his own home to save money.

    He has been pretty much going at it now for 2 years, he is in the building industry as well, but he only works half days to complete a massive restoration of a factory into a home. If by chance it has cost him in lost work a couple of 100k then is it all worth it?

    The same for a home, I understand if the commission is a lot but it still is a lot of time and hassle and for many people it is not worth the time.

  • Dave Platter
    Posted January 13, 2012 at 8:10 pm 0Likes

    Thanks, Peter. OK, then. I won’t hold my breath. πŸ™‚

  • Dave Platter
    Posted January 13, 2012 at 8:11 pm 0Likes

    Hi, solution on its way. Sounds intriguing. Do let us know when you launch. I’d love to learn from you.

  • Nick
    Posted January 14, 2012 at 7:06 pm 0Likes

    Well depends what is mean’t by that and what is needed. πŸ™‚
    W3C doesn’t enter in to this too much except in the raw XML and HTML specs.

  • Shane Dale
    Posted January 15, 2012 at 9:07 am 0Likes

    @Bill

    I agree the technical items you raise that can be done by a smart enough vendor, but as a non agent with 15 years observational and involved experience I would say that having a skilled third party between buyer and seller seems to be the only way an effective transaction can happen – of course its possible to do it as a sale by owner but in most cases I don’t see it as being practical in time, expertise or details( even how to order a signboard or lodge a website with a listing is a task most civilians may not be able to do). Humans just seem to work better in this situation with an intermediary – in this case a real estate agent.

    As an example, I always say – sellers want too much and buyer want to pay too little – plus I see many common mistakes from sellers who will read the most positive interpretation of any CMA given to them because their particular decor is clearly adding value πŸ˜‰ or their spouse absolutely wont sell for less than “x” and so forth – despite their having no actual day to day experience in the field.

    Of course I have also seen many poor agents who just don’t do the work they should and can even hamper the process, but thats another story.

  • Bill
    Posted January 15, 2012 at 11:20 am 0Likes

    Shane, I agree with what you say and agents offer a valuable service, my point is though that many of the services can be outsourced such as ( even how to order a signboard or lodge a website with a listing is a task most civilians may not be able to do)

    Those two tasks could be provided by some service for a reasonable cost, there is no need to hire an agent to carry them out. In the future I believe these service providers will start to appear on the scene and dare I say it aren’t the FSBO sites an early example of what may come.

    Where the agent’s expertise is “most effective” is physically introducing a potential buyer to the property and effecting the sale. To my mind everything else can be done by the vendor or contracted out to service providers.

    I take your point that vendors want too much and buyers want to pay too little. However after 40 odd years of building, buying and selling property in which i have used many real estate agents when a buyer has made an offer I have “never” had an agent say to me, “Bill that offer is too low, don’t accept it because I know I can get you more.” I’m not saying there aren’t agents out there who would have said that if it was true, I’m just saying it’s never happened to me. By the way personally or withcompanies I have owned I have been responsible for selling close to three hundred properties and the vast majority via an agent so I’m speaking from experience.

  • Shane Dale
    Posted January 15, 2012 at 2:16 pm 0Likes

    Bill, unfortunately all so very true what you say.

  • kane
    Posted January 15, 2012 at 6:14 pm 0Likes

    The worst part bill is that most owners are often dazzeled by gimmicks or the agent being nice
    Too often I see owners taking agent selection way to lightly and seem to think it doesn’t matter because they won’t accept an offer less than they want.

    Experience tells me the always do and besides they will never know the offer their agent couldn’t get.
    *Sent from phone in case of bad grammar

  • Karl
    Posted January 16, 2012 at 11:45 am 0Likes

    Snip[The service I really wanted was that of the agent scheduling and attending open homes. (I could have done that or hired someone to do it for me. I’m sure this is an industry waiting to evolve)]

    Bill you did hire someone to do this for you! Your Agent! This is the industry you are talking about!

    Peter, This is the service I am talking about. Yes you could train a monkey to open the doors to let people through to see the property. The added value of the agent is to sus the people out and see how serious they are. This takes experience.

    The quality of the services, broken down by bill, is what will keep agents in business.

    Yes you are right Peter, they need to produce results!!!

  • Mike Salway
    Posted January 16, 2012 at 11:47 am 0Likes

    Interesting post, Peter.

    I’m not sure if such a solution will eventuate in the near future, but it’s definitely an interesting idea.

    The cost for uploading to portals is much too expensive.
    For agents – paying fees to each portal and to the software company to build the uploading capability
    For software companies – expense to build the uploading capability, different formats for different portals etc.

    A consistent, open format for listings data that ALL portals must accept would be a step in the right direction. REAXML almost fills that need, but some portals (Domain, REIV, others?) still have their own formats. And REAXML still has its problems.

    An open platform in the middle that all agents (via their CRMs/uploaders) send their listings to, which can then transmit the listings to the portals the agents choose, sounds like a good idea in theory, but I’d be concerned about the privacy and competitive nature of the data that would be stored on that platform.

  • vic Del Vecchio
    Posted January 16, 2012 at 12:43 pm 0Likes

    Mike,

    Great to hear from you again.

    Some very good points you make.

    However, the idea is to cut out the CRMs charging to upload from the system. Uploading to portals should be a no cost and should be available to all agents to choose which portals they wish (or more so their vendors choices) to list with.

    I’m sure this is Peter’s vision; as it is certainly is mine . I look forward to the day that such a system comes out for the benefit of all.

  • Peter S
    Posted January 16, 2012 at 9:47 pm 0Likes

    Don’t take too long please. I am looking forward to cancelling my REA subscription again – but this time permanently!

  • Jezza
    Posted January 17, 2012 at 8:28 pm 0Likes

    Solution. The problem is most people look at it the wrong way. All they players that have tried to ‘change the game’ have tried nothing more than re-jig the revenue and ownership model that the major players use. They’ve also done nothing more than tried to sell based on ”we all hate REA”….perhaps some of the weaker business management I have seen.

    Now, the game isn’t really about pandering to agents. The stark truth is most agents have no idea a UID and will twist your world to their view.

    So what am I saying?

    The only way someone will knock off or even make a dent in REA is by focusing on the consumer…an amazing consumer focused site that people love could work. Revenues wont exactly flow like the Murray in a good spring but eventually it might turn when the agents figure out you have traffic.

    The thing is REA have 6,000,000 UVs. Like and or believe it or not that’s the industry measure and they are double Domain. Without a decent bite of that a site is worthless. FACT.

    Without it the agents you do get wont stay and that means your business is worth nothing.

    So, before you jump on these sites telling everyone you ‘have something’ think about you model first…many many people have spruked on here before and lasted 5 minutes in the market.

  • PaulD
    Posted January 18, 2012 at 2:39 pm 0Likes

    Jezza, —–“The thing is REA have 6,000,000 UVs.”——

    EVERYONE knows that that number is fantasy. The accepted number is that between 3 & 5% of the population is in ‘buying mode’ at any time. So when you dice up the Australian population of potential buyers, ie that doesn’t include people under 18 or over 70, or people that are simply not capable of buying a property, or those in jail, then you have a about 10 mill of the 22 mill who can buy a home. 5% of that is about 500,000 people. Considering there are about 500,000 residential sales per year in this country (according to the RBA), it makes the 6 million UV’s per month look even more stupid.

    So are you telling me that 6 million people are looking to buy and only 40,000 of them succeed every month? That’s less than one percent !!!! If 99% of the people who wanted to buy property every year FAILED – don’t you think there would be a public uproar and a Judicial enquiry ?? There should be literally millions of people who are capable of buying, complaining how hard it is to successfully buy a home. How many of your friends complain to you that they missed out again ??? There should be about 99% of them complaining. I can’t remember the last time one of my friends complained that they couldn’t buy a house – and I work in the industry. Well on the numbers that you say “believe it or not” — I don’t believe it. By any standard that number is a complete farce.

  • Sam
    Posted January 18, 2012 at 6:10 pm 0Likes

    Maybe black out business2.com.au for 24 hours to protest the dominance of realestate.com.au?

  • Jezza
    Posted January 19, 2012 at 9:42 pm 0Likes

    PaulD oh dear. Did you actually read what I wrote?

    “The thing is REA have 6,000,000 UVs. Like and or believe it or not that’s the industry measure and they are double Domain. Without a decent bite of that a site is worthless. FACT.”

    I think I made it clear that I agree there are so real questions about that number. But in case you still dont read what I wrote I’ll give you my summary.

    Do I think REA have 6 million UV. Yes, there is no doubt that going by the industry measure REA have that number. They dont lie about it.

    The real questions are 1) how is that formulated 2)what does that mean in relation to actually property buyers.

    1) how is it formulated. does it include the traffic in REA agent admin system? does it include all the other site REA control including 1000’s of agent site? I’m not sure and have never seen an answer

    2) what does that mean in relation to actually property buyers? not much. Anyone that assumes that 6,000,000 buyers is a fool for so many reason I cant be bothered listing here. But your logic makes no sense. I haven’t purchased or sold a property in Australia for 6 years…I still look at REA a few times a week.

    Sure its not 6 mill but you assume that only people active in the market look at REA… everyone I know looks at it all the time even when not buying property.

    Now before you start talking about a Zionist/Masonic Conspiracy within REA with an agenda to use those number to keep rates high you need to remember the main point. The numbers are independent and all sites are measured in the same way….so, although 6,000,000 is not the number its fair to say REA still have twice as many as anyone else…this is a fact.

    Peace

  • PaulD
    Posted January 20, 2012 at 1:50 pm 0Likes

    Jezza,

    Zionist/Masonic Conspiracy ?? wow, there is a screw loose somewhere. I think this perhaps could be a discussion regarding semantics, however that is a good deal away from a semitic discussion.

    In my opinion, the numbers trotted out as previously discussed are about as relevant as saying that a house on Victoria Road which has a sign out the front has 40,000 people looking at it, because there are 40,000 cars a day passing by. In fact if you added a factor of 2, allowing for all the people on buses and other forms of transport we could easily come up with 80,000 UV’s per day and therefore 2.4 mill per month. The major problem with traffic statistics, apart from the obvious incredulity of them, is that unless you pay Nielsen – you don’t get measured. That’s like only counting the cars on Victoria Road, and not Parramatta Road, because they don’t pay. You say that all sites are measured in the same way, well, quite obviously they are not. I do agree with your statement :
    “what does that mean in relation to actually property buyers? not much.”

    If we assume that UV is “Unique Visitor” on a monthly basis, that is still saying that 30% of the entire population of Australia looks at realestate.com.au EVERY month. Surely you can’t possibly believe that !!

  • Jezza
    Posted January 20, 2012 at 1:59 pm 0Likes

    PaulD. Sorry wouldn’t let me reply above.

    You’re analogy is actually pretty good.

    Maybe I’m not being clear. We agree. 6million in terms of property buyers is rubbish.

    My point is REA and Domain are both measured by the same people using the same measurement…so you can use the numbers as a guide.

    A smart agent would then look at the numbers in their actual area – including the number of listing on either site. Slightly less browsers but a lot less listings, logic would say your better on the site with less traffic.

    The conspiracy comment was a gag about the way some people carry on about the big guys here.

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