Nothing excites us more than when a broker breaks with the common wisdom of the tribe. Edina Realty proves that leadership matters, perhaps just in the nick of time.
Last week, Edina Realty took a stand in a decade-long argument. Is the best way to sell homes to spread them all over the internet in the hopes of attracting a buyer? That’s the accepted wisdom in real estate these days: Stuff every nook, cranny and IP with your listings and you’ll sell it. We’ll leave aside other matters like price or positioning for the moment. In the post-newspaper-classified era, the argument goes, your listings must be where the eyeballs are, all over the web. Thus, listing distribution sells homes. So say the listing aggregators, of course. Their quid pro quo: Give us your listings and we’ll send you new business.
Last week, Edina Realty said, Rubbish!
Especially since the quid pro quo recently become quod me nutrit me destruit. Some say it’s not as simple as that; but actually, it is. Edina Realty is proving the common wisdom wrong. It’s demonstrating that a company with a solid marketing plan, a decent website, a well-spent budget and a leads management system can make one of the most important decisions in modern real estate today:
Not to feed its dis-intermediaries.
Now, there’s a big word we stopped talking about recently. They’ve still there, though. The companies that will gladly pay you Thursday for your listing inventory today. The distribution websites who have inherited the intellectual arguments of the newspaper-classified and diner-magazine advertisers of days gone by. The ones who masterfully used the brokers’ listing data to out-flank everyone, including their trade association. Count how many times you see Zillow or Trulia quoted weekly in the media; then compare it to how many quotes from the National Association of Realtors or some of the biggest brokerages.
The aggregators have stolen the real estate industry’s voice.
Do they help sell homes? Sure; For many brokers, with little budgets, marketing savvy or IT capacity, aggregators are godsends. For near-free, they will spread that brokers’ listings all over the web, and send them back leads. Sometimes. Especially if you pay up. Because the aggregators business model isn’t just advertising any more; it has changed. Now they call it enhancing your listings with special features. But essentially, if you don’t pay up, they’ll sell your zipcode to your competitors. They will get the leads on your listings. It’s protection money, if we’re honest. Maybe worse: It pits agents against their own brokers, because some agents will do just about anything to get a lead today, at their long term expense tomorrow.
After all, aggregators have spent a decade telling them that’s how it works.
It’s more than that. The very presence of aggregators creates problems for an industry that does the actual work of brokerage. Part of that work is helping consumers answer important questions like: How much is my home worth and how should we market it? That’s the job of a broker: licensed, regulated, educated and also liable for the outcomes. Yet aggregators purport to answer this question for consumers, with zesty-estimates based upon often truly-bad data. So the real brokers have to spend hours, days, months arguing against the aggregators’ message to the consumer, while simultaneously empowering them to attract consumers to that very message.
It’s called falling on your own sword.
That’s why Bob Peltier, Edina Realty’s CEO, says their answer to the aggregators’ offers will be, No more! Instead, he’s going to do what all good companies do: He’s going to compete. He’s rejecting Trulia and REALTOR.COM’s latest value proposition. As a customer, he’s declining an offer that asks more than it gives.
More importantly, Edina’s decided to stop competing against itself.
Edina’s decision is good for Edina, its agents, and its customers. Peltier notes he really didn’t make the decision to influence other brokers, but to follow his own strategy. That’s a huge step in an industry that’s dominated by sameness and copy-cat pathology. After all, MLS, IDX and listing aggregators are both great empowerers and great levellers. In blind taste tests, few brokerage websites, listing presentations, offices and even agents can be distinguished from each other. It becomes even less so when you strip away their branding and amalgamate their listings into mass-production websites featuring the same inventory.
Edina thinks their inventory should make their website special, not similar.
Edina’s decision is to support its brand, not dilute it. To support its agents’ knowledge and experience on pricing issues when talking to sellers, not confuse it. To reduce the company’s cost for SEO and PPC, not drive it up by competing for the same eyeballs as the aggregators. And perhaps most importantly of all, to control its budget by eliminating the pressure to pay to get their own leads back.
Sounds pretty smart to me.
In fact, it sounds exactly like the strategy any company could make. Build a marketing plan, fund it, and go to market with it. Then track it, so you know where your leads are coming from, so you can make smart decisions about how to advertise. It’s exactly what made us jump for joy a few years ago when Shorewest Realtors ran a full page newspaper ad that said, This is our last newspaper ad!
Where did they ask consumers to go afterwards? Not to the aggregators, but to their own website. Of course.
Edina’s web analytics told it they already had dominant positioning for search traffic. Their leads management reports showed that most of its business was generated by its own efforts. Its agents and managers were frustrated by constantly fighting against their partners message on pricing during listing appointments. Pulling out of the aggregator strategy wasn’t really a risk, because Edina Realty understood its brokerage business better than the advertisers did.
Will Edina’s agents have a hard time explaining to potential sellers why their listings won’t appear on “all” the websites? Not if they focus on outcomes, rather than process. Mr. and Mrs. Seller, you’re paying me to sell your home, not advertise it. Of the last 500 homes we’ve sold at Edina, the majority of them were sold through our website or our agents’ sphere of influence. They’ll just have to use their reports, their own data, to stand on their own two feet. Remember, only about 40% of buyers found the home they actually bought on the internet. That means 60% of the sales game occurs lots of other ways.
It’s not just distribution that sells homes.
Does this mean other brokers should stop using third party listing aggregators. Not one bit. Plenty don’t have the systems, tools and budget to do what Edina is doing. Besides, they should follow their own strategy, which might include trade-offs that Edina’s not willing to make.
Could Edina’s decision inspire other companies to pull out of the aggregator strategy, too? Quite possibly. Because that’s what leadership does. It inspires others to make tough decisions, too. It breaks the monotony and encourages creativity in an industry languishing in that’s just how we all do it mentality. It happened with newspaper advertising. It can happen with aggregators.
I suspect that’s why so many people reacted so strongly to the decision – both pro and con. Fans of distribution, especially those who need it to survive, are already dismissing the decision because it goes against the tide. Others have cheered – us included – because Edina’s decision heralds a changing tide. One in which brokers take control of their business and set the course for themselves. Either way, it’s the bold leadership move, not the technical or marketing change that matters most. Somebody finally made a move, rather than just doing what everybody does. That’s a welcome change in an industry that too often “goes along to get along.”
It’s never the leaders who are standing naked when the tide goes out. They’re still standing when it comes back in.
Our experience with brokerages around the world tell us that there are many ways to reach success. In New York City, there’s no MLS but plenty of success. In Europe, web aggregators are virtually unheard of, yet homes are sold just fine. In Australia, the leading companies auction listings in 30 days, rather than advertise them online for a year. They put all of the “leads” in a room and make them bid it out for the seller’s benefit. That’s why those who think Edina has made a marketing mistake have missed the point.
Somewhere in the midwest, companies are learning the lesson that so many Silicon Valley CEOs have taught:
If you want to create your success, it doesn’t take a committee, a policy or a village.
It takes a leader.