Matthew Ferrara, Philosopher
 

Edina Realty: Because Leadership Matters

Nothing excites us more than when a broker breaks with the common wisdom of the tribe. Edina Realty proves that 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.

  • I hope Edina is going to inspire more leadership! My disdain or contempt for these aggregators is pretty intense.

  • John Schumacher

    When I first read of Edina’s decision and action, I wanted to shout “Hurray, at long last…Leaders!”  One of the bravest, best decisions I’ve witnessed this year.  Bravo, Edina!

  • My pleasure; I’ve been waiting for this to happen for 10 years – it’s invigorating!

  • Duffyschafer

    Duffy Schafer; office manager/broker/Edina Realty.  Just another solidifying action by a company that so many of us feel proud to be a part of.

  • Thanks for your comment; it’s wonderful to see how this decision has been so strongly supported by everyone at your company, and from the comments on the web, many in the industry, too!

  • Juliemoorhead

    Matthew,
    I chose Edina Realty as my brokerage 10 years ago after interwiewing 3 other firms. My choice was easy, I knew something very special was happening here and they proove it over and over. One of our managers likes to ask at our meetings “What’s Next?!” I think that sums it up. Thanks for your post and the clarity of your insight.

  • Julie:
    That sounds like the right question and attitude to me. Keep up the good work and I look forward to watching Edina prove the exception should be the rule! – MF

  • Stan White

    A bold move made possible by great leadership and having a confident marketing plan, funding it, execuiting it, and tracking it. Great leaders are those willing to step out in the heat of battle and go on the offensive.

  • Stan: Agreed. Still, it’s always refreshing to actually see it happen not just talked about! :>

  • Susan Rochwarg

    My attraction to leadership is undeniable. Whether or not I agree with leadership on a strategy or plan, I recognize there is timing and risk associated with a decision of this significance. The Law of the Big Mo! Momentum is the great exaggerator and we could see others quickly run toward (or away) from this new model for real estate lead attraction. Thanks for a great write. Your writing is brilliant. That we can agree upon.

  • Thanks, Susan. I had the same experience when I heard about Edina’s decision – MOMENTUM is infectious and energizing. I have a feeling a lot is going to change!

  • Bob Gilbert

    I couldn’t agree more with your comments.  Like many others, I chose to work at Edina because of their honesty, integrity, and the courage to do things (such as this) that others are afraid to try.  Very, very good article!

  • Poconnor

    Yes, hats off to Bob Peltier for this move – and don’t forget Joe and John Horning at Shorewest in Milwaukee, who also led on this issue, and their brokerage site traffic has risen!

  • Margaret Serbus

    At first I was a bit skeptical of this decision but, Matthew after reading your Article I think it is a great one ….We are the Leaders in RealEstate here in Minnesota and, I Love working for Edina Realty ….They have proven over and over to me that we are the Brokerage to be reckoned with ….Leaders we are ….Thanks for writing this …..:)

  • Margaret – so glad to help! With your support, I’m sure your company will be a success!! — Matthew

  • Dan DeMarchis

    Okay Matthew, I’m starting to get it.  I just sent this to the President of our company.  I certainly hope he’s way ahead of me and has already seen it!

  • RealtorYP

    A Couple Questions…

    1) what is the script for an Edina agent when they go on a listing presentation and the Seller says “I used Trulia/Zillow to search when I bought this house 2 years ago and I want to make sure my home is on those sites as well when we list.” I know the spin that the owners of these large companies will put on not putting listings on those sites…but the Sellers WILL NOT buy it.

    2) What is the end result if all the large independents start pulling out of syndication? Is the goal to get where EdinaRealty.com is the only website that has Edina listings? If so, is that really serving your seller? If it’s a competitive listing and one agent shows a list of websites and an Edina agent just shows EdinaRealty.com – who really looks better? Plus – if I’m the “other” agent I would tell the Seller that their listing would be on EdinaRealty.com if that was so important to them because Edina shows IDX listings. Then, I’d show a report from Listhub that shows all the traffic from Zillow and Trulia that comes to our listings and say “Do you really want to put yourself at the disadvantage of only being on one website?”

    If I were an agent in Edina’s market I would be very excited to read this article and I’d have new listing ammo.

    Now – please tell me where I’m wrong because I’m afraid my company may do the same thing as Edina and needless to say, I’m nervous about it.

  • Gail Petersen Bell

    Smart. Savvy.Strong.   Thank you.

  • Dan: great! I hope he engages the discussion. Any way I can help, let me know.

  • Rob, all great questions. Here are a some ideas.

    Answer 1: Mr and Mrs Seller, At our company, we have plenty of data indicating we can find your buyer for you. We sold X homes last month thru X, Y and Z techniques. We are selling homes for X% of our sellers’ asking price in Y days on market. Our record speaks for itself. So, I’m confident we can sell your home using the techniques that have led us to be market leaders already. Now, if the appearance of your listing on Trulia is a deal breaker, then let me give you the name of a company in the area who will do it for you and wish you the best of luck.

    See how easy that was? It’s not necessary to do every deal. It’s not necessary to compromise your principles and your brand for every dollar in the market. As long as you can continue to reach your desired results – which Edina is doing – within its own parameters, then *not* working against yourself is never a problem.

    2. There is NO indication that Edina or any other company who is not syndicating will not continue to participate in IDX – which is BROKER to BROKER level data sharing. All of the listings will be available through ALL of the brokers – without any “special costs” other than what they already pay for MLS services, and their own marketing strategies. Serving the seller can be done in dozens of ways, as long as you can reach the seller’s goals of price, timing and conditions. You don’t even NEED a website – but you’d never believe that, I bet :>

    You’re making an assumption that showing “more” stuff is “better” service. More websites = better marketing. More leads = better conversion. More goodies = better results. That’s simply not the case. It’s a by-product of poor agent recruiting technique – more stuff is what agents demand, but not customers. I never asked my lawyer if he had more books, my doctor if he had more scalpels, my car mechanic if he had more wrenches. I only expect them to achieve the end results within my desired price, time and quality.

    There is no “disadvantage” to being on one website as long as that site is producing the results the customer wants. Each broker will rest on its RESULTS, not its EFFORTS. You’re confusing process with outcomes, I’d submit. Just because my car isn’t a Mercedes doesn’t mean I’m not totally satisfied with it. Just because my house only appears on one website doesn’t mean I’m unhappy as a customer. Especially if that site has a proven track record in getting the most local traffic and its agents have the leading position in converting the leads it gets.

    Hope this makes sense. The competition for the future is between outcomes, not stuff.

    Thanks for your comments!

  • I am an Edina Realty agent and just did some research on a few of my listings.  On a listing I just put on the market 10 days ago, Trulia had provided me with 44 listing detail views.  On edinarealty.com that same listing had 661 listing detail views!  I looked at a couple other listings and saw similar patterns of 10x-15x the views on our own site versus theirs!

  • That’s great news, Aaron! Now, here’s a suggestion: Start tracking which of the leads you’re converting. This is critical. Not only is it important to have traffic, but it’s important to know which sources of traffic are generating the kind of inquiries that you are able to convert into sales. Since you’ll be applying the same skills (it’s still you, after all) to both sets of leads, it can help you understand if there’s not only a quantity difference, but a quality one as well.
    Good luck!

  • I’ll jump on the love train with this one.  I thought it was bold when I first saw a passing blurb about it.

    I am so tired of large aggregators using our listings to distort the true value of the market and then sell them back to us as if they were doing us a huge favor.  
    I got sucked into the whole “pay for our ads and ‘enhanced’ services” .  It’s a money hole of unbelievable proportions.  What really steams my shorts is that Realtor.com is getting into the “lead referral” business.  It’s one thing to charge for virtual tours, expanded still photos, customized text descriptions (of our own listings!), it’s quite another thing to charge me to “refer” me to someone who likes my “enhanced” listing.  It’s double dipping.  NAR is supposed to be *our* organization.  Harumph!

    I applaud Edina for taking a leadership position. I have my doubts that others will follow. We can only hope.

  • John Ash

    Say no to Zillow and Trulia, sign the petition here:

    http://www.ipetitions.com/petition/say-no-to-listing-data-aggregators/

  • Well said!  It’s getting fizzy.

  • – Matthew

    O. 978.291.1250
    C. 508.878.6223
    Matthewferrara.com

    Mobile Transmission complete.

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