The debate over the big portals will rage on forever, but should we even care? Are they really such a key component of today’s real estate industry that we have to spend so much time and effort trying to figure out if they are helping us, or planning to take over the industry?
Based on the extremely overvalued stocks of the soon-to-be married Zulia/Trillow, Wall Street is betting on these portals disintermediating the industry. Before you jump on that bandwagon, keep in mind that Wall Street hates real property investments and would love to disrupt the industry and the value of owning a home.
Say what? That’s right, look at the big picture.
The two largest investment vehicles available to almost everyone are real estate and stocks/bonds. The more money that goes into Main Street, the less that goes to into Wall Street.
Also, remember the big housing bubble last decade? While there was plenty of blame to go around on that crisis, Wall Street was guilty of blindly selling trunks of bad real estate mortgages to unsuspecting investors. Admittedly, at that point they probably loved real estate, but their actions were the gas on the fire and it came back to burn them.
Wall Street will always compete with us for investment dollars, so anything that might disrupt real estate is valued by traders. Their over-zealous support of Zulia/Trillow is yet another misguided attempt to capitalize on Main Street values. By the way, they significantly overvalued Realtor.com when it first came out, partially aided by some illegal book-cooking by Homestore executives back in the 90’s.
But all this Wall Street hoopla is all just smoke and mirrors and we have all fallen into caring more about the big data aggregators than we should. Zillow gets 45 million visitors a month. So what? That might sound good to online advertisers and investors, but is it really disrupting the real estate business?
All real estate is local
No matter how hard Wall Street might want it to be true, technology cannot counteract this basic rule of real estate. All real estate is local and even really cool technology will not change that rule. So, some clients may start their real estate search on the national sites, but many start, and more importantly finish, their Internet search for a home on a local site owned by the broker or an MLS.
Wall Street, the media, the national portals and Fern down at the hair salon might all tell you that their favorite national aggregator site is the best place to go, but ask a buyer in search of a home and they will typically tell you they used the agent’s IDX site or the local MLS site.
Let’s be clear, we are not talking about so-called “leads.” We are talking about where a client goes once they are serious enough to be ready to buy. These are people who have already decided to buy, selected an agent, and probably even pre-qualified for a loan. They aren’t interested in messing around on a national aggregator with inaccurate data and a bunch of ads.
So the question is, how many of the 45 million visitors to Zillow each month are people seeing what the Zestimate is on their own house, looking at the latest celebrity homes to hit the market, or checking out the insane real estate prices in San Francisco? Zillow probably can give you a guess and maybe they will add some stats to the comments of this post (begging).
Look at the numbers
Numbers may not really exist to measure national aggregator traffic compared to the aggregate of thousands of local sites, but bloggers can make up numbers as well as any Internet site. Commscore said in April that 97 million unique visitors went to a real estate website. Apparently 87 million of these visitors went to one of the three big national aggregators, leaving just 10 million for all other sites.
Why should we believe that number? NAR reports that just over 5 million existing homes are expected to sell in the US this year. Yes, the Internet overlords are telling you that 97 million unique visitors EACH MONTH are only buying 5 million properties each year. Keep in mind that there are only 300 million people living in the US.
We should not buy these numbers for a minute. Let’s start thinking for ourselves and forget these hyped up stats.
A conservative estimate of the number of local IDX sites in the US would probably be 200,000. Add about 100 really top-notch local MLS sites, many of which dominate the local market, well ahead of the national aggregators.
Again, conservatively, let’s say these sites average just 300 unique visitors a month. That’s over 60 million visitors compared to Zillow’s 45 million (assuming you believe that number). By the way, Zillow claimed almost 79 million unique visitors to their site in April.
Confused? Who should we believe?
This is worse than Century 21 and Re/Max debating who was the biggest real estate company a few years ago. If we look around and think for ourselves, we will realize it doesn’t really matter. All real estate is local and of the 5 million real buyers in the market this year, I’m betting most will find their dream home on a local site.
If we think for ourselves and quit getting caught up in a bunch of big numbers, including the numbers estimated for this article, we might be able to rationally discuss this issue. Ask your clients where they search for homes when they are ready to buy. We may never be able to prove it statistically, but the safe bet is that all real estate AND all real estate searches that matter, are local.