From Crains Chicago –> http://www.chicagorealestatedaily.com/cgi-bin/news.pl?id=29581

“The Chicago-based parent organization for about 1.3 million Realtors nationwide agreed to drop rules that allowed its members to block Web sites from listing certain homes for sale. That rule and another one that didn’t allow Web sites to sell referrals to other brokers were put on hold when the Justice Department filed a complaint against NAR in 2005.”

I’m not too sure how important this really is in today’s world anyways. Since 2005, the internet marketing world (and the real estate market) has changed dramatically and as we’ve found out… it really does matter on the ability of actual real estate agents. Just because you can list a home for sale and put it in the MLS or on a website, certainly does not mean that you know how to market and sell one. Here are some great examples of some really poor real estate marketing.

“The previous rules inhibited competition and discouraged discounting of commissions, the department said. The settlement will mean “better service” and “lower rates” on commissions, Deputy Assistant Attorney General Deborah A. Garza said in a teleconference with reporters. “Consumers will now benefit from unfettered competition.”

I never knew there was never a choice for consumers in the first place. The main proposed rules in question that the DOJ were against, were never implemented. In other words, nothing has changed since 2005 and nothing will change. Consumers have always had a choice just like Real Estate Brokers have always had the choice of what commission they feel they need to charge to stay in business.

With the recent closings of numerous Real Estate Brokerages across the country, online services only in business because they’ve raised and are surviving on Millions of Dollars of Venture Capital, it is quite evident that commissions are where they are for a reason: To Stay in Business. It’s not cheap running a real estate business…. when you look at the super rich in the world, how many of them owned Real Estate Brokerages or were REALTORS? Not many if any that I can think about. If you become a REALTOR just for the money, you won’t be a REALTOR very long as we are finding out during this downturn. Like teaching, you have to have a passion for it.

Two very well known Las Vegas Real Estate Brokerages that filed for Chapter 11 Bankruptcy last year were some of the most successful Real Estate Brokerages for their franchises in the world. How many of the most successful businesses for franchises such as McDonalds file for Ch. 11?  Certainly does not sound like real estate Brokerages make too much money to me. And trust me, we are not in collusion with other real estate brokerages. Just look around for all of the “We’re #1, We’re the Greatest”, We’re the Biggest, blah, blah, blah”  Advertising for Real Estate Brokerages out there. From years of playing sports and being in a Fraternity, you tend to get a nauseating feeling and a desire to puke when you see this form of self promotion. Not a very good platform for collusion. Even within real estate brokerages, there is competition between real estate agents in the same office. I’ve been with some companies that pushed this with company awards, etc… that pushed production more then satisfaction in determining what a great real estate agent was.

As real estate agents, There is so much competition, we have to spend a ton of money just to be seen in the crowd and even more to market real estate for sale - effectively. Advertising is one thing… marketing is another and that’s where the value of the commission comes in. Just posting homes for sale on the internet or the MLS is advertising… Putting up the right pictures, descriptions and the proper calls to action are another. We get paid because we know how to do it, not just because we are licensed to do it. We waste a ton of money if we don’t do it right, sellers don’t sell their home and we don’t get the money we spent (or time) refunded to us.

Internet Advertising for Real Estateis already very competitive and certainly much more competitive since 2005. Our first real estate website was in 1999 and I think I could count the number of Las Vegas real estate agents that had their own website on my fingers. But… that certainly did not mean that we had a corner on the Las Vegas real estate market and could charge whatever commission we wanted to. And.. just because we put our Las Vegas homes for sale on it, did not mean they automatically sold. It took years to realize this and it’s not taught to real estate agents on company time.

Today, the real estate internet world has become so competitive, web savvy companies with Millions of Dollars in Venture Capital such as Trulia have even realized that they need Real Estate agents to help them out.

Not all real estate licensees or REALTORS are created equal. As evidenced by the recent TRULIA Awareness Campaign, there are still literally Tens (if not hundreds) of Thousands of REALTORS that do not even have a clue about Internet Marketing. Samples of some of the recent articles about the Trulia Trick on REALTORS by REALTORS that do Understand Internet Marketing highlight this:

Basically, a very high tech web company with a business model based on advertising (more clicks, higher advertising costs it can charge) has leveraged their expertise in the web world by using the many non-internet savvy real estate agents. (In all fairness, at least these real estate agents have their own real estate websites.)

On another note and something not highlighted yet, I think there may eventually be some backlash from individual real estate agents concerning recent deals being cut with national brokerages with some third party sites. I already know why they did it and what it means but we’ll see how many other real estate agents that it affects pick up on it. (Personally, it means nothing to me so I’m not even going to highlight it. Rule #1: Track your Advertising. I already know it has little benefit in relationship to other things we do so it really does not matter to us… but it will for some real estate agents.)

Realtor.com has been charging Real Estate Agents for years with enhanced features that in my gauges for effectiveness, failed miserably in terms of ROI. We still use the Featured Homes aspect of it just so we can get enhanced pictures and descriptions in it, but just posting a home on Realtor.com does not mean it’s going to sell. Just posting homes for sale on Zillow, Trulia, LasVegashomes.com, ColdwellBanker.com and hundredes of others (we put our Las Vegas homes on all of these and our own sites) does not automatically mean it’s going to sell. It still has to be done the right way.

And…. as more real estate agents really start to learn how to showcase a home on the internet, I have to expect the effectiveness of third party non-real estate broker sites less and less effective in actually selling homes. I make this opinion from years of tracking the numbers from being on these real estate websites and years of being on the internet to begin with.

Rule #1 in Marketing: Track your results from your advertising sources to see what works and what does not.

We track the numbers and share it with the home owners and generally our own sites get much more individual attention and views for our clients listings. (There is a deliberate way we set this up but that’s for me to know from years of testing and tracking our marketing efforts.) All I can suggest for real estate agents is to learn how to accurately track internet advertising and the truth will open up your eyes and make you a more effective real estate agent and an even more valuable source for home sellers.

“But NAR President Richard F. Gaylord said in a statement: “This is clearly a win-win for the real estate industry and the consumers we serve. Today I can say with clear knowledge, underscored by DOJ’s settlement compromise, that the real estate industry is dynamic, entrepreneurial and fiercely competitive.”

The trade association noted that it was not required to admit any wrongdoing or liability, nor was any monetary penalty involved.

Although brokers will not be able to keep homes they are selling from being listed on the Internet, sellers will still be able to block their own homes from being listed on the Web or restrict how they are displayed, according to an NAR spokesman.

The settlement may not lead to greater use of the Internet, or lower commissions, he added.

“They say use of the Internet will bring down commissions, but everybody is using the Internet. Competition is what’s bringing down commissions.”

I’m not a automatic Kool-Aid drinker. I tend to ask what’s in it before I drink it so most of what I’ve said is from actual experience. Rule #1 in marketing: Track your Advertising. I really don’t know how the proposed rules from the National Association of REALTORS would have mattered to individual real estate agents anyways - in fact it probably would have hurt the internet savvy ones more then help just like some recent changes to the REALTOR Code of Ethics that hurts REALTORS that have “MLS” in their domain name. Which ironically, cannot be enforced against non REALTORS and third party sites that just sell the internet consumers information.

On another note, I don’t think millions of dollars of Venture Capital would be invested into internet real estate advertising sites in the current real estate environment. Most of these were created and the capital was raised during the real estate boom when people came addicted to real estate. (Welcome to my world!)

Do you see any new TV shows coming out about real estate? During the boom, so many were coming out that it became hard to track them. And… don’t even get me started about how bad many of them were with just terrible information. (A couple of the first ones such as the one that focused on Trademark Real Estate in South Carolina were good.)

With the multiple sources of internet sites easily available to list homes on today in comparison to 2005, It’s pretty easy to determine that just because you put a home on a site… does not mean it’s going to sell. Otherwise, we’d be selling more homes then ever with all of the internet sites available and that’s just not the case now, is it?

Things have certainly changed since 2005… But.. we knew that back in 1999 when we first got into the internet real estate marketing game. It’s just one form of advertising out of many and just because you have a website and can put homes on it or a blog and can tell everybody how great your dog is, does not mean you are doing anything beneficial for your client.

You still need to know how to Market and they do not teach that in any real estate licensing school that I know about. (Marketing that is covered are topics such as illegal marketing such as Discrimination and Deceptive Real Estate marketing practices.)

Internet Real Estate marketing takes years to understand just how effective it is and what it really means. There are so many new gizmos and gadgets being explored and just like last year’s headliner or the year before that, many of them will just fall on the wayside as being ineffective tools. (Online home valuations come into mind here and some banks may even be in trouble from relying on online based appraisals used during the sub-prime fiasco. Big Hint — don’t rely on them and if you are a real estate agent — you’ll be wasting your money paying for these leads.. we already tried it long ago.)

Michael Evans, international treasurer with the American Society of Appraisers, said some lenders eventually began using computers alone to establish home values.

The same major concepts are still in play as they were back in 1999. While internet websites have become much more effective in helping consumers search around for homes, (and our Las Vegas Real Estatesite with the full search of all Las Vegas area homes listed in the Las Vegas MLS by participating Brokers has certainly helped us out time wise), smart consumers still want experienced and educated Real Estate agents in helping them make a life changing experience.

Just because you can form a real estate advertising site with millions of dollars of Venture capital, does not mean it really helps sell homes. These particular sites even know that they need REALTORS and are in trouble without them.

You don’t learn about what makes a community a community unless you are out and about in it. Community events, charities, social activities, etc… life. Cool graphs, charts, etc.. are nice to look at but personally, I don’t really use them to learn the look and feel of the layout of the land.

The internet is not going to replace our Experience. If it could… it already would have. REALTOR rules or not. Experience is when you’ve already seen it in another form and can save everybody time (and money) and that’s priceless.

It took the Department of Justice and the National Association of REALTORS three years to realize this and come upon an agreement that really means nothing. A lot of time and money could have been saved if they just would have asked the experienced and internet savvy real estate agents in the first place.

Paul Francis, CRS
Coldwell Banker Premier
Las Vegas Real Estate
702.592.3058