Realtors and advertising portals that use listings can reach a more productive and profitable accord by determining what the true value of a listing is - to both sides.

Let's say for argument's sake that we already know that seller listings are the gold in the Fort Knox that is the traditional real estate industry. This gold is distributed among 800 MLS organizations - broker-controlled cooperatives that agree to share listings information with competing brokers and their agents.

The broker-controlled listing is a gold-backed paperless currency that impresses potential clients and venture capital-backed aggregators with equal dazzle.

Because listings are only valuable when others know that they are available, it is necessary for brokers to display their "wealth." The listing can be photographed and slapped on newsprint, or it can be made into a mini-movie on the Internet.

The listing has another function for the broker. One of the things that makes a listing so valuable is that inventories of listings can also be used to advertise the brokerage. The question that is being raised is should a listing on the Internet be treated any differently than listings offline?

That may depend.

Newspapers have long known that listings are valuable content. That's why almost every paper has a real estate section, where they give brokers a place to advertise their listings and services. By selling as many ads to as many brokers in town as they can, the newspapers "aggregate" as many listings as possible. They know that local buyers and sellers want to look at as many homes as possible before getting in their cars and searching on their own.

Yet, have you ever seen a newspaper pay for listings? Another thing you never see is the newspaper engage in an arrangement with a particular broker to exclude the other brokers from advertising in a certain section. Newspapers get paid handsomely to "block"display brokers' content, and then they charge agents for classified ads. It's not in the business model to favor one broker over another, except for the ones that spend the most. They get premium positioning, discounts, space upgrades and other perks.

Newspapers sell real estate by the inch. For expenditures that range in the hundreds to thousands of dollars per week, the broker and agent get exposure for themselves and their listings, but what does the consumer get? A tiny, blurry photo and some text that raises more questions than it answers. Ads make the phone ring, say the brokers.

Now contrast that age-old, low-tech advertising approach with what happens on the Internet.

Advertising opportunities on the Internet are not as focused. Brokers and agents have to pick and choose where they want to display their listings and do their personal marketing. Agreements between advertising portals and MLSs sometimes makes it more challenging for brokers to exercise freedom of choice. Advertising listings online is more complex because the information that is displayed is more complete. A learning curve for brokers and agents becomes a boon for consumers!

Instead of front door pictures of homes accompanied by a brief text, the houses can include comparables, virtual tours, multiple photos, school, crime and neighborhood reports, market conditions, and much more. The cost to the broker to provide these tools is higher but it makes the selection-elimination process so much easier for the consumer.

An added benefit is that the consumer can contact the broker or agent directly from the listing via e-mail or phone.

At first, few brokers had a problem with advertising portals like Realtor.com and HomeSeekers paying the MLSs to get their listings. The listings were advertised by the portals for free. So the portals were paying a cost, and providing a free service.

In order to make some money, the portals used the listings to get consumers to come, and then they sold lead capture tools such as reports and Web sites to brokers and agents to enhance their positions.

These tools are met with mixed appreciation by brokers and agents. While complaining of the cost of the tools, they forget that their ad - the listing - is being displayed to 60 percent of homebuyers free of charge.

So many brokers have refused to renew their lead capture tools or have asked their MLSs not to share their listings with certain portals, or in other ways have abandoned the advertising portals. They grumble that the aggregators are interlopers, after their money and diverting their leads.

Meanwhile, almost every advertising portal is renegotiating with MLSs to either lower or eliminate their payments for listings. Almost every one is in serious financial trouble or in some other form of retreat.

Does this mean that the advertising listing portals weren't a good idea?

No, they were a good idea - but by trying to provide more value to the broker and agents, but advertising the listings for free, the advertising business model became perverted. It's proven to be a poor idea to give something for nothing.

More consumers go to the Internet than any other source to get homebuying information. The number one thing they want to see is listings. Does it make sense to drive the advertising portals out of business when they are the means to richer, fuller advertising content for agents and brokers?

With improving technologies, the Internet is rapidly moving closer to television quality presentations and further from two-dimensional print media. While content with low-detail photos or text in newsprint, consumer expectation of presentation has subsequently risen dramatically on the Internet. Like children in a candy store, online consumers flock to the listings with the most visual appeal - the eye candy of virtual tours, maps, school information and more. And that is where the Internet medium breaks with the value tradition of offline advertising. Listings which are enhanced present more opportunity for the aggregator to collect revenues in order to continue to supply such an advertising medium.

Technology service providers are able to help brokers and agents provide more information to consumers than ever before. But how much is this information worth without the listing to provide the focal point of interest?

Unless brokers and agents want to pay to post their listings online just as they do with the classified and block ad models with newspapers, then they need to come to grips with what is and isn't a good deal.

If the brokers and agents don't want to do business with the portal, is it still a good idea that their listings are being displayed for free? Is it a good deal if the portal engages in a relationship with one broker to exclude others from advertising? Imagine the same thing on a newspaper site - a broker is allowed to display listings via classified ads, but to get to the ads, a competitor guards the gateway with a user agreement, and bombards the consumer with lead capture devices so that the consumer may see your listings but won't come to you to show it to them.

Is it all right for the advertising portal to make money so that it can continue to supply the service of free advertising of listings? Most businesses have a loss leader, but is it a crime when the company tries to make up the difference with other products. Listings sites lose money on listings, is it unreasonable for them to create lead capture devices to sell to Realtors who want more of an edge?

To beat the classified ad model, the advertising portals must come up with creative ways to charge for listings display, whether it is supplying loans, reports, or links back to the agent, or they won't be in business to deliver the leads that the brokers and agents gave them the listings for in the first place.

Is that what brokers and agents want, or do they want to find a better way to work with the listings portals so that they get the exposure they want and the listings portals can profit enough to continue providing the service.

Published: November 8, 2002

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