Realtors are writing Realty Times, setting up Websites to 'just say no' to Realtor.com, and complaining to their brokers, associations and franchises to intervene on their behalf to get Realtor.com to reconsider their dramatic price changes and the elimination of html enhancements to listings (photos, links, graphics.)

This wasn't the response Realtor.com was hoping for when it launched its new 'Realtor Choice' unbundled advertising services. In fact, it is a huge mess, that has caused the attrition of some brokers who were once loyal customers, including franchisor Realty Executives which won't be renewing 8,000 Realtor.com Websites in June, without better bulk terms. The company had been paying $1 million annually, or $125 per agent, and has been asked to pay $4 million to renew, about $500 per agent, says the company.

The problem is largely caused by Realtor.com's failure to communicate why it needed to raise prices so dramatically while limiting previously available services. What happened to the site that was supposed to be Realtor-friendly, and can better communication solve the problem?

On Thursday, last week, RE/MAX International officials including Kristi Graning, RE/MAX vice president of Web Services and IT marketing, met with Homestore and Realtor.com personnel including Jack Dennison, COO of Homestore and David Bay, COO of Realtor.com.

Complaints to RE/MAX International over Realtor.com's sudden and large price changes and their method (or lack of) communication to RE/MAX brokers and agents prompted Graning to move these concerns to the top of the agenda for the quarterly meeting, she says.

Says Graning, "We did express concern about their communication and campaign, and how it was communicated to the agents. This will continue to cause alarm with agents."

Among the complaints Graning relayed to the Homestore/Realtor.com team - prices rising greatly, credit cards charged without notification, and inability to enhance listings to attract more consumers with additional html links, photos and graphics.

Better communication needed

Graning says it was not her intention to ask Realtor.com to lower their prices, but to get better communication from the company.

"It is a very high priority to take care of these brokers and agents," she says. "We went into additional detail, and received a presentation from Realtor.com why it was done (pricing changes) and the results thus far. We saw statistical data that the buyer is surfing the Website and clicking through to detail pages, and Realtor.com has made modifications to drive more leads. They can see the user is viewing more detail, so the agents who enhance their listings with photos are getting seen more than they used to be, but Realtor.com has to balance the promotion of listings and agents."

Graning believes that better training will help. "We also saw their sales team and scripting process and toured the facility and saw the people on the floor on the phonelines. If the agents speak to a well-trained person, then our agents are more familiar with what Realtor.com is trying to do. We walked away knowing a lot more, and we have the challenge of educating our agents and brokers about what Realtor.com is trying to do - that they need to do this to make a profit and be competitive."

Says Marty Frame, who attended the RE/MAX quarterly meeting and in response to questions from other brokers and agents, "What is going on is that we host their Web site (www.remax.com) and part of our deal is a quarterly update with us so we know what they are doing with products, sales, marketing, trade show planning, branded materials and customer support. It's very routine and tactical and we've been doing it since 1999. But there is an issue with a broker-owner in greater Lansing, and they took me through the history. One thing we are all trying to do is, as the host of their site, show them that their investment is a wise choice. We have to provide good service to this guy, and he and RE/MAX has a right to expect that."

Says Frame. "From our brief chats, this broker had a bad encounter and our rep may not have been apprised in training, in my own dear company. My guess is that two things happened: he was working on an arrangement with this company at a time when the product was transitioning, and then the deal closed, and it appears the deal wasn’t updated accordingly. That would be hard to tell, but it would account for the sudden change in what was promised. It is obviously a training issue and the broker-owner has every right to be upset.

"When I encounter training issues, there is a problem. I will talk it over within the association, as it appears there are other agents who are unhappy," says Frame. "That may be a function that the product has changed, and that produces a host of potential issues. The way everybody is trained to support people through the change is that our reps are assigned geographically, so there may be a training issue with the individual that Kristi told us about.

"We are no longer autorenewing credit cards," Frame emphasizes. "We are instead engaging Realtors in a discussion of our products and one thing that has happened is that all of the historical anxiety or negative feelings come out in that conversation, and that is a great opportunity to tell where we are. No one is making a purchase decision against their wishes."

Pricing structure needs better explanation

Realtor.com's new pricing strategy is complex - especially to a Realtor who is trying to understand how their Website just doubled or tripled in cost over last year.

At the NAR mid-year convention trade show last month, Daniel R. Sale, executive vice president, Capital Area Association of REALTORS, stopped by the Realtor.com booth to inquire about the company's new prices.

"Our local Re/Max franchise which is our largest office recently received their renewal notice," Sale wrote Realty Times. "They were charged about 8 times what their bill was last year. For the same features they paid $500+ for last year, they have been charged $4,000+ for this year. So, I stopped at Realtor.com and I had a lengthy conversation with a woman (Leza Vanbueren, Major Account Manager). She essentially compared the new pricing model with how newspapers charge (i.e., the more listings you advertise with the newspaper, the more you pay). Also, it was implied that because brokers are relying on newsprint less and less (thanks to the Internet – although that's debatable in our market) they can afford to pay more. Finally, she did show me (online) the new rate cards. I asked her if I could get one for our market (“B market”) so that I would be somewhat clued in to how they arrive at their prices (so when I start to get the calls – and I will). She said that I could probably get this from Joanne Margulis at Realtor.com."

But in what is becoming an increasingly typical communication breakdown at Realtor.com, Sale says he e-mailed Vanbueren for Margulis e-mail address, but never received a reply.

Editor's note: To understand Frame's reply below, ads are the same as listings. Detailed ads are the next click down from "Search Results" on Realtor.com.

"If they have to make purchase decision on our new product, it is derived pretty simply," explains Frame. "how much market traffic there is to view ads, how many times the ad will be viewed, and how many ads will you have?"

Realtor.com has divided its markets, where it gets listings from over 800 MLSs, into four tiers:

• 35 markets are AA, in which detailed ad views average about 850.
• 80 markets are A, where detailed ad views average about 629.
• 250 markets are B, where detailed ad views average about 460.
• 513 markets are C, where detailed ad views average about 275.

Then detailed ad views are calculated by the number of ads (listings.) If an agent has 50 or more listings annually, she will get an average of 58,440 detailed ad views. For 26-50 listings, she'll get about 30,764. For 10 to 25, she'll get 15,254, and for 4-9, she'll get 6,339, and for one to three ads, she'll get 1,987.

"For example, in a double A market," explains Frame, "every ad has a guaranteed circulation of 58,000 impressions at the detailed ad level. At the C level, the impressions are about 16,000. For a person who takes a lot of listings, you get a volume price on your ads, when you get into the 100 plus listing level, you are talking a $15-20 fee per ad.

"That is the conversation we have to have with our customers, when you multiply that by ads, that is a $2,000 purchase. You might have been paying the base level ILEAD, in the past, about $500 a year, and a lot of folks sitting at that listing level are folks who spend on what works for them. At the diamond level, they are at $1,300 or $1,400 a year. Now we are saying, your pricing is calculated on the number of listings. You get a volume break in the $16 to $20 range for the life of the listing.

"We have to ask everybody who is a potential customer, would you pay $16 an ad for the life of the listing to have your listings on Realtor.com?," suggests Frame. "If you decide that kind of exposure isn’t worth it, the ad is there whether you subscribe or not. You won't get enhancements, but it has the broker-owner's office phone on it."

Editor's note: Frame says, "We need to be clear that Realtor.com's fees are charged to attach our products to your listings on Realtor.com. We never charge to place your listings on Realtor.com, and never will -- that is guaranteed by our operating agreement with NAR."

So why can't Realtors see a rate card so they can understand the pricing for themselves? "It is difficult to calculate because everyone is different," says Frame. "They are having a hard time understanding it, and they want to go to the Web and see something. So, it is incumbent upon us to make them understand how we are calculating it."

Frame says that a rate card will be available online at Realtor.com shortly. "We thought we could talk our way through it," says Frame, "but people want supporting evidence. They want to know they aren’t being played. People are entitled to have empirical evidence, so we'll have that up on http://imarketing.realtor.com in a couple of weeks."

Why listing enhancements with html have been limited

RE/MAX Home Professionals technology director Mark Passerby is upset that agents can no longer enhance their listings with html photos, links and graphics to bring more attention to the listings. He believes that the html has been disallowed because it detracts from banner ad sales to third-party companies who are using the listings to get traffic. HTML links lead visitors away from Realtor.com.

"The entire focus is on keeping the traffic on their (Realtor.com) site to use up the CPM banner advertising, so that more banner advertising inventory is available for their reps to continually sell," he says. "The more the buyers stay on their site, of course, the more that banner advertising inventory is used up and the more they can sell. Unfortunately that isn't particularly focused on the agents' benefit who not only makes up the NAR membership, but also provide the "content inventory" that truly drives their site. Simply put, it won't work. It is a focus on selling advertising inventory as opposed to one that is about effectively helping agents market their inventory."

Passerby says that since html was disallowed on listings, his company's agents have complained that they aren't getting leads anymore.

Frame says, "I had not heard that there was a sense that leads were drying up. The html has gone away because it was blowing up our site and creating problems. They were dropping java applets and not using it judiciously, we would have to deal with users being unable to use search results because a malformed piece of html tags were being placed in there. We knew people enjoyed customizing property ads, but the most important thing Realtor.com has going for it is high-quality consistant user experience. That adds up to a better experience for Realtors. When users look at an ad and can’t see the rest of the ad because a tag blew up the rest of the page or created an epilepsy-inducing flash, they blame us. Yet our customers place high value on the ability to enhance their ads, so we allow even the novice users to come in and customize their subscriptions without any technical knowledge with text enhancements. They can add markup consistant to the user presentation, so that consumers will think 'someone has spent a lot of time making this look great, and I know where to look for TLC on listings, and I don’t have to guess why this has banner ads all over it.' The ability to link is still there, but it is in a sandbox. We think while that’s different, it is a higher-quality consumer experience and yield for Realtors.

"I have consistently seen dramatic improvements in the user experience," says Frame, "and we saw 125 percent improvement in leads to everybody. If there are specific users who aren't getting leads because of html, then we have not seen that across the board."

Frame says that if a Realtor.com customer would like to contact him that he can be reached through the customer care e-mail at Realtor.com. "We are open to constructive criticism," he says. "Shame on us if we aren't responsive to requests for information."

Contact Frame at customercare@realtor.com.

Published: May 30, 2003

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