Uses of websites of effective real estate marketing

Journal of Real Estate Portfolio Management, Apr-Jun 2000 by Bond, Michael T, Seiler, Michael J, Seiler, Vicky L, Blake, Ben

Executive Summary. The Internet is quickly becoming the place where customers first look to buy products and services. The real estate brokerage industry is no exception. Whether relocating across town or across the country, individuals are shopping more and more over the Internet. It is the fastest and least expensive information source available. As such, it is becoming increasingly more important that brokerage arms remain competitive by offering their properties on the Net. This study examines the efforts of residential real estate brokers to keep up with this dynamic environment by gathering listing information of existing real estate brokerage websites.

Introduction

E-commerce is undeniably a significant current and future venue for doing business. With 83.4 million American adults on the Web (http:// www.e-land.com/estats/100999_tv.html), it was inevitable that businesses would begin to sell their products and services in this low cost environment. Because of the anonymity of the Web, no longer is it necessary to do business under the traditional brick-and-mortar framework. Instead, even small firms with a single employee can be represented on the Web the same as a Fortune 500 company This not only levels the playing field, but also allows for increased competition and potentially lower prices for consumers.

In the real estate brokerage industry, buyers and sellers are already searching for relocation help through several websites that provide mortgage calculators and information on the quality of school districts, neighborhoods, shopping and parks. In order to succeed in today's e-commerce society, firms must not only anticipate consumer demand, but inform their customers of their products/services through both online and offline channels (Shirer, 1999). The purpose of this study is to assess the degree to which the real estate brokerage industry is responding to opportunities to promote the properties they represent and themselves over the Internet.

Literature Review

The extant literature suggests substantial growth in the use of web pages in the real estate brokerage industry. In January 1995, there were approximately 100 real estate websites that offered properties for sale. By the end of that year, the figure had risen to over four thousand sites and up to approximately 8,000 sites by the end of 1996 (Heller and Krukoff, 1997). Some of the sites involved the home pages of single properties while others included listings of over 500,000 properties. While complete marketing and purchasing information was initially lacking in the majority of the sites, this is rapidly becoming the minority of the listings.

In 1996, the National Association of Realtors estimated that of the 2 million homes for sale in the United States, only a few thousand were listed on the Web (http://nar.REALTOR.com/home.htm). As of October 1999, http://www.realtor.com lists 1.3 million homes for sale. Today, approximately 9% of all web pages on the Internet are associated with real estate (Conhaim, 1999).

The results of this electronic revolution are a mixed bag for consumers with greater convenience for potential buyers coupled with a great deal of additional information to examine. Genie, Prodigy and Compuserve started their existence by devoting a great deal of space to real estate "forums" or "bulletin boards" and all had classified listings. Compuserve is also home to several professional industry networks while America Online has an active Real Estate Desk with a growing number of services to members (Conhaim, 1998).

Local newspapers have attempted to protect the annual $2.5 billion in classified advertising revenues they earn from realtors by offering their own websites for real estate. For example, the Classified Federation, a subsidiary of the Newspaper Association of America, created http:// www.realfind.com, which is an Internet and tollfree service through which potential relocation buyers may request a copy of the weekend real estate section of newspapers in major markets. In addition, these prospective buyers may link directly with newspaper classifieds via the Internet.

The Internet is rapidly spawning much more sophisticated homebuyers and sellers. They are coached on what questions to ask by consumer sites such as the real estate section of http:// www.consumer.gov and http://www.homepath. com, which are sites featuring information on home buying and selling with FNMA information. They also check the reputations of builders, neighborhoods and school districts by accessing local newspaper online archives. The use of Real Estate Library (http://www.relibrary.com) allows for ref erence information on home buying and financing including locating a reputable agent. If customers are interested in selling their home, they can see which realtors and news vehicles do the best job at online selling. If customers wish to list privately, they can offer the property on national selling services such as the Abele Owners Network (http:// search.cnet.com/Single/0%2C7%2C99350481%2C0200.html).