At first glance, visitors to last fall’s national Realtor trade show in New Orleans might have wondered if they were at the wrong exposition.
Instead of real estate firms, the biggest exhibitors at the annual National Association of Realtors convention were high-tech companies, such as GTE Corp., International Business Machines Corp., Sony Corp. and a host of smaller computer software and computer systems companies.
In a business where the bywords have always been location, location, location, Realtors are struggling to come to grips with the hottest marketing address: the Internet.
“The residential real estate industry has been slow to come onto the information superhighway,” said John Tuccillo, a consulting economist with the 720,000-member Realtors association. “Realtors tend to be risk-averse. If they have something that works, then why change?
“But they realize that on the Internet, there is a battle going for the attention of the consumer,” he said.
By some estimates, more than 70 percent of homes listed for sale in America’s major metropolitan areas are already displayed on the Internet.
With the help of a personal computer, home shoppers can cruise the streets of neighborhoods across the country, looking up houses’ price tags and finding which agents have the most listings in an area.
Most home shoppers use Internet listings to get a first look at a housing market before relocating to another city or contacting a local agent for a showing.
But debates rage in the industry over what Internet vehicles to use and just how profitable Internet marketing is for real estate agents.
A poll of real estate agents at the New Orleans conference found that although almost 90 percent of Realtors think the Internet will be good for their business, only about a third had received a sales contact generated from Internet marketing.
Real estate agents also worry that the Internet will open their businesses to new competitors and shift the first point of customer contact out of the real estate office and into cyberspace.
“Realtors had damn better make sure they are still the contact, as opposed to some nontraditional players coming in,” said Stuart Wolff, chief executive of RealSelect Inc., which runs the Realtors official Internet site.
With more than 1 million homes listed in 253 markets, the National Association of Realtors’ www.realtors.com site is the nation’s largest Internet home sales location.
After some costly mistakes early on, the Realtors estimate that customers are now looking at almost 14 million pages a month on their online service. The average prospective home buyer spends about 16 minutes per visit on the site and views 18 pages.
With that level of activity, it’s no surprise that the number of Internet home marketing sites is ballooning, with literally thousands of smaller local and company sites across the country.
Major media and software companies recognize the potential to become involved in the biggest financial transaction that most Americans make–buying a home.
“We are never going to see people purchasing property on the Internet by clicking a button,” said Errol Samuelson of GTE, which was making a big pitch for Realtor business at the industry show.
“But with the Internet today, the process of who you work with to buy that home could change. A brand on the Internet could become your first thought.”
Even the Realtors are divided about who will win over consumers on the Internet. More than 30 percent of those surveyed said non-Realtor sites might dominate the field.
Indeed, big entertainment companies such as NBC, software firms and traditional newspaper advertising departments are making the pitch that they will capture a share of the cyberspace market.
“The newspaper strategy is really very simple–to extend the advertising Realtors have traditionally done in newspapers to advertising on the Internet” on newspaper sites, said Tony Marsellas, vice president of the National Newspaper Association.
“The thing we count on is the tremendous advantage the newspaper industry has in its promotional ability in real estate,” he said.
Real estate advertising now generates almost $3 billion a year in revenue for newspapers, Marsellas said.
He predicts newspapers will have an edge because they serve local markets.
“And the business of real estate is local,” he said.
Thirty-seven percent of Realtors polled the largest number said that newspapers will win the local Internet marketing battle. However, other potential players aren’t ready to concede the issue.
“We want to set ourselves up as a gateway to all this information,” said Andrew Shotland, director of NBC Interactive Neighborhood. “We think the way to do this is through a partnership between the national network, your local TV station and the local Realtor.”
Whatever becomes the vehicle that brings Internet home sales advertising to America, the information network and other high-tech tools will bring further consolidation to the real estate industry, Tuccillo predicts.
“We will see fewer and fewer agents needed,” he said. “Information technology is providing the opportunity for people in this business to better leverage their time.”
The ranks of residential sales agents have already been shrinking about 2 percent a year.
However, now and in the future, “buying a house is a very emotional process,” Tuccillo said. “You can’t replace the human beings in the process.”
