Real Estate Marketing Blog

Real Estate Profits

I am reading a fascinating book called, "Real Estate Confronts the Future".

The book interviews several industry players that give their forecasts. One interviewee John Tuccillo is NAR's Chief Economist. He pointed out that the gross commission on a transaction averages less than $200.

This is amazing! Meanwhile, agents pound their Brokers for more when it appears there isn't any more to give.

Additionally, it is costing more and more difficult to succeed online while every Tom, Dick and Mary wants your top spots in Google and Yahoo.

There are only 24 hours in a day for goodness sake.

That's why you need expert online web marketing from Spider Juice Technologies. We bring the traffic and help you convert the traffic into leads. Basically we can help you with everything but put them in our car for you.

Real Estate Commissions are a Dropping

It seems The National Association of Realtors (NAR) has the Department of Justice in a bit of a pickle.

NAR, in an effort to support its vast membership's best interests, has given the go ahead for Agencies not to allow Zip Realty to show their listings. In a recent article in Forbes the author writes:

The National Association of Realtors, responding to the online threat, plans to put in place Jan. 1 new rules that could zap Zip and other discounters. The Realtors are pros at the protection game and have beaten back other interlopers, including the nation's biggest banks and Microsoft, which last year gave up a five-year effort to compile its own real estate listings.

So the Deprtment of Justice has stalled NAR from implementing their new rule.

Later in the article, Southern California Catalist Homes Broker Michael Davin says,

You can't blame Realtors for fighting to keep anticompetitive laws. Without them, the industry would be in for a shakeup. "Fundamentally, it really hasn't changed since the Twenties," says Michael Davin of California discounter CataList. The average Realtor today sells fewer than six houses a year. While other fields have become more productive, Davin says, "real estate has gone backwards."

A RealtyTimes.com article made an unconvincing point that the Forbes piece is unfair in that it takes a one sided view of discounting. It takes a victim view as if the Corporate wooptie woops (that is official language that means big shots) are picking on the poor non-corporate Realtor.

Here is my take:

There will always be a place for discounters and always a place for the Full Boat commissions. But reality is reality guys. The full service guys are being pushed down in commission and the discounters are finding they cannot make it at ridiculously low rates.

So we have an industry average of 5.1%.

Zip Realty, as pointed out in the Realty Times article has raised their rate a bit, while the tradionalists are beat down in commission. In the end, every body ain't that far apart.

However, that is not what is bothersome. What is bothersome is that agencies are keeping their listings from being freely circulated via the IDX/VOW protocol. Now these guys may claim they have the right to their listings, but who in the hell are they representing?

It sure isn't the seller.

They are attempting to protect their larger commissions by punishing the discounter. Ironic isn't it? The very reason the discounter has a marketplace is because of the the perception that Realtors overcharge for little service.

Well, when 70% of the buyers use the web to find a house to buy, and a seller's house is not part of the larger syndicate of homes on the web, who is not getting represented?

The Realtor community can pretend this is not going on, however, Catalist Homes mentioned above has been blackballed by some in the their MLS community in which I live. Meaning some agents have refused to show their listings because of Catalists discounting model. One company in particular has refused to share their MLS data thru VOWS. It is believed they did this as a way to make it difficult for Catalist to represent their listings.

What it comes down to in my opinion is that the industry lead by NAR has been intellectually dishonest. I believe that they probably do a better job at representing the needs and concerns of the vast majority of Realtors and not the few.

What a great organization you might say. Except Realtors are independent salespeople and the 80/20 rule applies. The few are what floats the boat. They are your transactions. They are your profit.

The few are rarely outspoken because they are too busy selling!

Thus, I think the opinions that matter. The opinions that are changing the industry in one way or another, are not heard. Ask any top producer in a competitive marketplace like Los Angeles if the Realtor designation matters at all. Most will laugh.

Yet, NAR and its followers (the voices of the industry) are quick to point out what a great job it does at protecting it constituency. Just listen to its latest branding campaign and you know there is a screw loose somewhere. "Ask if your agent is a REALTOR®, a member of the National Association of REALTORS®." Does anyone care?

So the real issues are blindsided as NAR and all the state AR's push for silly awareness campaigns to justify their existence and build machines like Realtor.com that suck your dues out from underneath you. Meanwhile, the value of you the Realtor's only tangible assett the MLS, is devalued thru FREE and ungoverned syndication.

It is this last issue that should really be the main concern of all Realtors as this is what is really driving commissions down.

Newspapers No, Google Yes

Did you know that Google News reaches more Americans than washingtonpost.com? And that Yahoo News now reaches a larger unique audience in the U.S. than MSNBC.

I know I hardly ever read a paper or get my news from the television anymore. It is always several hours behind what you can get instantly online.

Search Affect on Branding

The report, titled "Internet Search Brand Effectiveness Research," studied the impact of search and contextual text ads on an array of brand metrics, including aided brand awareness, unaided brand awareness, brand image association and purchase intent.

For the search listing results, when respondents were asked to name a specific leading brand within a tested industry, they were 27% more likely to name the brand displayed in the top search result spot than those in a control group who were not exposed to the ad.

This is just more proof that Top Natural/Organic positioning and Sponsored Search results benefit your brand.

Cost Per Lead

I found a terrific resource proving that search is the cheapest cost per lead generator out there. The source from this chart is Piper Jafray

While search is shown to be at .45 a lead, direct mail is $9.94.

You always have to look at these numbers relative to the other relation. But it is revealing nonetheless.

Meanwhile excentric millionaire Mark Cuban, owner of the NBA Team The Dallas Mavericks, has started his own search engine called Ice Rocket.

Mark is a blogger too.

Know your Metrics

Often times I find that my clients don't have a great understanding of their numbers. I try to council him or her into knowing the cost of each lead and sale from their web results. Therefore they can know the true value of our work, and quite frankly, hold us accountable.

Unfortunately, my industry tries to point clients to pay attention to metrics that are one small piece of a larger puzzle. SEO companies will teach web businesses to pay attention to Key Word positions on the web. What is your position for the term "your key word here"?

So we have a web full of people always pulling up their key word to see where they rank.

Who cares?! It is one word for goodness sake.

Look traffic comes from keywords. Many keywords. And each key word can send 1 or 100's of people into your site if you are ranked well for the term.

So when we start on a project we want to determine your keywords, that represents your marketplace, that carry the highest potential for traffic.

I call each one of these high volume terms a traffic stream.

A traffic stream is a finite number of inquiries typed into a search engine. Your take of a traffic stream depends on your position for the stream. It is at this point that you may say I am contradicting myself.

The reason I don't put much emphasis on weather one term is ranked number one or not is that the algos for the engines ebb and flow each month. When one term falls, the other rises. Thus we wish to represent many keyword terms as we realize it unlikely to dominate on every single term. So we are hedging our bets to benefit you based on the odds.

I would rather you pay attention to much more important metrics. Such as how many leads you are receiving. This is why I always council my clients on the 5 steps to a successful website. Only one of those steps is traffic. And within that step are several microsteps to succeed at creating traffic. But it is only part of a five step process.

First lets understand some terminology.

Hits
This is a poor method of measuring web site traffic. A hit is registered each time a browser request is made from a web server. If you have a web page containing four graphics, each page display will count as five hits.

Page View
This is a more effective way to measure web traffic. A Page View refers to each time a page is displayed. So, if you have a web page with six graphics, each time the page is displayed counts as one page view but seven hits.

Unique Visitors
The number of individuals who visit your site in a defined time. If 400 people visit your site this week, that is 400 unique visitors. If one person visits your site 400 times, that is one unique visitor.

Cost per Sale (CPS)
This is the cost of obtaining a new customer. You divide your total acquisition expenses by your total number of new customers. For example, if you have $700 per month spend that produces 10 new customers in that month, your CPS is $70.

CTR (Click Through Ratio)
This will show up on the Pay Per Click engines. The number of people who click through a link or banner compared to the number of people who view it. If 4 site visitors out of 100 click through a link, you have a CTR of 4/100=.04 (or 4%).

Conversion Rate
The percentage of visitors to your site who perform your Most Wanted Response -- subscribe or register to get your MLS listings. If 10 out of 100 unique visitors sign up, your conversion rate is 10/100 or 10%.

CPC (Cost Per Click)
This is the cost of attracting a visitor to your web site. You calculate it using the following formula: CPC=CPM/(CTR x 1000)

If you paid $45 CPM for a banner ad with a CTR of 1%, your CPC would be $45 / (.01*1000) or $45/10 = $4.50). Each site visitor is costing you $4.50.

CPA (Cost Per Action)
This is an online advertising model in which the advertiser's payment is based on the number of people who perform the Most Wanted Response (i.e. subscribe, register, purchase, etc.)

PPL (Pay Per Lead)
In this advertising model, payment is based on qualifying leads supplied. For example, a publisher might pay you a set amount for each visitor you send who subsequently provides contact information or subscribes to an ezine.

PPS (Pay Per Sale)
This is an advertising model in which you pay a commission for each qualified sale that results from activities.

I hope you can look at these metrics and know how to take your cost of sale and your cost of lead. Your cost of sale is going to be determined by how good you are at closing your leads. How many leads des it take to get a sale?

Google IP No

A recent Playboy interview of Google's co-founders Larry Page and Sergey Brin
(ever wonder where the term Page Rank came from?) features the two discussing the company's rapid growth and even brag about how Google's search engine has helped save people's lives.

There is concern that the interview could cause a delay in the Google IPO.

"I don't want to rain on their parade, but I think this interview is going to cause regulatory concern. There could be consequences," said Zuppone, now with Paul, Hastings, Janofsky & Walker in New York.

Guaranteed Search Engine (SEO) Results

Or something for nothing.......

It is realistic to expect some kind of guarantee from a service.

When dealing with search engines however, it is not realistic to expect a guarantee of placement in the SERPs (search engine ranking positions). Especially when an SEO firm offers such dramatic results on the cheap.

Common sense dictates that you and everyone else wants a top position. The company that is offering a guaranteed result for $100 does not have magic Google dust to spread over your website. There is no red phone sending your proxy love over to Sergey and crew.

The promise of guaranteed position can only be legitimately offered via one avenue. Pay Per Click.

The trick goes like this: Offer Guaranteed position for a low fee.

Say for instance you have a real estate related website. You want it to position in at number one. Along comes Dr. Feel Good SEO company offering you painless top position (The Traffic part is implied). Read the fine print.

-----You will get that top position as long as your budget is paying for it.-----

Now, I guess as long as this scenario is disclosed everyone will be happy.

However, once your dollar runs out, your position runs out. Unfortunately, I have read pitches that promise to get you position in the search engines. Not even disclosing whether that it is a Pay Per Click (PPC) management offering.

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Side note:

Spider Juice Technologies metaphorical definition of PPC and Natural Search results

PPC- Like a sprinter your campaign takes off full speed only to exaust itself out after about 100 yards (your budget is exausted)

Natural Search Engine results- Like a freight train it takes awhile to get going. But once it gets going, it is hard to stop.
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A firm up in Redmond used the guarantee pitch and have been ordered by the court to refund monies and pay heavy fines on a lack of performance on their guarantee.

There is much scheming by companies wanting to grab a fast buck. They always tug at that place right next to your heart called greed.

A for sure way to avoid being taken is to realize that something so good, that is so competitive is not cheap. That will whittle out most of the scammers for sure.

Google Downgrades Big Sites

A recent post in Webmaster World has confirmed suspicions that Google has downgraded the positions of big sites. Pros are reporting that their SERP's (Search engine ranking positions) have fallen, despite their backlinks having exploded.

By the way to find out your back links in Google you can use the Google Bar, or simply type into the query : link:http://www.yoururl.com

However, that often will only list sites page rank 4 or above.

So a better way is to type:
.yoururl. -site:www.yoururl.com
This will net you all the backlinks and sites that mention your site, other than your site's pages.

The best way to find out all the links that Google has is to go to Yahoo and type: link:http://www.yoururl.com
Since Yahoo has most of the sites that Google has, it is a good bet that Google knows about these too.

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In other news, I found Forbes release of the most expensive houses.

A cool California mortgage broker site

For Sale By Owner

NAR's Profile of Homebuyers and Sellers in 2003, found that the amount of successful for sale by owner sold homes were 14 percent. This is a 30 percent decline over the last two years in the number of people successfully selling their home "by owner."

Many flat fee for sale by owner services have sprouted out of the natural affinity for the FSBO home seller to seek cheap marketing and representation. Many offer to sell your home for less than $500 for a no frills listings package.

It is still too early to tell if these sites offer much value to the consumer. But it definitely is helping to drive commissions down. And, it is pointed to as proof by those that believe the industry will soon dismantle commissions into "a la carte " style fees.