Are You Afraid Of Competition? Or Worse, Have You Already Succumbed To It?
June 5, 2008
Lately there has been quite a buzz in the real estate blogosphere about the likes of Trulia and zillow “stealing” business from real estate agents.
Nothing could be further from the truth. These newly arrived real estate behemoths are merely beating their competitors. Albeit these are competitors who viewed these entities as partners without realizing that they were empowering their “partners” to gain significant market share.
Realtors being angry at Trulia and Zillow is like Jack’s Hamburgers being mad at McDonald’s. Who is Jack’s Hamburgers? Well Jack’s is a small family operated hamburger “chain” here in the Fort Lauderdale area. I use the term chain loosely because there are only 2 Jack’s Hamburgers locations. Jack’s is the kind of place that would have caused Ray Kroc to think of the McDonald brothers.
In a search on Google for Jack’s you won’t find his website anywhere. However, you will find reviews of Jack’s everywhere. His business is marketed on many various search aggregators and community portals. He is a direct competitor to the national fast food chains in theory only.
While Jack’s is a hamburger joint, he did not care, nor has his business suffered because of the advent of fast food franchises. Jack’s has been a fixture here in Fort Lauderdale for over 35 years. When the new kids bearing “Happy Meals” and Chicken Nuggets” came into the market, it did not cause him to say that they were “stealing” his business. They couldn’t steal his business.
If you want fast food go to McDonald’s. If you want a hand cooked made to order ground sirloin hamburger with the thickest milkshakes you have ever had, then go to Jack’s. Guess what? It will even cost you more, but you’ll love it and you’ll be back.
Jack can compete with the big boys because he is a local fixture which people have come to know and tell all their friends and families about as a quality alternative to a fast food joint.
Jack can also compete because he knows that he does not need a significant market share of hamburger consumption to make his business profitable.
How does this compare to real estate? Well if you are asking, that’s part of the problem. It means that for the most part you are not running your real estate “business” like…well, a business.
We keep hearing the mantra that real estate is local. If that is true and I believe it to be, then I want to ask any real estate agent or any consumer where the local office or store of Zillow and Trulia can be found? If real estate is local then surely there must be a Zillow or Trulia store somewhere in the community. However, that is not the case.
Zillow and Trulia exist and have grown because they have gained significant market share, if not market dominance, and are exploiting your inability to serve the local consumer.
I actually applaud Zillow and Trulia. I want to be involved in a industry that requires me to up my game in order to compete. I want to do my best to train and become better to unseat my competitors in the market. Even if I fall short I have actually gained something. That something being market share.
Here’s a question you need to ask yourself. What percent of your local real estate market share does Trulia, Zillow, Homegain..etc…maintain? Then ask yourself, what percentage of your local real estate market share do YOU maintain? And lastly, what share of the market do you NEED to obtain to be successful and profitable?
Here in Broward County, Florida, even in this so-called slow market, there are an average of 500-600 single family homes sold per month. The average home in this area being around the $300,000.00 indicates that the average commission is approximately $9,000.00 per side.
If one were able to capture even a hal of 1 percent of market share one would have a minimum of 2.5 sides per month…or $22,500.00 in earned gross commissions. I don’t recall seeing any of the Zulliagain’s in the sales history of the last month recap. That being said, they are not set up to invade or inhibit your market share.
What you need to ask yourself as an agent is what you need to be doing and what should you be doing to increase your local market share.
From a marketing perspective, if we all agree that 85% or so of homebuyers begin their home search on the Internet then the prudent agent would realize and understand that they need to improve their relative market share by being out in front of their competitors where it is they are shopping.
Trulia and Zillow can’t beat the local agent in market share or web presence if the local consumer knows you exist! When someone puts “Charleston real estate” in Google, then a local Charleston agent had better show up or Trulia or Zillow or Homegain will service that consumer better than you will. You can’t blame the aggregator or the consumer for relating. You didn’t give them a choice.
Incidentally when you input the search term above, there are a few agents showing up that I suspect have no problem with the likes of the Zulligain’s of the world. Why? They don’t even show up. How can any real estate agent complain about the Zulligain’s when they aren’t doing anything to compete. By not competing effectively, you are succumbing to your competition.
If you are tired of the Zulligain’s “stealing” your business then improve yours. It’s that simple. Real estate is local and so is the organic search on Google. We all know that the first position gets the lion’s share of the traffic..but the other 9 aren’t going broke. I want to be on those SERP’s. I want to show up above the Zulligain’s as well.
I want the Zulligain’s to supplement my business, not BE my business. I am going to utilize the Zulligain’s to HELP me gain market share, to augment my marketing efforts not BECOME my marketing efforts. That’s what I seek in a partner.
I want to gain market share and I want to be like Jack’s Hamburgers. I don’t need 1 Billion Sold to make a good living. 3 sold will make my month. Will it help yours?
It is known that today’s consumers are looking for greater meaning in their purchase decisions beyond price and efficacy. You better have a proven methodology for catapulting your real estate business brand to greater market share and market dominance without having to outspend the Zulligain’s because you won’t be able to.
A big reason that so many complain about the Zulligain’s is that their own current state of affairs exposes a weakness in the development of their marketing strategies or lack thereof.
This is a tactical error in business. Too many involved in real estate are trying to find the cheapest, easiest way to market and promote their brand instead of realizing that only works once you have obtained and captured your desired market share. Even then there has to be a sustaining level for ongoing strategies.
The real estate business model is not equipped to compete with the Zulligain’s and that’s the biggest problem. Too many real estate agents have cars pushing their engines instead of the other way around. You can’t be effective as the Zulligain’s or even as an effective marketing savvy Realtor unless you are committed to maximizing the horsepower of your localized brand as the catalyst for securing market share and market dominance for your real estate business.
Am I going to lament and complain about the Zulligain’s of the world? Hardly, I embrace them and want to cooperate fully with them. I’ll work to get my business known locally and globally for my search terms and I’ll use the Zulligain’s to give me a bit of extra push to get there.
I don’t think they are stealing my business, I know they can’t. I won’t let them. Why are you?
Instead of trying to compete with Trulia, why not join them:
http://www.trulia.com/publishers/platform/
We incorporated this into our site and it look amazing:
http://www.myhome.tc
[...] today we talked about a blog post from Barry C titled, “Are You Afraid Of Competition? Or Worse, Have You Already Succumbed To It?“. We discuss the concept of market share and how it relates to competition within your [...]
Silly me for thinking all this time that Zillow and Trulia were marketing tools to take advantage of.
There are a ton of tools and opportunities to market real estate available but if it’s not self serving or an offer of compensation it must be a threat.
i.e. Most Realtor websites are about the Realtor rather than the services they can offer (although most don’t have a website.)