The Conflicts of Advertising and Listings

Aug 3, 2007  |  Michael Wurzer

Inman Blog writes today that the Realogy deal with Yahoo! Real Estate doesn’t knock Prudential out of the picture, instead Yahoo! has created (and Realogy apparently agreed t0) a separate “classifieds” section of their search and Prudential still gets the “Homes for Sale” section. The upshot: you can’t search both Prudential and Realogy listings at the yahoo_real_estatesame time, which, of course, is ridiculous from a home buyer’s perspective.

This bizarre result is predictable and shows the difficulty of striking a proper balance of interests allowing competitors to advertise together. There basically are two revenue models for listing aggregation sites: (1) charge the broker or agent for premium positioning; or (2) give the listing advertising away and sell advertising to others. I don’t see either of these models building a critical mass of listings necessary to serve the consumer.

The broker pay model fosters competition among the listing providers (brokers and agents) for the premium advertising space, and that competition necessarily will increase demand and then prices and eventually drive out a significant segment of the listing providers who will choose to advertise elsewhere. The free listings/outside advertising model doesn’t work because listing search is advertising and the advertisers (brokers and agents) don’t want their advertisements diluted by others’ advertising.

Every listing aggregator falls into one or the other of these models, or a combination of the two. is straddling both models and their troubled history is a classic example of the conflicts inherent in mixing listing search with advertising. Trulia, the heir apparent to, so far has eschewed outside advertising and is focused on charging brokers and agents. So far, they’ve done well attracting listings but my guess is that they’ve cut sweetheart deals to get a foothold and eventually we’ll see the need for cash start to drive up prices and eventually the listings will go elsewhere. Zillow initially ignored (annoyed) the broker/agent market but now is a mix of both the broker charge and outside advertising models. Yet, they have few listings and I’ve predicted for a long time that they’ll never build critical mass. Point2 isn’t seriously in this space, as they are more of a syndicator than an aggregator. Google is an outside advertiser model and hasn’t gained much traction either. I could go on but the result is the same: all these aggregators make a lot of waves but their models are doomed as it relates to comprehensive listing search.

Though I’m completely biased, I think the facts show that the only model that can work for the consumer is an MLS portal, devoid of all advertising and premium positioning. The beauty of this approach is that it not only is consumer-centric but it’s also the least expensive for brokers and agents. The MLS fosters the cooperation necessary to tame the competition enough to allow listing aggregation, which is necessary to serve the consumer. I wrote yesterday that I needed x-ray glasses to see through all the hype surrounding these issues. Do you think I found those glasses?

Update (sort of):  I think this post on traffic for, Zillow and Trulia is relevant here.  I had read it before but was reminded of it today by Jim Duncan.

8 Responses to “The Conflicts of Advertising and Listings”

  1. Johnny Storm says:

    When searching on Pru – you search a complete IDX dataset – which may or may not have 100% of the listings, but more often than not will have Realogy listings, as they are dumb enough to opt-out of IDX

  2. Johnny Storm says:

    That should have read
    ‘they are not dumb enough to opt-out of IDX’ – or in other words know the value of IDX

    as a side note – I completely think MLS portals make the most sense, and I applaud HAR and their 45% market share of listing search.

  3. I agree that MLS, devoid of advertising and premium positioning, is the most consumer-centric model but it only addresses broker listings.

    MLS is not and cannot represent all of the homes on the market if it excludes FSBOs or any other non-MLS business models.

    While I think Yahoo! does a disservice to consumers with this search model, given the reluctance of MLS groups to tear down their garden walls, this is the best Yahoo! or anyone else can do.

    (Johnny – what’s HAR?)

  4. Wow, that’s even more incredible. Realogy gets relegated to the “classifieds” and they’re already in the Homes for Sale under Prudential’s brand. That’s unbelievable. This result is more bizarre than I first thought and suspect there’s even more to the story. Perhaps Realogy is just waiting in the wings until the Pru agreement expires.

    Tripp, HAR is the Houston Association of REALTORS, which operates a very successful MLS search site ( in Houston.

  5. Tripp, most MLSs already include limited service listings, which really is just a way of charging the FSBO for advertising in the MLS. An interesting test might be to see what would happen if an MLS or two with a listing portal opened it to FSBO’s free of charge. Of course, the limited service brokers would not be too fond of that approach. I suspect listing brokers and agents wouldn’t be either, though they’d be happy to see the limited service brokers go away. Buyer brokers likely would love it, but there would be questions to resolve about offers of compensation unless the commissions could be divorced and the buyer’s agent could be paid through the buyer’s financing. The bottom line is that limited service listings are probably one of the better ways to allow FSBOs into the MLS. A social contract of some sort has to be crafted so the parties know what to expect, and the limited service listing seems like a pretty decent approach that is already available.

  6. Peter says:

    It seems to me that the MLS itself is very similar to the broker pay model you mention above: Brokers pay to have their properties listed. And from a consumer’s perspective, the MLS system has some serious disadvantages compared to the Trulia’s of the world – namely almost every MLS system I’ve used as a consumer has an abysmal user interface. In my opinion, the listing aggregation sites are a much better, newer implementation of the MLS concept. At a basic level, MLS was created to simply share listings between offices – something that Trulia does a better job of – they only lack the inertia that’s behind MLS. But that will change over time as the newer aggregation sites add features and the MLS systems lag further behind.

  7. Peter, I agree that MLS systems have been less consumer friendly than some of the listing aggregators’ sites, though I expect you’ll see that changing very rapidly. Beyond the interface, however, there is a fundamental distinction between the MLS, which is not trying to make money off advertising, and the listing aggregators, which are. In fact, in many cases, the MLS is owned by the brokers doing the advertising and that model is getting more and more attention. This cooperation among competitors is what distinguishes the purely competitive models, and what allows the aggregation in the first instance.

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