REAL Trending Episode 15: Website Ranking Stats, KW Tech, Gross Margin Decline

On this episode of REAL Trending we are discussing the Keller Williams aggressive moves into technology, the results of our recent Website Rankings, and some new information about what’s going on in the brokerage business.

REAL Trends Website Rankings

REAL Trends annually ranks residential real estate brokers’ website. We have a team of three people, the project is led by Brent Driggers who is an expert at analyzing the strengths and weaknesses, appearance, and design features of real estate websites. 

William Pitt Julia B Fee Sotheby’s, took overall first place in overall best website. Interesting enough, in the six brokerage/team categories, companies like Compass; The Agency from Los Angeles, and Core of New York City took first place in video strategy, mobile experience, design, property detail page and community details page. It was an interesting cross blend of different kinds of brokerages of different sizes in different markets. But realistically, whether you’re in a small or a big market, or West or East coast, or nationally branded, or independent, it doesn’t matter, the brokerage can control the quality and the delivery of what the consumer will see on their website. We were honored to work with over 150 brokerage companies and state and local associations of realtors, which were ranked in their own categories. Congratulations to all the category award winners.

With each award winner, the top 25 websites overall and the top 10 in each of the six categories, we also listed the brokerage company’s technology provider. 

3 Surprises Found In The Rankings

  • Here’s surprise number one from the REAL Trends website rankings. The most ranked vendor was actually not a vendor at all. While Real Estate Webmasters had three websites ranked in the top 25 best overall and Boston Logic had two, in-house websites, websites built by local developers or staffed employees, had five of the top winners.
  • Surprise number two, the hardest category to rank was video. The usage of video is only slowly becoming a staple on real estate websites with brokerages and teams in the luxury and urban markets placing the most video on their websites. It would seem that this is a huge opportunity for the improvement in the delivery of sleek design, great information, and entertainment to use video to feature your people, the communities you serve, and the kinds of houses you represent. There’s a great opportunity with video because it really hasn’t developed fully among residential real estate firms as we found out in the web ranking report.
  • Lastly, a surprise was in design and design elements. Truly today, less is more. Websites with an overall minimalist design ranked high in many categories. They’re modern, they’re sleek. There’s less text, more imagery. Websites with minimal design featured ranked high not only in design, but they also ranked high when they had great design in mobile and obviously in video. Websites that custom curated the experience from desktop to mobile also ranked high.  Companies that copied and cloned their exact desktop functionalities and content to mobile without considering how to make this viewing experience different, experienced a much higher bounce rate, reduced time on their pages, and less satisfying user experience from our analysis. Let me repeat that. You can’t just take your desktop and then copy it to your mobile, can’t do it. The people who are looking at desktop are often people different than that are looking at mobile and the experience needs to be custom designed for the mobile experience.

Keller Williams announced this past week that they had acquired Smart Agent

Incredible story, going to propel Keller Williams forward in their development of the ultimate platform. Now, we’ve all heard since February this year that Keller was in a technology arm’s race with all of their competitors. I think this move with SmartZip just doubled down. We know earlier in the year, for instance, that Re/max acquired Booj; one of the country’s finest website designers and developers. Keller Williams has built their own voice search tool called Kelle, among many, many other tools that they are building and have built out and are working to perfect. This is truly an arm’s race. Keller is down the road, perhaps farther than their competitors, but we know that their competitors aren’t going to leave that field to just Keller Williams. Whether Re/max, or Berkshire Hathaway, or Realogy will rather build than buy is uncertain at this time. But clearly, Keller Williams made a statement.

They took several steps forward faster than some of their competitors. They get access to tremendous technology and knowledge from what was already built into Smart Agent, or Smarter Agent. We expect to see more, and more, and more of this among leading national and even some regional companies acquiring technology where they can acquire technology to advance their cause faster than they can build it themselves, or whether it brings unique features and/or customer base. We expect to see quite a bit more of this in the months and years ahead. The one thing we would comment on is once you start such an arm’s race, it doesn’t tend to end at any particular time. It’s a never-ending quest to stay ahead of what the competition is doing out in the marketplace.

Gross Margin Decline

The last area we want to cover is, since we last reported, numerous more companies have contacted REAL Trends about challenges relating to a decline in the gross margin due to increased competition for top performing agents and now the market is coming down. We haven’t seen that kind of situation for many, many years. In fact, it’s been almost 30 years since we’ve seen the combination of increasing low cost competition and an increasingly stagnant housing sales market. That was the period of time, 1988 to 1993, right after REAL Trends was launched, which was in 1987. We had some pockets of foreclosures, but it was not widespread. We just had a stagnant housing sales market. Sales were relatively flat, the average price increases were very modest, and right at that time is when Re/max International really gained strength in many, many markets around the country.

One thing about the years leading up to this period of time is just like those periods of time, we had a run up in housing from 1983 to 1987, a big run up. Brokers of all types, models, brands, and regions, when they have double digit volume increases in their markets each year, they forget that they need to pay attention to their costs, their productivity, and other factors related to the operation of their brokerage. Back then, a lot of brokers did not get it until it was too late. We know several large brokers did see it, didn’t wait, and reduced their cost across the board. Both personnel, and space, and what we might call related general administrative expenditures. But it’s worth noting that that stagnant flat market, that five of the largest residential brokers then in existence did not make it through that timeframe. Four were on the East coast and one was on the West coast.

It had nothing to do with regional companies. These were companies who were in the top 25 residential firms at the time in the whole country. Why do we bring this up now? We are seeing now intensified competition from teams, from Compass, EXP, and other companies like HomeSmart, Realty One Group, and others like them in virtually every market in the country. This is causing brokers to have to adjust their splits, and fee schedules, and they’re losing some gross margin. The other thing that’s happening is unit sales are now down six of the last seven months and the average price increases in most markets are coming down. That doesn’t mean house prices are dropping, just that the increases year over year are declining. If we are indeed heading into a repeat of that timeframe, and we are looking at a flat sales market within the next six to 12 months, and if that’s the worst that happens, it’s not that bad.

What is going to be bad is if you have a flat volume market and you have increase in costs of retaining top producing sales agents and teams, it doesn’t bode well for any brokerage company of any brand, model, type, or region to not get their cost in line. Our word for our listeners now, it is time right now to examine, if you haven’t already, every single thing you’re spending money on, and anything that is not directly related to the activities around listings and sales and getting deals done, should be severely curtailed, questioned, or done away with. We don’t know for sure where this market goes.

Our belief is a flat stagnant market maybe in store. Second part is, we don’t know for how long. There’s no way to know. Brokers, no matter what type you are, brand, model, location, now is the time to examine the cost side of your equation and be sure that you’re not spending any money that doesn’t have to be spent. Learn more about industry trends, marketing and technology strategies, as well as listen to past Real Trending episodes on our website, www.realtrends.com/blog. This has been Steve Murray. Until next time.

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