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October 20, 2022, 08:15:03 PM |
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PRIMER:
Internet Listing Service, or ILS, an online real estate search database, showing properties and units that are for rent or sale. Prior to the explosion of the internet, the primary way real estate listings were promoted was via newspaper advertising, real estate agents, and traditional “for rent/sale” signs in front of properties. With the steady decline of newspaper readership, printed real estate listings have also all but disappeared. The power of the internet has transformed the way real estate listings are advertised no less than it has transformed the entire advertising business.
People are more likely to start their apartment or home search on the internet today than ever before. For example, 86% of renters use an ILS platform during their search and the average renter is on four different sites before they sign a lease. According to The National Association of Realtors, 52% of buyers found their home on the internet, 29% from a real estate agent, and 6% from a yard sign/open house. These trends seem to be here to stay as the younger generations grow increasingly reliant on the internet for goods and services.
The move to online advertising created a flood of newly formed companies employing novel strategies to display listings and capture the widest public attention. Initially, brokerages took advantage by posting their listings for free on every new website that popped up. Agents sucked up all the digital traffic from these websites, and owners began paying commissions to agents for their leads. This period coincided with another boom in the real estate market – rental agents. The aftermath of the Great Financial Crisis saw a decline in home sales and an increase in people looking to rent. These market forces naturally led to brokers focusing on listing apartments/homes for rent instead of homes/condos for sale.
Towards the end of the 2010’s the ILS market has worked out all the kinks on the best way to search, post and organize real estate listings. Owners can now easily pay to post their vacancies and set up showings directly through these platforms. This has caused real estate professionals to question whether these giant internet companies will seek to displace classic brokerages altogether.
Like most new ventures in growing markets, many companies failed. The ones that didn’t were consolidated into a few major players. Those major players – the ‘Big 3’ – are Zillow, Apartments.com, and Realtor.com. Realtor.com is operated by a News Corp. subsidiary, Move, Inc., and is associated with The National Association of Realtors. As of mid-2020, they claim to be receiving approximately 68 million unique visitors a month. Zillow has been called the ‘Facebook of Real Estate’ by buying up a wide array of real estate related companies, even one of its biggest competitors, Trulia, for $3.5 billion in 2014. They claim to receive 36 million unique monthly visitors. The large international commercial property company of Costar Group purchased Apartments.com in 2014. Their marketing budget ballooned to $250 million in 2020 alone, well above the $150 million they spent in 2019, and vastly more than any other ILS.
This has led to a paradox: there are a multitude of ILS sites to choose from, but ownership of these sites has consolidated to just a few big players. This concentration of ownership in a small number of entities has increased their leverage over other real estate stakeholders – agent/brokers, landlords, and management companies. The natural result of this consolidation is a decrease in competition and an increase in price. By capturing a critical mass of the traffic and pushing out the competition, the ‘Big 3’ has been able to increase pricing. That is great news for these Silicon Valley behemoths, but bad news for brokers and owners with online listings more expensive than ever.
Answer: An ILS that is owned by the actual people that make it run, AGENTS and LANDLORDS. I'm looking for some help on this forum from people who know how this can be done via blockchain.
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