Newspapers 2.0 $75 billion online business model.

Short Answer:  Adsense for Realestate.

The following MSNBC article says there are  6,760,000 homes sold in the last year for an average price of $223,000.  The average commission on a sale of a home is 5% or $11,500 per home.  6,760,000  homes *  11,150 commission = $75 billion in commission

The affiliate marketer in me says that realtor.com should create adsense like product for realestate.  If someone clicks on an ad and as a result places a call, or emails an agent all that can be tracked and recorded.   If a sale takes place as a result of the click the referring website should get a cut of this commission.  

Newspapers are the companies best positioned to take a huge chunk of this market,  other companies like zillow.com  would be worth billions overnight.   Given that I have hundreds of thousands of unique visitors a day It does not seem outlandish that a site like mine could sell 2-5 homes a day  which would by far out monitize what adsense pays, and my site has nothing to do with homes. 

So come on Google, Yahoo, Realtor.com etc   Who ever builds this first send me an email I want to be in the beta.

25 Responses to “Newspapers 2.0 $75 billion online business model.”

  1. James J. Says:

    How would one track sales in a way that didn’t hinge on the honesty of agents?

  2. Markus Says:

    When there is this much cash at stake there is always a way…

    I suspect you can tie the Land Title System together with the MLS system. You can also capture a leads information like name phone etc before they are allowed to contact a agent. At any rate at the end of the day in a computerized world everything is trackable.

  3. Ruben Says:

    I have never understood why someone with monetary backing has not been able to make inroads into this area. If a company like Google or Yahoo started a By Owner site it could put a big dent into the commissioned agents’ pocketbook.

  4. Joshwa Says:

    The tricky thing is conversion tracking– it’s very hard to reliably find out referer information from a phone call. Except I just had a ridiculously good business idea to solve this exact problem…

    A related obstacle is confirming sales– it’s easy for a realtor to know when a transaction occurs, since they are a party to the transaction, but how would an affiliate know if a realtor is underreporting sales? Though I suppose this is a problem endemic to affliate marketing..

  5. Markus Says:

    Its dead simple, you generate an anon phone number and then conference lead and the Agent together. The title company could help confirm the sale, the realestate agent doesn’t even need to be involved.

  6. Eric Says:

    There are some things that just wouldn’t work as well online. I think buying a house is one of them. Key phrase “as well.” I’m not saying it’s not doable but I think most people would want to see the house in person and walk through it before they decide on such a big investment. I know with the whole advancement in digital cameras and video people would be able to take a tour of the house but it’s just not the same.

  7. Chris Wants to Learn! Says:

    Markus is the man. You sure as hell can do this. Especially with the BIG 3.

    That anon number can be tracked just as he described it and sales can be recorded and cash distributed. If they could bust out an “AdSense” like system for the little guys they could easily get this thing worldwide in days for all of the major Real Estate companies. Thats who should be stting down with yahoo and google right now to get something going before a major tycoon scoops that up.

    Hey Markus, what are you waiting for! You got the backing, the skills, the money- Take me on as an intern I just want to learn how to get the famous $901,733.84 like you!!!

    Damn that felt good coming off the tounge…$9-0-1,7-3-3.8-4

    On a serious note Markus is there a way to get with you on a professional level to learn a thing or two? I would pay all I have for that and soak it up like a sponge!

  8. AdamD Says:

    Referrals are already baked into the Real Estate system. All you need is a realtor on staff to process the lead and refer it to someone else.

  9. PRoales Says:

    The global market for advertising is $479 Billion, the global market for home sales by your calculations is $75 Billion. Assuming the same percentage flow online, the market for your idea is tiny compaired to straight advertising.

  10. Chris Wants to Learn! Says:

    Is the PRoales guy serious. That doesn’t just go for Real Estate. Mortgage, Appraisal, etc…. That is more of just the beginning-

    Get Excited-

  11. John Says:

    The devil is in the details, but vary doable and profitable. @78% of all real estate transactions in 2005 where initiated form the web! Because a search for real estate are area + real estate, area + state + real estate, or niche + area + real estate and the fact that a majority of agents are not vary technical this in not a competitive market.

    What you need to know about commissions. A commission for a $223,000 house is $223,000 * 5% = $11,150 which is split between the selling agent and the buying agent. What this means is a referral from a web site will generate on average $5,500 in commission. Currently agents are willing to pay 25% to 30% of the commotion for a referral. This leaves the referring party a check for $1500. On my websites and clients sites for every 50 people you can get 1 qualified lead, meaning name, address, *phone number, and information about what they are looking for. A good agent can then convert 1/3 of these leads if they are prescreened quality leads into a real estate transaction generating a commotion.

    What you need to know about commissions pay out. It is illegal for a real estate agent or I should say broker to pay any kind of commission / referral fee to anybody that doesn’t have a real estate license. Let me say that again, if you do not have a real estate license you can not be pad for a real estate transaction. Sites like homegain do sell leads to realtors for something like @ $35 a lead and realtors can use ppc to get traffic to there sites (vary profitable).

    What you need to know about how to track sales. AdamD above hit the nail on the head. You have to get the lead on the phone (if you are an agent witch I am) then get them referred to a good agent in there area. This I dune all the time and although not foolproof
    Is vary reliable. I do it all the time.

    What you could do is say a site / person sends you 1,000 clicks which result in $15,000 of commission then that sites traffic is worth $15 a click mines whatever the referring agent ( hopefully me ) would charge. If the referring site was sending better quality clicks and those same 1,000 clicks result in $30,000 in commission then it is worth $30 a click. The problem is people online looking for real estate are in the early stage and a commission my not be generated for 4-6 months to a year or more down the road.

    PS.. I’m dislecsic and if I do not spend time to proofread I can sound like a retard. My stander I’m not a retard discloser.

  12. Andy Says:

    John hit the nail on the head with the legal issue, I run several real estate websites, hold a brokers license and looked at numerous angles over the last years. Real estate & Mortgage business is a HIGHLY regulated industry at the Federal and State Level, just like you can’t get paid from stock and bonds trading commissions for just providing leads to stock brokers. They can pay you for leads all day long(not connected to if they buy or not), but you are not going to get piece of the commission that is linked to a lead buying. LOOK-UP FEDERAL RESPA laws and then state RE licensing regulations. (I my city they put at least 20 people in jail last year for taking part in what is called illegal kick-backs of commissions and fees,) 1. you must be a licensed real estate or mortgage broker who actually provide some value service related to the transaction, you can’t merely be selling leads. Even Agents referring clients to another agent must be in the business of real estate and/or relocation real estate services. And yeah, i know what you are thinking, and NO you can’t, the FEDS and the state agencies has already caught on to the scam of “Let’s hire a real estate broker, and get licensed as real estate company”, and then lets just call the lead selling “referred clients and relocation services” . They will let you spend all the money to set-up and get licensed without saying a word and soon as your competitors report you(that’s almost always how they find out) you’ll have a lot of tap dancing to do. No, the big sites (Yahoo, Msn, etc) are not a sleep at the switch, they aleady thought about that, till they talked the regulators and they lawyer’s). That’s why all those marketers all selling leads or click-thru’s on a per lead basis to agents and loan officers using the formula john spoke of above to price the leads.

  13. Ferris Says:

    There is a major point being missed here. The listing BELONGS to the listing broker office and they provide this to the MLS (each MLS is regional).

    There is a big move regarding this and many big companies want this data to be public.

    Bottom line is this, listing belongs to the listing broker, he can opt-out and not list the home.

    Aslo as an agent you can advertise/publish your OWN listing, agents without their consent.

    Here is a scenerio: I can take all of the listing from MLS, promote a real estate website, throw all of the listing on it, and when the potential customer callsl or email from finding my website, I call the listing agent and tell him I have a customer, and collect 30% of commision. Since, you have to get a permission from listing broker, you cant do this. If you do, you can say goodbye to your MLS membership.

    And most Broker will not let you follow this model.

    Sorry for typos…

  14. Michael Webster Says:

    The legal landscape, at least in the US, appears to be changing to allow a more competitive marketplace, see:

    http://financialservices.house.gov/media/pdf/072506jbm.pdf

  15. Antony Says:

    I think this is the approach a UK based real estate search engine is taking:
    http://www.extate.com
    Its more difficult in US due to the MLS system.
    Also, I do not see the need for tracking a user all the way to the transaction level. Like Google’s PPC, the value of the referral is established by the agent: if he knows that from site X only 10/1000 users turn into buyers then it is enough to assign a value to each referral. And then its all up to market forces…

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  17. Alma Says:

    helpful,thanks.

  18. banshee Says:

    do i need to be a member to comment on this blog?

  19. Dave Says:

    An affiliate program for real estate would be the best thing they can come up with! Just a fraction of a percent would make it all worthwhile!

  20. Mary Says:

    Great Blog – Can I post some of your comments on mine?

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  22. Invest in Armenia Says:

    cool idea

  23. directory Says:

    Whoa….check out this page…hmmm, and I thought this was only for the kids

  24. Admin Real Estate Says:

    Thankyou

  25. yates en ibiza Says:

    There is a big move regarding this and many big companies want this data to be public.

    Bottom line is this, listing belongs to the listing broker, he can opt-out and not list the home.

    Aslo as an agent you can advertise/publish your OWN listing, agents without their consent.

    Here is a scenerio: I can take all of the listing from MLS, promote a real estate website, throw all of the listing on it, and when the potential customer callsl or email from finding my website, I call the listing agent and tell him I have a customer, and collect 30% of commision. Since, you have to get a permission from listing broker, you cant do this. If you do, you can say goodbye to your MLS membership.

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