Cyberhomes learns from Real Estate 2.0 Pioneers
Categories: Technology, New Business Models, Title Insurance
Last week, I had a conversation with Marty Frame, Fidelity National Real Estate Solutions (FNRES) Chief Information Officer, and builder of its Cyberhomes automated valuation model ("AVM") product. We discussed the state of Real Estate 2.0 and Marty shared some of the strategies FNRES has for Cyberhomes that evolved from watching RE2.0 pioneers like Zillow and Redfin blaze the trails.
Zillow, Redfin and Cyberhomes all share the objective of providing education, compelling data and services to the consumer. Both Zillow and Redfin have been on the path, sometimes intentional, sometimes not, of upsetting the industry's status quo, and in doing so have had to make hard strategic decisions about how they will engage the three main players in the industry - the brokers, their agents and the consumer.
Marty and I both relish corporate strategy, we're both channeling Harvard's Michael Porter, dry as that may sound. The charts below illustrate examples of the challenges Zillow and Redfin have encountered and their positioning strategies, and how Cyberhomes might take advantage by adapting its positioning after the pioneers settle on a strategy...like playing the big blind in poker, betting after everyone has had the chance to bet. (Some of Marty's insights are in italics)
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Zillow |
Action |
Intent/Unintended effect |
Positioning |
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Brokers |
Invited Agents to post listings on the new Zillow |
Unintended effect: "Further cutting brokers out of the loop by empowering agents" |
Broker neutral - but Zillow's relationship with the Brokers is weak... they also haven't attracted the broker advertisers and that is probably a key objective to their "media" strategy. "Zillow had to give up on the brokers when they stated they are a consumer focused media company" |
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Agents |
Promised agents Zillow wouldn’t disintermediate their deals and encouraged them to directly add their listings on Zillow
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Intent: encourage “listings content” to attract and strengthen data relationship with consumer |
Zillow aspires to help agents attract a consumer client base and develop organic leads. Stickier site = bigger media play. |
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Consumers |
Providing educational real estate resources, such as Real Estate Wiki, in mission to educate the consumer about pricing (AVM) and real estate transaction processing
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Intent: establish credibility with consumer. Unintended effect: still irritating Realtors who think consumer education equates with disintermediation.
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Focusing on the consumer as the audience in their media business model. By emphasizing no intention to monetize from the transaction, Zillow is positioning itself as a free, impartial, "no agendas" data service for the consumer.
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Redfin |
Action |
Intent/Unintended effect |
Positioning |
|
Brokers |
Flat out, a Broker trying to get market share |
Unintended effect: Competitive listing agents disenchanted with Redfin model avoid showing properties to Redfin buyers. (See "Hall of Shame") |
A new broker brand, with a technology pedigree. |
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Agents |
A Google ad discovered by Kevin Boer: Redfin The Site Realtors Don't Want You To See |
Unintended effect: in Kevin's words: it's disingenuous to complain about not being loved while simultaneously being somewhat, um, hostile . |
Wants to fit into the community like the new kid on the block and taking and delivering the punches in order to gain respect. (btw, they have mine) |
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Consumers |
Courting the Consumer with a rebate of 2/3 of the buyside commission |
Intent: buyers create their own value by doing the legwork and analysis in finding their home. It's all about empowerment leading to savings... |
Although variations of the biz model have been tried before (Zip, HelpUsell), Redfin focus is almost "new-age" like in their promotion of an empowered consumer - friendly biz model |
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Cyberhomes |
Action |
Intent/Unintended effect |
Positioning | ||
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Brokers |
Catering to the brokers. Offering Cyberhomes free to Brokers' sites as an AVM service |
Intent: Brokers find an ally in the Real Estate 2.0 world... even though that ally's AVM product is still a relative unknown, it's backed by a big title insurance company. But it doesn't matter if there's no consumer traffic because Cyberhomes will brand the AVM to the broker site. It's all for them... |
"The brokers are and will be the brand names of real estate marketing. Ask the man/woman on the street if they've heard of Zillow... not yet, but they immediately know the names ReMax, Century 21, etc."
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Agents |
Catering to brokers by extension caters to their agents. |
Intent: Cyberhomes' title parent Fidelity knows the agents as their principal clients for settlement services, so their offerings are synergetic and mutually marketable. |
Fidelity Title and the real estate agents are on the same side of the fence... they've thrived on the vintage opaque biz model and don't relishing any kind of disintermediation.
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Consumers |
Cyberhomes still doesn't know the consumer (because parent Fidelity has never been consumer focused )... and the consumer can't find Cyberhomes yet, it's "Alexa ranking" as of 1/22/07 is about 144,000. (yes, I know Alexa is an unreliable traffic index, but for comparison, the rank is similar to Transparent's) |
Unintended: Lack of consumer traffic reflects Fidelity's "still in beta" testing of their consumer marketing strategy. When will they roll out? And yes, consumers do figure prominently in Cyberhomes' strategy... I'll explain in a future article. |
Patience... Cyberhomes follows the trailblazers, learning from them and refining their biz model... or... is the "patience" possibly an indication of a slow corporate bureaucratic culture? (although possible, it's probably in their best interest to move slowly)
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Conclusion:
Zillow and Redfin have met resistance by the Realtor community because they represent consumer empowerment. And being the first "messenger of bad news" is the Realtors' rub... ("yeah, they started my path to job obsolescence"). Cyberhomes is easier for Realtors to digest because their AVM offering, as well as other AVMs like eppraisal, was not the "match that lit the flame" of consumer enlightenment, nor do these AVMs have the threatening consumer traffic that Zillow has. Finally, Cyberhomes, backed by Fidelity Title, understands the Realtors' perspectives, and endorses strategies that won't alienate them.
Cyberhomes' main challenge is to build consumer awareness. There's more about my discussions with Marty in Part 2 later this week.
(Note: it's hard for this article not to sound biased in favor of Cyberhomes' position... keep in mind it's written from the perspective of Cyberhomes' strategic vision)
Related articles:
- Cyberhomes.com - a Title Insurance Company now has a Consumer-facing website with a 1999 -style name
- Fidelity Title's encore act in their "Reach Out to the Consumer" strategy
- An Open Letter to the Title Insurance Industry
- Real Estate 2.0 First Mover Advantage?
Technorati Tags: cyberhomes, fidelity title, fnres, marty frame, zillow, redfin, real estate, real estate 2.0, real estate technology, real estate marketing, eppraisals, avm, new business models
Great write-up Pat! Very well thought out and compelling.
Another framework from which to examine how these new players, of which we are one, are impacting the industry is the "blue ocean" strategy developed by W. Chan Kim and Renée Mauborgne of INSEAD. They basically view innovators as delivering propositions to consumers typically in ways that incumbents are missing - along specific un-served or under-served attributes. As such, their offerings exist "outside" of what is currently available and so they don't really compete with incumbents. The long-term affect on the industry is to grow to include the innovators business models which means the pie gets A LOT BIGGER rather than cannibalizing existing businesses.
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Thanks Karim, I've been a fan of the Blue Ocean since I read their book last year... the real estate industry has many blue ocean "pools" offshooting from the shark tank that walled off outsiders to the party known as "opaque real estate". Now the walls are becoming windows and the new real estate business models are opening new or expanded markets. Cyberhomes is a first indication that the title insurance companies are ready to trade in their high margin title business (it was inevitable anyway) for an expanded marketplace that includes the consumer.
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A few weeks ago in one of my classes, I told a big group of real estate agents that if I were a betting person, I would bet that the companies who are best set up to dis-intermediate the MLSs were the national title companies who own public records repositories. For exampl, First American owns Metroscan and Experian.
Maybe a Nat'l title company (well, they call themselves "information service companies") will buy zillow.
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Love your writing on Rain City!
Your insight is very logical... the title insurance companies have every piece of information (including credit) to make instant loan decisions, but no consumers to connect with. Zillow at least has consumer eyeballs.
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From my experience in the tech world many moons ago, there isn't a new web model that isn't developed without the idea of spinning it off to a big player. Zillow, Redfin, Trulia, etc. all have those desires somewhere deep inside of the founders. Whether it goes to a title company or Google, Yahoo or Microsoft, they will sell out to the highest bidder. BTW, Movoto has a good model that I personally like, too.
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That's the tech world... fund > build > deal. I think highly of Movoto as well, you should write about it on your new blog Lenore...
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I like Zillow and Cyberhomes and use them as one source for home valuations for the mortgage side of our business (Majestic Mortgage)the values are quite good.
I wish we could somehow incorporate one of the autovaluation models into our websites without the worry of losing our client to a site sponered agent. I wouldn't mind even paying a small fee each time a potential client uses the valuation model for their home thru one of our real estate websites. Better yet if a title company would offer the same service to lenders and realtors in an easy to use format.
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The chart looks pretty clear and thanks for coming out with this article.
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