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Google: Savior or Satan?

The Search Giant Could Change the Business. Is That Good or Bad?

IPJ Exclusive: One on one with Google's Sam Sebastian. Click here

By Kevin Brass
IPJ Editor

To real estate technology consultant and widely-read blogger Rob Hahn, Google’s move into real estate will shake the foundation of the industry.

“Google is probably the most significant influence of the next two or three years, in terms of how real estate is done,” said Hahn, managing partner of 7DSAssociates. “The impact will be very far-reaching.”

Hahn is not alone in his opinion. The search engine giant is the 800-pound gorilla in the room these days, provoking everything from elation to fear within the real estate industry. Depending on who you talk to, Google has the potential to smash the MLS, make brokers obsolete and destroy portals like Zillow and Rightmove.

For its part, Google insists it has no aspirations beyond improving its basic search business. In its promotional materials, Google clearly states it’s not a Multiple Listing Service (MLS) and executives repeat over and over again that there is no “evil plan” in Mountain View to develop as a real estate company.

“It’s a pretty simple and I think innocent approach,” Google’s director of local and business-to-business markets Sam Sebastian said in an interview with the IPJ. “If a consumer is looking for something our goal is to try to give it right back to them as quickly as possible and take them off to the best source, which is what we do on Google.” (For the full interview with Sebastian, click here.)

Innocent as it may be, the ramifications of Google’s growth resonate in every aspect of the business. Google is all about democratization and the free flow of data--dicey territory for industry players who may prefer to horde data and create exclusive relationships.

At the same time, Google’s position as the Internet’s gatekeeper gives the search engine tremendous ability to bring buyers and sellers closer together—perhaps without the aide of a broker. A recent study by the National Association of Realtors found that 90 percent of consumers start their property search on the Internet.

The recent downturn “was a great wake-up call for a lot of real estate practitioners and how they spend their money and advertising and how they market themselves,” Sebastian said. “And when [the market comes back], I don’t think it will be standard refrigerator magnets and open house ads or agate ads in the newspaper.”

New Friends
Brokers and agents, in general, have eagerly applauded Google’s entrance into the listings game. It’s not complicated: Google posts listings and drives traffic for free, providing an alternative to the fees charged by listings services and portals.

Last year the National Association of Realtors—which runs listings site Realtor.com—changed its bylaws to formally allow sites like Google to “scrape” listings from members’ sites. The move came after brokers balked at language that appeared to require Realtors to block search engines like Google from indexing their listings.

“Competition is almost always good,” said Jay Thompson of Arizona-based Thompson Realty, who helped fight the policy and now sits on NAR’s MLS committee. “Google may cause [the MLS] to step up their game.”

Behind the scenes, MLS executives must make a fundamental decision—do they give their listings to Google and fuel a potential competitor? Or do they stall and block Google, risking the wrath of clients who want to connect to Google’s huge traffic stream?

“MLS should be sitting down and talking” to Google,” said Gregg Larson, c.e.o. of the Clareity Consulting, which works with MLS. “I don’t think you can put up walls that will stop Google.”

Google’s ability to drive traffic can’t be ignored, he says. Rather than trying to block out Google, MLS operations need to create new services to solidify their importance in the data food chain, such as adding distressed property inventories and the type of visual presentations regularly found on consumer sites, he said.

“I’d rather be integrated and working with them instead of sticking my head in the sand and hoping they will go away,” Larson said.

The Houston Association of Realtors has been feeding its listings to Google for years. “It makes sense, if that’s where people are going for information, to have your information there,” said Bob Hale, president and chief executive of the association. “Any way we can market that helps brokers and sellers, we want to do that.”

HAR.com receives more than 1 million unique visitors a month, in part due to the traffic from Google and the other sites, Hale says. MLS will still play a key role in the listings flow--performing the grunt work of compiling and certifying listings, providing the type of control that is far removed from Google’s open source business model--but the listings services need to tweak their approach, he says.

Hale believes MLS companies need to take two key steps to position themselves for the post-Google world: One, they need to launch a consumer site, bringing their services to levels dictated by the open public sites. And, two, they need to add agent reviews, a service consumers repeatedly say they want in sites.

Google will eventually add ratings to most of its services, he believes, evidenced by its recent interest in acquiring Yelp!

“If we don’t get in there and do it, somebody else will,” Hale said.

Death Knell for Rightmove?
Google clearly has the ability to raise the bar on the consumer experience. By integrating mapping, video and an array of information, it can easily develop as a first-stop for consumers. That’s bad news for Web portals like Zillow, Realtor.com and Rightmove, some analysts believe.

“If I’m an aggregator I would be trying to think of a new business plan,” Hahn said. “Google, for all intents and purposes, controls the consumer.”

Google has already started rolling outs its real estate services in the U.K. and Australia, promoting lively debate, if nothing else. In both markets, there is no MLS and big portals dominate the listings world, much to the annoyance of many agents.

In the U.K. many brokers and agents applauded Google’s entrance into the market, which they hope will provide competition for industry giant Rightmove. “Rightmove is not popular with agents, and if they are to survive, they will have to completely redesign their business model and be free to use,” Ed Mead, of London agents Douglas & Gordon, told Estate Agent Today.

In December, when rumors surfaced about Google’s U.K. plans, Rightmove’s stock dropped 10 percent in a day. But the company executives fired back that Google is not a competitor, arguing that agents spend money at Rightmove for “brand awareness” and visibility, not simply to post their listings. In fact, a few weeks later Rightmove announced plans to incorporate Google Maps into its service.

“Google is pre-eminent as a way of searching for information,” Rightmove commercial director Miles Shipside told a reporter. “But when people know what they want, and want to source quality information that is clearly presented, they turn to websites such as Amazon for books and CD’s, Ebay for auctioned collectibles, Autotrader for cars and Rightmove for property. There is no conflict between what these sites do and what Google does.”

Google’s impact on the portal industry will be “minimal,” says Simon Baker, founder of the Australian-based Property Portal Watch and the former managing director of the Australian listed online real estate company realestate.com.au (also known as the REA Group).

The portals are “entrenched brands,” offering established relationships with both consumers and brokers, Baker says. Google will never be able to police the listings and provide the type of services the portals offer, he argues.

“Google doesn’t deliver you leads, it just delivers you clicks,” Baker said. Google may help “fringe” players with small budgets, but the big players will continue to use the portals, which “already offer a service most customers are happy with.” He believes it is “rubbish” to think Google will drastically impact the portal business.

“At the end of the day the broker and the agent still have to market to the best of their ability,” Baker said

Last year, rumors surfaced that Google was interested in buying Trulia, the U.S. portal, suggesting that the portal business may still have value. (Neither company has confirmed the rumor.)

The Future is Now
Meanwhile, Google continues to grow its real estate offerings at a typical viral rate, focusing on consumer-friendly features. A few weeks ago they added an element making it easy for consumers to compare available mortgage rates, for example.

In the past, Google may have appealed primarily with small players in the industry, but now it is increasingly targeting the listings of larger operations, which are reconfiguring their marketing models in tough times.

In terms of acquiring listings, Google is “probably at the same level as any other player involved in the listing syndication debate,” Sebastian said. “If MLSs are open to syndicating their listings, chances are we’re getting them. And if they’re not, chances are we’re not.”

As Google grows its services, the competition over data and consumer eyeballs is sure to intensify. Outside the Google debate, NAR is launching its Realtors Property Resource initiative, trying to create a national database of property information—another issue stirring the MLS business. Meanwhile well-funded sites like Zillow, Trulia and Redfin continue to fight for consumer interest, adding services and features.

Industry executives may question the extent of Google’s role in the evolving business, but there’s no doubt the search company will be a major player, most agree.

“You’re not going to stop Google, you might as well learn to play with them,” Thompson said.

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