Look up “New York City real estate” on Internet search engines like Google or Yahoo, and what do you get?
Not much, as far as New York City residential real estate companies.
Only a few companies – Corcoran, Sotheby’s and Citi Habitats – come up in even the top 100 search results.
While most companies rely on web traffic coming directly to their site, it’s likely they are missing out on business because they don’t place high on search engines. Nearly three out of four home buyers, or 71 percent, use the Internet as a tool today, according to a recent study.
There are other ways to get noticed on search engines, or get business from the Web. With “sponsored links,” companies or agents pay to have their name come up if an Internet user searches for a specific term.
There are also national companies that are increasingly trying to cash in on Internet users visiting search engines to look for real estate. The companies include Homegain, Lending Tree and others, most of which work by passing on leads to agents and then taking a cut of the commission if a deal goes through. Lending Tree, purchased by media mogul Barry Diller in April, has already signed up Goodstein Realty and William B. May in New York.
The most basic – and cost-free – way that a company can establish its web presence is by designing a site that comes up high on a search engine. While that partly depends on total web traffic, it’s also a matter of designing and “tagging” the web site well so that a search engine recognizes it.
Corcoran is the leader of the pack in this area. Last month, it came up third or fourth when a user searched for “New York City real estate”. The next closest companies were Sotheby’s and Citi Habitats, which usually came up at the tail end of the top 20.
With 600,000 visitors a month, Corcoran places a high priority on its Internet presence, chief technology officer Charles Olson said.
“Though most of our traffic comes directly to us, it is important to come up high on search engines,” he said.
Olson won’t give away any secrets about how his site is “tagged”, but said efforts to fool search engines don’t work. “We have the appropriate terminology,” he said. “It’s an honest web page.”
As far as “sponsored links” where a site pays money to come up on a search engine like Yahoo or Google, there are few in Manhattan that are using this service.
On Yahoo, the only residential agent or company with a sponsored link that comes up if one searches for “New York City Real estate” is Toni Haber, a broker at Douglas Elliman. Haber was reluctant to say too much about her sponsored link, possibly for fear of giving ideas to competitors. She said there is a bidding process that goes on to get a link, and it can be costly. “You have to pay several hundred if not thousands of dollars a month,” she said. “You have to be the top two or three bidder to get something up there.”
Olson said Corcoran had considered a sponsored link, but had decided against it. Sponsored links are generally “pay-per-click,” which means you pay every time someone goes to your site from the sponsored link.
“It cost two cents to several dollars per click for the more popular terms,” he said. “That can cost you thousands a month if you don’t cap it. We decided the cost wasn’t worth what it would bring in. We get more bang four our buck in The New York Times or on billboards.”
Another route that is open to real estate companies and agents as an indirect means of getting business from the web is using services like Lending Tree and Homegain.
Those companies work by getting consumers to come to their sites, gathering information about their real estate needs, and then passing those leads onto agents.
Lending Tree has two business lines: one that allows mortgage borrowers to submit an online application that then is shopped to multiple lenders, and another that other allows home buyers and sellers to find a realtor.
Most of Lending Tree’s business – around 85 percent – centers around the mortgage side, but the find-an-agent side is growing quickly. Lending Tree is based in Charlotte, but its parent company, Diller’s InterActive Corp., is headquartered in New York.
So far, Lending Tree has only a tiny foothold in New York City, said Eric Cunliffe, Senior Vice President and General Manager of Lending Tree Realty Services.
“In New York City, we have a very small presence,” he said. “We do have a big presence outside the city, in Long Island, New Jersey and Connecticut, though.”
Nationally, the company works with some 10,000 agents at 700 companies, but only two companies in Manhattan.
At each company, Lending Tree has a primary point of contact where it sends its leads, usually a company’s relocation department. At William B. May, the company’s primary point of contact is director of relocation services Karen Dillinger. At Goodstein Realty, the contact is president Len Bayer. From there, the leads are distributed to a select number of agents who are chosen to take part in the program by each company.
There is no charge to pass a lead on to an agent, but if an agent closes a transaction, the referral fee is 15 to 20 percent. Half of that figure goes back to the consumer using the service, in the form of frequent flier miles or gift certificates as an incentive to use the service, Cunliffe said.
While Cunliffe said the company doesn’t disclose the percentage ratio between applicants and closed deals, he said leads are “highly filtered.”
“We would consider an agent’s time wasted if they are not closing on these leads,” he said. Lending Tree doesn’t send leads if a customer is already using an agent or has already found a home, for example.
Cunliffe doesn’t see obstacles to growing business in Manhattan, though one stumbling block appears to be that to take part in the service, companies or agents are supposed to be members of the National Association of Realtors.
William B. May is not a member of NAR, but Cunliffe said individual agents at the company may be part of the organization.
One company trying to sort their way through all the different Internet approaches is Dwelling Quest.
“With 70 percent of buyers going to the Internet to look for homes, that’s where the future is going to be,” said Daren Hornig, president and CEO of the company. Dwelling Quest, which was acquired last fall by Hornig and his financial backers, has already launched a branding and advertising campaign and is now redesigning its Web site, a project that will be finished this month.
Hornig said he was looking at using sponsored links and Lending Tree, or another similar service, going forward.
“The net effect of everything you do in advertising needs to show results,” he said. “I would look to sponsored links if it showed results, but I’m not about to pay $100 for a click through.”
Hornig also said he was currently talking to executives at Lending Tree about using that service.
“I’m exploring it,” he said. “It’s intriguing, but it also seems a bit expensive in terms of commission.”