What is the favorite carrot dangled in front of real estate agents by real estate websites to get more of their money to list a home? You guessed it, The Featured Listing. (all bow in reverence). “Come on agents, get your featured listings here…featured listings here.” But are featured listings losing their allure? Did they have any to begin with? Is there a better way of doing it?
Do “Featured” home listings have value to anyone except the owner of the website?
In my opinion, traditional Featured Listings have absolutely no value to buyers and only some value to real estate listing agents. I shall expound.
Are Featured Homes Just the Previews?
A featured home has no intrinsic or added value to a buyer. None, nada, zip. I don’t know who came up with the word “featured” (maybe that guy who created “certified pre-owned automobiles” to replace “used cars”), but it’s more than a tad misleading, dontcha think? Featured stuff normally involves some value, some reason to pay your money– This movie features Angelina Jolie like you’ve never seen her before. But a featured listing? Featured for what? Because someone paid to jump the ticket line? That’s NOT value to the buyer. Buyers aren’t racing for buy the first homes listed on a real estate site.
In fact, I might argue the contrary– featured listings get passed over! They’re almost like previews — half ignored. Think about it. When buyers do a home search, they get hundreds, perhaps thousands, of homes in the results. And of that number maybe 2 or 3 are featured. I may be wrong, but I think most folks, the savvy ones at least, are going to look at those featured homes and say “Featured? Yeah, right.” Does anyone believe consumers think these homes offer something special? Furthermore, the featured status is transitory on many websites anyway— the designation is lost once the buyer re-sorts the results.
Could value be created for the buyer? Perhaps. For example, if a home was featured because the zestimate is $400K and the list price is $300K , that might give the user real perceived value. (hey, there’s another idea for Mr. Barton– feature homes on Zillow that are listed 50% below their zestimate. ) But featured listings don’t work that way– it’s pay to get your house to the front of the line– like a Disney Fast Pass.
The Value to the Listing Broker is Not Being First, It’s ….
My first thought was “if a featured house has no value to a buyer, how could it be valuable to the listing agent?” Then I figured it out– the value is not being first on line, it’s NOT being at the back of the line, where you have no chance of getting a seat. And as I explained, that front row seat value is not significantly greater than those in the next rows. It’s the folks in the last row of the balcony who have to squint.
Let’s take a look how the top three real estate sites display featured listings in search results:
Zillow: “Featured” is the default setting, but no individual houses bear the “featured” tag. Not sure if consumers really notice the distinction. In some strange way, that may be better, especially if the featured tag is understood by consumers as “bought”. There is no noticeable featured designation once the consumer re-sorts the houses (eg. price, bedrooms, etc)
Trulia: Only 3 homes are featured (the default setting is ‘best match’), and they are each labeled “Featured Listing”. Once the houses are resorted, (price, bedrooms, etc), no homes are labeled as featured listings.
Realtor.com: Like Trulia, the default setting is best match (they call it perfect match). But the marquee star of real estate websites, has taken a slightly different approach when it comes to listing placements that cost more. First, they ditched the word “featured” for “Showcase” and added a visual effect which catches the eye– a bright yellow corner. In addition, they gave these listings a headline. Interestingly, the Showcase listings appear on EVERY re-sort. Neither Zillow nor Trulia have featured listings on their re-sorts.
The only plot twist with Realtor.com was the showcased listings seemed to appear on EVERY page (I went 15 pages deep on one search and still saw them)– making the showcase label lose all of its uniqueness. A showcase on page 15? WTF? (what the featured)
If Featured Listings Have Value, Do They Favor One Group Over Another?
If someone can convince me a Featured Listing has value worth paying extra for, I’d say “Awright, then doesn’t that favor the group of brokers and agents who can afford to pay extra?” And while I accept that reality in a capitalist society, the system of favoring one home over another based solely on the ability to pay seems, in some way, unfair to the consumer. And isn’t it the consumer we are meant to serve?
A home for a buyer may be at the back of the line because the agent can’t afford to put it at the front. And the back of that line may wrap around the block so that the buyer is not willing to wait for that ticket. So, what can be done? You’ll say “Someone’s gotta be first.” And I agree. But maybe there is a better way. A system fair to everyone. (OK, Joe, you dragged us along this long, just spit it out– what’s the better way? )
An Alternative to the Featured Listing: The Revolving Listings System
My picture of fairness to ALL agents would be a revolving system for listings, where EVERYONE, regardless of number of listings or wealth, gets to sit in the front row —like driving cross country in August with 6 kids (hmm … sounds like Jeff Turner’s brood)– you gotta rotate the window seat. To let the oldest kid with the biggest allowance ride shotgun the whole way just ain’t fair in my station wagon.
What do the rest of you kids think?
Technorati Tags: real estate, listing sites, featured listing, listing broker, real estate agent
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Having never actually paid for a “featured listing” I cannot speak from experience, but I agree and disagree. I agree that featured listing add no value to the buyer, but being on top of the results list must have a significant advantage. Google yields thousands or millions or results and it’s the ones on top that get the most traffic.
I do like the idea of the revolving system but don’t necessarily think that it is Trulia’s or Zillow’s obligation to be “fair”. Perhaps this argument could be made for http://R.com since it is supposedly supporting its members.
Quite right Mike. Realtor.com could/should implement the rotating system. And given the number of showcases, perhaps they have. I will have to go back to repeat searches t see if the same showcase homes come up first.
Since trulia and zillow are increasing their featured listings through recent initiatives– spotlight ads (trulia) and consortium newspaper classifieds tie-in, there will have to be some system to put the featured folks in line fairly.
As for being on the top of the list, it’s may be a few spots and I think many consumers, who view them as glorified ads, will overlook them. I could be wrong. Besides, buyers still drill down past those few featured ones. And as I said, any re-resort results in the loss of featured listing designation– so you’re in front a short time.
I’m curious as to others who do use featured listings, whether they see ROI worth the cost— I’d love to have a system where you get the first spot right after the featured listings– like being #1 on google organic search.
Finally, being at the top of Google may not be the same value as being at the top of a general search results page. Surely, someone has the stats on this stuff.
As a Realtor, I find “Featured Listings” completely worthless. What a great scam to separate Realtors from their money. The only value I can see is for the home seller. They feel all warm and fuzzy when they see their listings as featured listings. I have spoken to several Realtors that paid for enhanced listings on R.com and never got a single lead from it. To me, this is not good ROI. It is very difficult to explain that to sellers, however.
Nice post - I agree that if the home is nothing special, then featuring it would be pointless. However, featuring a home that truly is remarkable or remarkably priced is a great idea - if the home was just decreased by $50k, it might be a good idea to make sure people have the home as an option.
Unfortunately, as you mentioned, most featured homes offer buyers nothing more so featuring them isn’t always a good idea.
I don’t see any value in featured listings. Like I stated on a post I wrote today it would be nice if some of the vendors out there would show me some white papers. They sell us a lot of crud, doncha know.
Sounds reasonable T. Let’s see the stats that show they are worth the money.
@Jayson I’m waiting to see a site that does that.
@Heather– you are probably right– make the seller feel good.
Joseph - we are currently working on a site that does that, and makes it so listings are rotated as you mentioned in your post. It’s been three months of “it’ll be done next week”, but I’m optimistic that it truly will be live within two weeks. I’d love for you to give it a shot before it goes live in the next few days…if you’d be willing to do that for us.
Hi Joe!
When a user does a search on Trulia, we only feature the listings that match their specific search criteria. Here’s an example: If you search for a 1BR, 1Bath Co-op priced between $700-800k on the Upper West Side in New York, you will only find featured listings that match your criteria. e.g. not listings for anything less than 700K or more than 800K. So it benefits both the consumer and the agent.
Plus, our data shows that the typical featured listing on Trulia gets roughly 4-7 times the exposure of the typical non-featured listing. Consumers are clicking on the featured listings and don’t overlook them.
Hope this helps
Rudy
Social Media Guru at Trulia
It it my opinion that “featured” or “showcased” listings have some value…but only to sellers who need a warm fuzzy and listing agents who need a hook. These types of listings may get more exposure (as Rudy stated above) but if the conversion factor is low why bother pay extra? Featured listings have become old hat in real estate advertising. I believe that the time and advertising dollars could be better spent on more progressive forms of marketing, especially considering the intense competition involved in doing business in a down market.
Hey Rudy
>If you search for a 1BR, 1Bath Co-op priced between $700-800k on the Upper West Side in New York, you will only find featured listings that match your criteria. e.g. not listings for anything less than 700K or more than 800K
Not so. In fact, ALL the search results met my criteria, not just the featured listings. They not only met the criteria in price, they met the criteria in 1BR, 1Bath. The featured listings were no different than the rest.
http://tinyurl.com/4pneqw
Exactly. Good for both the consumer and agent.
Rudy
Social Media Guru at Trulia
If the featured listings are the same as all the others, i.e. meet my search criteria, how does that make the featured listings better for the consumer?
I think mortgage brokers should stick to mortgages and Realtors stick to selling houses. I would be anoyed if someone took a deal off me. Featured listings is a rip off, people will see the add then look at all the others.
Teresa:
It goes both ways the vendors. As a vendor I’m often asked by clients to perform some service for them which I know has about zero actual value in terms of moving property or generating traffic or leads. When I explain the low-marketing value of what I’m being asked to do, I’m often confronted with “It’s to impress sellers.”
It always makes me pause and scratch my head. I suppose it’s a daisy chain of sellers not knowing what actually works but wanting to be impressed, so real estate pros need to impress them and then go asking for impressive actions instead of actions with marketing value. I dunno. I think I’m missing something…
There’s no more value in a “featured home” ad from a buyer’s perspective than there is in any other advertisement. In my experience, it is a way to get a property in front of buyerss and those ads that I do buy typically bring lots of visitors to my site. Net cost is far cheaper than any pay per click campaign.
Norm,
Yes, I agree– FLs have no more value to buyers than other listings.
Whatever value FL have for agents (not being at the back of the line), it is lost the moment the buyer re-sorts the results.
What ads work best to bring visitors to your site– are they FL or other ads?
Joe,
I’m a member of the Canadian Real Estate Association and our realtor.com equivalent does not provide opportunities to “feature” properties. Everything comes up in a search. That may change when realtor.ca launches on July 2, but at this point, no ads are sold to agents.
I purchase a “spotlight ad” on Point2Homes ($25) and a “Top of List” ad on kijiji ($25) to roll out each of my listings. I believe that the P2 spotlight ads generate additional views that cost between 5 and 10 cents depending on the listing. I’ve also done some experimenting with newspaper ads, using unique URLs. A $200 newspaper ad rarely produces in excess of 50-60 website visits.
Another real estate web tool that wasn’t listed that I’ve been using a lot lately is PropertyMaps. It’s a Google Maps/MLS/RealtyTrac mashup for properties across the country. It’s been a great help.
@Norm
I like the Canadian system. It seems fairer than having agents buy their way to the top of the search results.
It is great that you are able to track the visits. Have you also tracked the conversions? If you get less visits but more conversions, I’d say that is a better ROI.
BTW, I like the use of unique URLS. We built the Sellsius link to accomplish the same thing.
http://www.sellsiusrealestate.com/html/popup_sellsius_link.aspx
Comment from Norm Fisher (rescued from spam):
Joseph,
CREA has always maintained ownership and control over their national “homes” site. It’s a complete piece of crap website but I’m sure it is “fair” for its members compared to realtor.com.
“Have you also tracked the conversions?”
I wish I was that organized and analytical.
My opinion on the results of “featured homes” is more of a feeling. 
Like, “wow, I’m sure getting a lot more listing visits since I started buying these.”
I do know that there is a pretty direct relationship between visits to our website and closings. I could really use some help tracking and improving conversions, but overall, I’m pretty delighted by the return on investment for our web related marketing.
Hi,
It is relatively a good step that they are doing more and more for the real estate blogs and it is a good thing too that the featured home listing do not charge to the buyers.