photo credit: garryknight
First we got the news that the San Diego Union Tribune is on the auction block. Now we hear about the demise of the Los Angeles Times Sunday Real Estate section.
Now, I do not profess to be a marketing genius, but I do have a couple of ideas about what might have gone wrong. I have some ideas because, in many ways, I am the newspaper.
Up until about a year ago, Steve and I were still money-bleeding, staunch supporters of advertising in the Sunday Real Estate section. My logic was that if there was one person out there still reading the paper, then it was incumbent on me as an agent to expose my client’s home to that one person. Further, I argued that our in-line ads could include our web site address, thereby cross-promoting our brand and our homes.
Here’s what went wrong. Because readership was down, the newspaper folks decided it was time to raise our rates. This flies in the face of supply and demand, of course. An analogy is the message we deliver to our selling clients along with our feedback reports. The buyers may be saying that your yard is too small, your kitchen is too dated, or your garage is too “two-car” versus three, but it is amazing how many objections are overcome the minute the price becomes compelling. If your home is not selling, you don’t raise the price; you lower it. The Union Tribune missed the memo.
Then there was the issue of the tail wagging the dog. When it suddenly became apparent that the Internet wasn’t going away, they made it mandatory that every open house ad placed be accompanied by a paid ad in SignOnSanDiego, their on-line companion. I couldn’t run one without the other. Now, I understand the goal. Seeing the writing on the wall, they wanted to populate their on-line site. Since all I really wanted at this point was an ad in SignOnSanDiego, not in the newspaper that no one was reading anymore, wouldn’t it have made infinitely more sense to give one or the other away for free? Then, everyone wins.
Finally, there was this ostrich mentality. With heads firmly stuck in the rocky, San Diego soil, they thought that they could ignore the Internet groundswell and make it go away. On numerous occasions, we submitted press releases only to see them published absent our web site or blog site addresses. This was presumably done thinking that promoting web presence might diminish the value of the print medium. All the while, ironically, the Real Estate section in particular and the paper in general were being filled with articles with a purposely negative slant; bad real estate news was embellished and, when there was none, seemingly fabricated. While the Real Estate section had arguably been their cash cow, they appeared to do everything they could to bite the hands that were feeding them.
So, I am the newspaper. The only difference is that I am not for sale, and I am doing what our newspaper should have done years ago. We still spend buckets of money on print advertising, but we have also had the foresight over the past couple of years to entertain and embrace new ways of reaching our audience. Our print materials will continue to be an essential as long as there is one person who isn’t comfortable with a computer, but our print efforts partner with our on-line presence (and the other way around). One hand feeds the other, and one doesn’t have to go away. If we can effectively integrate both, we expand our reach, our effectiveness, and our success.
The demise of our old ways of doing business makes me sad on some level, certainly. Steve still trudges to the driveway each morning for his news printed on stock of tree-origin, and he does this because it is familiar and comfortable, while I am at the same time booting my computer for my daily dose of goings on. But much like Steve with his newspaper and me with my laptop, Anderson Cooper with his computer in front of him while we watch him on TV, and the Ikea catalogue in my mailbox and in my inbox, we are at a crossroads. Those who are able to successfully marry the two media will survive. Everyone else will be yesterday’s newspaper.
ABOUT THE AUTHOR Kris Berg is Co-Owner and Designated Broker of San Diego Castles Realty. If not-so static web sites are your thing, go here at once where you will find loads of real estate information including homes for sale, market trends, floor plans and more. Kris's hobbies include fencing and spot welding. She likes kittens. 
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{ 21 comments… read them below or add one }
Until Apple makes a waterproof tablet computer, I’ll keep reading the dead-tree WSJ in my morning bath. Yes, I take baths.
Why doesn’t the SANDICOR MLS include open house dates? That would be sooo convenient for buyers. Is there any central repository for open houses?
>Is there any central repository for open houses?
Why, yes there is — Your agent!
(Didn’t have you pegged as a bath guy).
The only newspaper I continue to read is the New York Times. I make the pilgrimage to Borders every Sunday morning.
Great read Kris, it is really nice to read a story from someone that really gets their hands dirty with this stuff!
This boggles my mind:
“All the while, ironically, the Real Estate section in particular and the paper in general were being filled with articles with a purposely negative slant; bad real estate news was embellished and, when there was none, seemingly fabricated.”
A couple of questions: (1) Were you complaining when the UT was shamelessly cheerleading the RE markets from 2002-2005, or is it only when the news is negative that it’s a problem? (2) Since prices are down HUGE over the last three years, then whatever “negative slants” were being presented over the period were helpful to readers that bothered to heed the message (that is, prices are headed down). And if prices are down another 10%-15% over the next couple of years isn’t whatever “negative slant” is being presented currently justified?
These are rhetorical questions, of course. This parallels the current frenzy over short sellers in the stock market. No one cares when the manipulation is driving stocks up, but when stocks go down, well, hell, it must be – ipso facto – because of manipulation.
The little weekly community fish-wrap we have in our town is still surviving mostly on realtor(R) advertising. They also control the real estate “news” and it is always positive. Always a great time to buy. Always.
But, I don’t think anyone would consider these stories as real news, so it’s not like they are paying off a reporter to falsify information. It is more like NAR tv ads. The viewers can consider the source.
Dave (and Smithers),
As a point of clarification, the “news” we were getting in 2002 through 2005 was mostly of the “Isn’t the market great and aren’t Realtors overpaid?” variety. Agent bashing was a favorite column topic, and thus the biting the hand that feeds you remark.
Dave – To expand just a little on Kris’ comment, during the boom years there was a systematic effort by the UT to highlight the amount of money agents were making and how easy it was. Is this any different than a successful public company issuing stock options or the value of stock options increasing when profit increases. Yes, one works hard for financial reward. The UT articles seemed to resent this and went out of their way to highlight it on a regular basis. Yet I have not seen one article in the past three years (since the downturn began in SD) describing the number of agents and related professions, from title and escrow to contractors, to property inspectors, etc. who have lost income, their jobs and/or their homes. The financial toll in SD county has to be in the hundreds of millions of dollars a year. I’m not whining here. Kris and I are established and are able to withstand market cycles. But most agents are not. When sales are down there are many people in many professions that get hurt, not just agents. It is a reality. Yet when it comes to the San Diego UT reporting the impacts to the same people they vilified for making too much money a few years ago, all we hear is crickets.
I think there is a fairly wide belief is that Realtors are grossly overpaid so perhaps the UT was simply reflecting that. Agents making $30,000 taking the order for a single 600k house does seem excessive. Look at the success of Redfin. People are ready for change.
I agree it was bad business for UT to be biting the hand, but they reflected a widely held belief, especially on the buyers agents that they are just making too much money for the amount of work involved.
So if I understand correctly, there were/are some “hard feelings” about the UT trash-talking realtors(R) back in the day, and now that the RE gravy train has dried up and times are tough in the RE industry, they have not come out with any “times are difficult for these poor people” type stories. So, there is some bitterness.
As you say, the Bergs are still in business, while they (the UT staff in 2002-03) have either already been let go, or will be as newspapers join the “remember those things” part of human history. Feel better? (probably not).
Good grief, Jakob. That is precisely the kind of misrepresentation that feeds into the belief that I am not worth what I make. $30,000 for a $600k home? On what planet? I have seen a paycheck of that magnitude only once in eleven years of real estate and it was certainly not on a $600,000 home nor was my role one of order taker.
People tend to forget that there is a broker to pay, a cooperating agent to pay, and marketing and business expenses that would make your head spin. It is not sexy, but the reality is that even in our higher-priced market, paychecks starting with a three but lacking one of your zeros are quite common. Take away the splits and costs of doing business, and for several months of elapsed work (and it is “work”), you can divide that number by at least two to estimate the money have left over to pay my mortgage.
I am not going to spend a whole lot of time defending my pay; I have done that too often in the past, and I know I earn every penny. What I would like to emphasize is that your new math is absolutely incorrect. I would also be interested how you define “success,” which brings us back to perception versus reality.
Now that I feel better (and not for the reasons Smithers thinks I might), I still like your avatar best, J. It is very difficult to spar with a guy wearing a funny hat.
Have you seen the Bravo reality show “Million Dollar Listing”? That’s certainly not helping the “Realtors are not overpaid” cause, how it flashes commissions amounts every time these young agents make a sale. For a $5M house they show $125,000 commission. Cha-ching!
I guess at the end of the day, people will chose with their wallets, and agents will be fine if they offer a service that is worth 5% of the sale price. My thinking is those days are numbered…
I don’t have any numbers on Redfin, it’s purely anecdotal. I actually just entered escrow on a house using Redfin.
2 of their agents I worked with had just joined, and one mentioned that Redfin is looking to hire another agent in San Diego. They definitely seem to be expanding their presence here.
Maybe someone with MLS access could actually get numbers on how many they sell and buy here? That would actually be really interesting.
J – I’m disappointed! I would have guessed that you, of all people would have done your due diligence. In deciding to work with Redfin (or any agent) one should first ask them for their numbers for at least the past year (closed escrows, representing both buyers and sellers). We voluntarily provide this information to all of our client’s, right out of the MLS, so there is no BS about them. But if all you consider important is a commission rebate, why worry about their experience?
Expanding in San Diego? Once you see their numbers, you can decide for yourself if that is a valid perception. Of course, Kris and I are always looking to add another good agent. I guess that means we are expanding in SD, too.
“(and not for the reasons Smithers like I might)”
Now Kris, I closed with “(probably not”)” because I know that you and Steve would not take pleasure (at least in public) in the misfortune of others, even those nasty, vilifying (former) newspaper people.
Steve, I suspect the number of affiliated agents or prior closings or whatever for a “buyer’s side” agent is not important to Jakob, but he can speak for himself. I would speculate that he has done all his homework on selection and pricing, and views the “value” of an agent at 1% of his purchase price instead of 3% (or thereabouts), even though he also knows he will get less “service”.
Jakob may miss something that an experienced agent may have spotted and pointed out to him that would have caused him pay less or pass altogether on the house (i.e., saved his bacon), but that is unlikely. And, let’s face it, the tract record of realtors(Rs) “saving peoples’ bacon” over the last several years has been less than stellar (yes, I know, many exceptions). Instead, it’s been all about the closings.
I can see where having an experienced agent would be important for most people for selling, and for many people (e.g., my parents), it is also would be very important for buying. But, not for all people, especially with all the information that is available on web sites like (sorry, got to say it) Redfin (e.g., previous purchace price, tx assessments, nearby actual sales comps are good stuff).
Redfin may well fail, but there will be others like it until someone finally gets it right.
(The forgoing opinion is just that; no real expertise or brain power was involved).
please replace “like” with “thinks”
(as I said about the lack of brain power …)
>please replace “like” with “thinks”
OK, Smithers, done. I also mentally added an “e” to “forgoing” while I was at it.
You are right. If it wasn’t Redfin, it would be someone else, and it has always been so. Discount and limited services brokers are nothing new. They will always exist and there will always be some market for their services (Jakob).
I always enjoy your relatively balanced comments, by the way.
You need “people” – and I need a full-time editor (you were kind to only fix one extra …). Thanks for the “relatively balanced” comments part, too. Maybe this one will not be seen that way, so I promise I will make it up to you with a highly pro (full-price) realtor(R) comment at a later date.
Discount brokers may not be new, but the ability to point and click one’s way to more and more pertinent information is very much a new thing, and will just get better and more thorough. While I don’t see myself using Redfin as a broker, I do think they have a more buyer-useful website than any broker site I have seen. I have yet to see any broker site provide past sales, tax assessment and (most useful of all) recent nearby comps (broken in $/ft) info like Redfin does. Why does it take a “discount broker” to provide the best information?
By the way, the “Real Estate” section in today’s San Jose Mercury News (another dying paper) has a full cover page illustration of a Realtor(R) sitting on a cheap suticase, head burried in hands, “House for Sale” and “Open House” signs lying at his feet. Large Print (take up whole upper half of page) states” REALTOR WOES”. The smaller print at the bottom says “Owners aren’t the only ones feeling the pinch in a sagging market”.
I did not notice at first, but the whole section is an “Advertising Section”. The accompanying article is a pity-puff piece on realtor(R) woes.
Notable: “At the pinnacle of the market … [NAR] boasted a total membership of 1.37 million licensed Realtors”. Says that is “nearly one Realtor for every 110 Americans”. Goes on to state that number is down by nearly a tenth. Then comes my favorite part:
“Why? Perhaps it has something to do with a sense of misplaced anger among homeowners toward those they see as part of the problem. It’s natural to feel bitter toward the person you may feel helped arrange a frustrating situation.”
Normally, I would toss my Cherios reading such condescending tripe. But, I had already seen the “advertising section” (in small print) and was able to keep my breakfast in tact for bodily processing.
I put the section in the “snail mail” to you and Steve.
wow – I am impressed!
Redfin is expanding to THREE agents in SD?
Living proof they are doing well ::
Okay, you deleted my last comment. I appreciate your posts so I will take the praising the competition talk elsewhere… My mistake.
J – I was going to just edit, but for some reason my ability to edit comments went AWOL with my last Wordpress update. I agonized over the decision, and I really enjoy the banter and divergent points of view, but we were starting to be nothing but a free platform for promoting a competitor, and that quite obviously is not what this blog is all about. It wasn’t the comment I objected to so much as the link.