Property Portal Financial Models From Around the World

When looking at property portals around the world, there are various financial models that are being chased.  The main ones are subscription, pay per listing, free to pay – pay to upgrade, lead generation and pay per acquisition.

The models that are truly delivering returns to the operators are the Subscription Model and the Pay Per Listing Model.

Each of these models is discussed in detail in this article.

Subscription Model

Many sites offer agents, or more likely the offices (brokers) the chance to buy a subscription to list all their listings on a site.  This model has the advantage in that they can get all the listing from an agent onto the site and therefore offer the consumer a comprehensive search experience.  Additional revenue for these sites is driven by the sale of “depth” products that allow an agent to upgrade their listing or to brand themselves on the site. 

These sites often use face to face or telesales teams to generate sales. 

Some of the sites that take this approach are realestate.com.au in Australia, rightmove.co.uk in the UK,  propertyfinder.com in the UK, athome.lu in Luxembourg, allrealestate.co.nz in New Zealand and casa.it in Italy. Most of the companies that take this approach and reach scale are very profitable – for example realestate.com.au in Australia generated $105m in revenues in FY 2008 (June 30 financial year) with a 50% EBITDA margin.
 
 
Pay Per Listing Model

Some sites, such as myhome.ie in Ireland, immoweb.be in Belgium, tradme.co.nz in New Zealand and entreparticuliers.fr in France, choose to charge on a per listing basis.  This means that the advertiser (either agents, offices or private parties) pays for each listing to be placed on the site. 

This has the advantage that the company is able to monetise each and every listing from the get go.  However, agents or offices often choose not to put all the listings up on the site in order to keep the costs down.  This model therefore leaves open the door for other models to gain a foothold in their market.  What is interesting to note is that all of the above players have strong revenue streams and are very profitable and are not chasing the goal of being THE online property market place in the countries they operate.

Free to List – Pay to Upgrade Model

Over the last few years the free to list, pay to upgrade model has been gaining momentum.  In this model allows agents to place their listings on the site for free and the company then tries to make revenues from either upgrading the listings (ie going to the top of the search) or offering the agents and offices (brokers) branding on the site.  They also try to capture revenues through display advertising or products similar to google adwords.

There are two variations on this model.  The first is a 2 page model and the second is a 3 page model. The 2 page model hosts the search and search results pages on the site and then drives traffic to the agent’s site.  The second model hosts all 3 pages – search, search results and property details pages – on the site and only drives email and phone leads to the agents.

The underlying hope is that by having significant content on the site and by applying great SEO and PR or by building social networking components on the site (e.g. blogs / forums / etc) they will be able to attract enough traffic to generate leads for the agents and therefore play off this lead generation to encourage agents to upgrade.

Most of the US sites operate this model (realtor.com, trulia.com, zillow.com) as well as other sites such as globrix.com in the UK, dothomes.co.uk in the UK, and properazzi.com which is focusing globally.  The challenge for all these sites is that none of them, with the exception of realtor.com, have reached enough scale to be profitable.

Lead Generation Model

A model that had momentum a few years ago, especially in the US, was the lead generation model.  This model attracted consumers to the site in order to capture the user details and to sell these details onto the agents or the mortgage providers.  The consumers were attracted by either displaying the MLS listings or through asking the consumers if they would like free valuations or help with the sale of their property. 

The challenge with this model is that the quality of the leads was not always great and that the agents found themselves paying high prices for converted leads.  In many ways this model has been usurped by the Free to List – Pay to Upgrade Model.

Sites that still take this approach are homegain.com and housevalues.com in the US.  It is unlikely that these companies will survive in the long run.

Pay Per Acquisition Model

The final model that exists is the pay per acquisition model.  This model advertises the listings for free and the operator of the site shares in the commission on the sale of the property.  Many of the smaller sites use this model as they are an adjunct to a property sales business – usually a developer business.

This is a hard business to run as you have to track the sale right through to completion and then you have to capture your share of the commission.

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