FOR MANAGERS
Best Practices

Seeking a coherent Internet policy
The Internet is still in its infancy, and so are the methods of broker-owners for dealing with how to use it to best advantage.

Some brokers are just trying to get their salespeople to go online, and many are trying to catch up. Some are centralizing access to the Internet to reduce liabilities, and if any problems arise, they are dealt with on a case-by-case basis. Systematic approaches are rare.

Few have a written policy—which may be dangerous, because experts say you need one. Here's what some managers are doing or not doing, and why some have opted to do nothing just yet.

Keller Williams Realty in Austin, Texas, seems a little ahead of most. It is renewing its online commitment made three years ago and is in the process of updating its system companywide. It’s also revamping its two-and-a-half-year-old manual for its several thousand sales associates.

Between 1,000 and 2,000 of Keller Williams salespeople have Web sites, but only a few are hooked up to the main company site, which is one of the reasons for refurbishing the system, says David Tennant, the company's Internet director.

“We're rewriting the manual to tell salespeople how to understand the Net and take advantage of it,” says Tennant. “We want them to know what the national site offers so that their local sites don’t have to.”

Although largely a technical tome of operational do's and don'ts, the rewritten manual will contain a section on legal pitfalls peculiar to real estate, such as how long listings should be left online and the proper use of images, logos, and slogans.

“We've been lucky to avoid legal problems so far,” says Kyle Terrill, information systems director. “Until the legal section is fleshed out, we’re stressing to salespeople that the Net is a professional medium—don’t put anything on the Net you wouldn't put in your flyers and brochures.”

A prime focus of the new manual is readability, says Terrill. There'll be no jargon in it, which will make it more user-friendly.

The manual should be done by the end of December, with completion of the system overhaul by fall 1999.

H.E.R. protects listings
At H.E.R., REALTORS®, in Columbus, Ohio, another problem, beyond the legal, has the company fed up.

Recently, H.E.R.'s president and general counsel, Harley E. Rouda Jr., called a halt to unauthorized use of its listings on the Web by certain online publishers, such asThe Real Estate Book and Harmon Homes, and aggregators like HomeScout unless they have written approval from H.E.R.

“These Web sites are threatening the position of real estate companies and associates as the first point of contact with the consumer,” says Rouda. In some cases, he notes, these Web sites are offering consumers rebates and discounted commissions on H.E.R. listings without providing any additional service or value to the transaction.

Rouda says H.E.R. will continue to support REALTOR® friendly sites such as REALTOR.COM and its own herrealtors.com.

Thinking through the Internet
Rouda, though, believes such questions of data ownership are “short-term.” H.E.R. has no policy manual per se addressing the Net, but Rouda is in the process of “planning through” the present problems. He has formulated a formal company document that spells out how H.E.R. sees the future of the real estate industry and how it plans to take advantage of trends. The Internet is a part of that. Some of the ideas are exciting.

Consumers are driving the change because they’re technologically able to do so, he says. “We must apply the new technologies in new ways, not new technologies in old ways.”

To remain the first point of contact with consumers, companies will have to “push” the message to consumers. “Instead of advertising a $200,000, two-story, three-bedroom home in a certain subdivision, we’ll have to use analysis from our database to narrowcastour message,” Rouda says. Analysis will show who's buying that type of house, what the demographics are, where they live now—then the broker pushes the buttons to those potential buyers.

“In essence, we’re identifying the customers before they enter the market.”

Reinventing value
Long term, says Rouda, the value proposition will shift from who owns the information to who knows what to do with the information.

“Think of the homeowner as the quintessential FSBO business model,” he says.

In this scenario, the real estate company can no longer operate under the theory that one offer fits all. The consumers define the offer they want, and the real estate company charges accordingly—a customized offer for each client.

“We're not in the business of helping people buy and sell homes,” Rouda states. “We're in the business of helping them manage and maintain the lifestyles they’ve built around homeownership. Those are the intangibles we must sell.”

He adds: “To succeed, we can’t just add value—we must reinvent it.”

Managing Web sites
Meanwhile, H.E.R. maintains a company Web site and handles individual Web sites for its sales associates. “We create them, manage them, and maintain them at a price the associates can’t beat,” says Rouda.

Many smaller companies are doing the same thing.

Jenny Pruitt, an Internet pioneer at Jenny Pruitt and Associates in Atlanta, provides a Web page for salespeople, and customers can push a button to find them. Sales associates may set up their own site but must run the marketing by management as a quality-control measure. The company also helps design their sites.

Pruitt deals with Internet problems as they arise. “I don’t have a manual that applies to Net use, but I send memos on a case-by-case basis. For example, some owners may not want their name on the Net listing, so we leave their names off.”

Jenny Pruitt and Associates has 250 sales associates in four locations, covering seven counties in the Atlanta area.

At Cleveland-based Realty One, with 1,500 salespeople in 45 offices in northern Ohio, Web problems are also handled on a case-by-case basis, says Jackie Cassara, director of corporation communications.

“Sales associates are required to submit all advertising materials to their office managers first, then to the corporate marketing department,” says Cassara. “We look to make sure that the logo and names are proportional to the company name, that the content is free of libel and complies with the fair housing law, and that grammar, syntax, and spelling are correct.”

Some salespeople are linked to the Realty One Web site.

Pressure and planning
Some brokers say they haven't felt any market pressure to get up and running on the Net and are just beginning to get Web pages set up. They also say their sales associates don’t have much interest in it.

Michael Sexton, broker at H. Pearce Co. Inc., Branford, Conn., says he's pro technology, “but many associates are just not interested in the Net. REALTOR.COM is starting to change our industry, but it hasn't yet proved itself.”

Paul Scalzo, broker-owner of Century 21-Scalzo Realty Inc., Danbury, Conn., says the Web is a strong part of his business now and he's taking advantage of it.

Scalzo says he feels some pressure to get a policy manual done to prevent problems for his 50 sales associates in four Connecticut offices. The associates are using the Net, he says, and about eight have their own Web sites or are in the process of getting one designed. One of the associates this year has done $2 million in sales based on leads from the Net.

He says that about 8 percent of the leads for the 30 modular homes he builds a year come from the Net.

But like many other owners dealing with the change brought by the Internet, he says, “Mostly we’ve been reacting and not planning.”

Some signposts to keep you out of trouble

The types of problems practitioners are finding on the Web are varied, brokers say.

One problem, such as out-of-date information on listings, can be more than just a business error or a marketing mistake—it can be illegal (see “ Expired listings on Web? You could be fined,” October 1998, page 20).

In one case, the Ohio Real Estate Commission fined two practitioners for advertising expired listings on their Web sites in 1996. One salesperson was fined for two violations of advertising expired listings, and another was fined for three violations, including posting somebody else's listing. An Ohio commission superintendenttold REALTOR® Magazine the fines are a warning to other practitioners that the state won't tolerate such violations.

Internet expert Michael Russer, whose column appears monthly in this magazine, says brokers should be mindful of the following:

• Federal law requires appropriate disclosures when advertising mortgage rates and terms
  
• Keep in mind that some kinds of contests you might want to run on your Web site are illegal in some states
  
• “Framing,” or borrowing content from another’s Web site to frame as your own content without permission, could violate copyright law(see ‘. . . But it’s on the Internet!’page 31).
  
  Spamming, downloading a virus, and inappropriate forwarding of proprietary material are other problems that can lead to technological as well as legal problems.(For more information on Internet problems, see “ Don't Get Snagged: Internet Rife With Legal Barbs,” March 1998, page 33.)
  
  Broker Max Ryujin of MKR Lakewood, REALTORS®, Ogden, Utah, also cautions Web users to watch their fair housing language. “The same words that are discriminatory in newspaper and television advertising are also discriminatory on the Net,” says Ryujin, former chair of the NAR Equal Opportunity Committee.