Will the Soft Housing Market Cause Online Real Estate Sites to Crash & Burn


As things cool off in the housing market, many companies will be affected to the downside. It goes without saying that major corporations like the home builders, home improvement centers, and others will see the bottom line affected to the downside. At the same time, there are a few companies and individuals out there who should benefit. Foreclosure investors are really starting to get excited as foreclosure rates climb across the nation. Others like online discount real estate companies are ecstatic, reports Red Herring.

“We think as the market goes on to become a buyer’s market, we have a huge advantage over anyone else as 80 percent of our business comes from buyers,” said Pat Lashinsky, senior vice president of new product development at online real estate service ZipRealty.”

ZipRealty “hooks home buyers up with real estate agents, while giving customers back 30 percent of the typical buyer agent’s commission.”

“Redfin, a startup serving the Seattle and San Francisco Bay Area markets, is also looking to tweak the traditional home-buying process. Last March it launched a program where people can buy or sell homes without a real estate agent. In turn, buyers get two-thirds of a buyer’s agent commission. Sellers get $2,000. Redfin spokesman Bahn Lee said sales have been doubling every month since March and that the company doesn’t expect to see a slowdown in the business.”

If the online discount brokerages are benefiting, who stands to suffer?

There are hundreds of FSBO sites, classified sites, and every other kind of real estate site in between. We get hundreds of submissions for new site additions here at BiggerPockets, and most of these disappear within months. As the market softens, we expect this trend to accelerate.

“‘I think the softness in the housing market is going to challenge these online sites because they are relying on customer demand to drive advertising revenue and there are a lot of competitors in the market and the cooling will affect some of them,’ said Greg Sterling, founder of Sterling Market Intelligence. Many of these sites will bite the dust—and only the ones that have the highest amount of traffic and good backing such as Move.com, Zillow, ZipRealty, and AOL Real Estate will survive the downturn, Mr. Sterling said.”

Of course, don’t look for BiggerPockets to disappear anytime soon! We’ll be here for you!

About Author

Joshua Dorkin

Joshua Dorkin (@jrdorkin, Google+) founded BiggerPockets.com when he saw a need for free, trustworthy information about real estate investing online. Over the past 12 years, Josh has grown the site from self-funded hobby to full-time job and passion. Today, BiggerPockets brings together over 600,000 members, housing the world’s largest library of real estate content, iTunes’ #1 real estate podcast, and an array of analysis tools, all geared toward helping users succeed.


  1. The housing boom cycle comes, on average, every 2-4 years. Yes, the market has softened, but no reason to panic. No, I am not a realtor who is just saying this to change public opinion that the market isn’t that bad. I am looking at economic numbers as a gauge, which, by most accounts are still strong.

    Lots of discount brokers don’t make it because the NAR employs monopolistic practices. I’ve seen it in action. Discount brokers have to be very well funded, or they will be run out of town.

  2. H Antoney Harvey on

    There are a large number of for sale by owner sites available today but many of them are simply around for advertising dollars from sites such as Google and others only exist to support other businesses. These sites don’t really provide a compelling service and don’t offer much assistance to home sellers and buyers. I agree that many of them face the prospect of closing anytime the real estate market takes a downturn.

    For Sale By Owner Sites who offer buyers and sellers a wide range of services to help them become successful have a much better chance of surviving and even thriving whether the market is up or down. Customers realize that services such as video tours, virtual tours, real estate resources, tips and other innovative features will help them to become more successful than sites which merely allow posting of static real estate ads.

    I’m curious to see which of the discount brokers and for sale by owner websites survive this downturn.

  3. The peoblem that I have in my experience as a Realtor is that you do not get the personal involvement. I am available to answer questions, give my clients updates and provide them with anything they need. I think people want that personal involvement with the biggest investment decision they will make in their lives.

Leave A Reply

Pair a profile with your post!

Create a Free Account


Log In Here