Opinion
Real Estate Web Portals: Powerful but Flawed Tools
Recently, I came across a pair of articles that looked at the pluses and minuses of web portals. While they weren’t about Spanish web portals, they nonetheless resonated with my own experience here in the Costa del Sol.
It is a given these days that if you are looking for a property to purchase, you will inevitably stumble across a property portal. In Spain, this would generally be Idealista or Fotocasa. Both of these portals are massive; in October 2023, Idealista had almost 76 million visitors.
It is easy to forget just how new this phenomenon is, with both of the above-named web portals having only been founded in the last 20 or so years.
The Challenges of Property Portals
Their rapid growth speaks to the efficiency and ease that they have brought to the house-hunting process. It would seem that portals offer a comprehensive overview of what is for sale at any given time. Or do they?
The efficiency promised by portals suffers from several problems that should be addressed and which buyers (and sellers) should be aware of.
First, there is next to no oversight or regulations within the sector, whether legal or established by the players themselves. This creates problems because the business model of both the portals and of some realtors has led to outdated, duplicated and even completely fabricated listings.
And there is little incentive for this to change….
Portals primarily earn revenue through advertising sales and paid subscriptions for agents to list properties. More traffic and a bigger perceived inventory size help them earn higher revenues. More listings mean more fees paid by agents.
As a result, there is limited motivation for portals themselves to crack down on duplicate, outdated or even completely fabricated listings.
Duplicated, Fabricated and Stolen Listings
Let’s take an example. A magnificent palatial property situated in the privileged location of the Costa del Sol. This is a very exclusive property in a very exclusive address and with a price tag to match.
Is it really a benefit to the owner of this property to be duplicated 11 times on Rightmove Overseas by 11 different agents? Or the same property 16 times on Idealista? Or a staggering 36 times on James Edition?
What possible advantage can such a spray-and-pray approach to marketing benefit the owner of such a property?
Rather than leading to convenience, this leads to uncertainty. Who is the “real” agent? Who has an actual relationship with the seller and can negotiate with confidence? In Spain, estate agents don’t require a license. Theoretically, anyone could post an ad claiming to be the estate agent representing the seller.
The lack of accountability leads not only to an increase in sloppiness, where agents simply leave up listings for houses that are sold. Some agents will even deliberately use expired listings or fabricated listings to drum up leads.
Even worse, they sometimes steal listings from the exclusive listing agent and spread them across multiple portals in the hope of catching clients. This is precisely because portals have no commercial incentive to police their inventory.
I know of one property we sold 4-5 years ago, which still pops up on Portals from time to time!
Agents, Portals, and the Need for Change
For sellers, it’s also bad news as you never know who is listing your property and whether they will properly represent you. And then you have to pay them a commission when all that they have done is post an ad, not even writing the sales copy themselves.
With limited regulations or penalties in place, there’s very little downside for some nefarious agents to pursue such bait-and-switch tactics. As mentioned above, I have seen ads for houses that have been off the market for years.
The unfortunate reality is that this practice is not just the purview of agents. The business model of the portals themselves is rewarded by it.
Enabling these dubious tactics is an overall lack of industry oversight and effective regulations. Spanish real estate historically has lacked uniform regulations compared to other markets such as the United States.
Centralized Multiple Listing Services, such as exists in the US are still a rarity in Spain. And portals themselves face little or no accountability when it comes to ensuring the quality of the listings posted.
There are, in my experience, no checks or verification to ensure agents are instructed to sell the property they are advertising.
Opting for Local Agents Over Portals
As mentioned above, using portals to find a property to buy can be a frustrating experience.
I would argue (surprisingly) that a better approach would be to use a local agent. Most agents are members of a large inter-agency network where agents share their listings with other agents. Some agents are members of several, thereby offering their clients the maximum choice.
To avoid frustration, I would advise clients to send any listing they find on a portal to their chosen agent and ask them if it is indeed for sale and available. We do this all the time for clients, and it also helps us understand what a client is looking for.
In the long term, portals need to get their acts together and work to change business models that incentivize sloppiness and fraudulent practices. It may make them money now, sure. But if they undermine the public’s trust in their services, they are hurting themselves – as well as buyers and sellers.
They should implement stronger verification processes for listings, rapidly removing clearly outdated properties. There should be sanctions and penalties for dubious listing practices, including removing the listing privileges of agents and brokers.
Portals should also consider exploring new pricing models that don’t reward inflated listing inventories.
Unfortunately, such changes could take some time. In the meantime, portals must be viewed as a useful but flawed tool. They make searching easier, but it would be a mistake to leave your important decisions just to the portals.
By Adam Neale | Opinion | December 12th, 2023
