The 4realz Interview with Alex Chang of Roost.com

After interviewing Marty last week, I thought it would be interesting to turn to Alex Chang (CEO of Roost) in order to get the perspective from someone entering the real estate search space from a different place in terms of timing, funding and resources…

Roost LogoI first met Alex while we he was setting up shop at NAR (in Vegas) outside of the blogger’s lounge at a table right next to mine. He was holding court with some interesting players in the real estate space, so when a free moment for both us turned up, I introduced myself and was pleasantly surprised to find out that Alex not only knew who I was, but that he had a strong command of the players in the RE.net (score a point for Alex!).

A few months later at RE Connect, Alex was nice enough to give me a demo of Roost, and I was immediately impressed. His team is obviously focused on doing one thing right (real estate search) and they have the money and talent to do it. However, seeing as they are relatively new to a fairly crowded space, I don’t think it will come as a surprise to anyone that they have their work cut out for them.

Dustin: Can you briefly tell us a little bit about the products and services that your company offers for real estate professionals?

Alex: Roost is an open and inclusive marketing platform for all brokers, large and small. Roost’s goal is to help broker partners drive more business for themselves and their agents in a way that puts them in control. To do this, we provide two services that operate in parallel. First we offer brokers of all types & sizes a powerful, IDX-compliant property search site that they can use at their discretion. Second, we send qualified home buyers to their sites via the Roost.com search engine. Our model is transparent and performance based. The broker only pays for the traffic they want by setting a monthly budget that meets their needs.

Who do you view as your main competition and how do you differentiate yourself?

There are a lot of companies out there doing related things in different ways.

In order to differentiate, we need to appeal to the fact that buying a home is one of the most important life decisions consumers will make. We need to offer a comprehensive, easy, fast and fun way to search for homes. We feel that Roost has cracked the code on providing comprehensive data on top the fastest and most intuitive way to search for homes. That’s our biggest differentiator.

When we think about our competition, we think more about the demands on a consumer’s time than we do about other companies. Between work, kids, home maintenance, etc consumers only have so much time in their day to dream about their next home and actively research it online or off. Roost’s mission is to create an experience that works despite these demands.

Between Move getting $100M, Zillow getting $87M, Redfin at $20M, Trulia at $18M, Terabitz at $10M, and NAR looking to invest approximately $30M through their 2nd Century Fund, there’s a lot of investment money floating around the real estate space at the moment. Do you see this as a good thing for the industry?

Without question. That capital is fueling innovation. And in most cases that innovation is an effort to provide the industry with better/more efficient marketing tools for brokers and better services for home buyers. Ten years ago it would have been about trying to disintermediate the Realtor. But that’s not the case today. The more options Realtors have to market their services, the better. Competition keeps everyone honest and striving to provide better services.

Besides the venture capital money mentioned in the first question, there are also a few big players from related industries who are jumping into the listings game. Such as Fidelity with CyberHomes and HGTV with FrontDoor. Why do you think there are so many companies chasing the listing side of this industry?

I doubt your average adult site would be very successful without the porn. Consumers want access to listings plain and simple. Other bells and whistles around home buying are nice, but when my wife Beth and I sit down to think about our next home, 90% of that time is spent checking out listings of homes we could go visit. I’d imagine that’s pretty common. That’s the focus of Roost and we’re solely concerned with filling that need. And besides, listings one of Gary Keller’s “3 L’s of the Millionaire Real Estate Agent” – so you know they’re important.

I don’t think it is a stretch to say that the big brokerages are only just beginning to use their websites to create a compelling consumer experience that competes with REALTOR.com. Why do you think it has taken the national brokerages so long to complete on this front?

It’s a question of core competency. It took a long time for retailers to get good at building e-commerce sites which is one reason why Amazon has done so well. Clearly, forward thinking brokers get this and are investing in their own websites. But the bottom line is that building great customer experience online is hard, even if that’s all you focus on all day long. And it’s not cheap. Also, I think it takes a little while to start to be able to measure and see a return from a broker’s site in this industry. So you have to have the appetite to make longer term investments in technology. That can be a tough pill to swallow.

ActiveRain, Trulia, Zolve, Realtor.com and others have created social networks that use real estate professional content in order to better inform consumers and (theoretically) drive more business to these online professionals. Does your company have any plans to either create your own social network or engage in these existing networks? If so, how?

No, we don’t. Our sole dedication is on search and building the Roost platform for brokers. That means we have to say no to lots of other seemingly cool and sexy ideas. I won’t say that we’ll never expand past this focus, but right now, being excellent at search is enough of a challenge and something that we believe the market is lacking.

To date, many of the most successful real estate professionals do most of their marketing off-line. If one of these experienced real estate agents wanted to jump-start their online marketing, where would you recommend they begin?

It starts with your own Web presence. First, create a couple great websites and blogs that get across why you are the best at what you do in some specific ways. Ensure that there are all sorts of ways for consumers to contact you on these sites, and obviously make sure you have some excellent ways for consumers to search for homes on these sites (you knew we were going to say that). Second, get some tools that will help you actually see what return you’re getting from traffic to these sites. Where is the traffic coming from? What leads is it generating? When those are done, find targeted marketing vehicles that send traffic you can actually measure to these sites at budget levels you can afford.

Would it be different for an agent who is just starting out in the business? If so, where do you recommend they begin with their online marketing?

I don’t think it’s a different set of steps for new agents. In fact, I’d say following the above list is even more important for a new agent who may not have an installed referral base.

What do you see as some of the biggest changes coming to online real estate in the next two years?

I see three things on the horizon. First, I think there will be a shakeout of wheat from chaff. Businesses that can’t add real value to both the consumer and the Realtor in a way that proves profitable, are not going to make it. Second, I think there will be a real premium placed on great product. This industry needs to catch up (and we’re seeing that happen). Sites that offer excellent experience will rise to the top. Finally, like many, I think mobile is going to become a huge force in this industry both from a consumer and Realtor perspective.

UPDATE: Joel just published a video interview with Alex on Inman News that is definitely worth checking out!

Published by

Dustin Luther

Current lead up the team managing Brand and Influencer Engagement programs for Dun & Bradstreet. You can find me on Twitter (@tyr) or LinkedIn (DustinLuther)

11 thoughts on “The 4realz Interview with Alex Chang of Roost.com”

  1. Good article, I think Alex is right in a lot of things. Web services are growing so enourmously in real estate sector and internet is the most powerful marketing tool. However, we are in Toronto real estate business for 16 years and I believe the key is direct attitude to the customer. Long term relation and excellent reputation are the best marketing tools and you can’t be on the top not having them!

  2. The roost technology that displays IDX listings on roost.com is very interesting.

    It looks like they co-brand the page to the broker and mask the roost domain name with the broker providing the IDX listings, and display all listings in an mls market.

    Are MLSs cool with this?

    It would seem that roost is either scraping IDX listings, which is a violation of IDX rules and regulations in IDX data agreements, or that the broker is providing IDX data to a third party – which is also a no-no in most mls IDX agreements. The language reads something like “IDX listings may only be displayed on the brokers primary website” which is listed in the agreement.

    I think that what they are doing is great, and definitely broker-centric, just not sure what will happen when roost grows and comes under the watchful eye of MLS executives.

  3. Victor,

    You’ve definitely hit upon an interesting element of their business model… My take is that they’re definitely following all the rules in terms of displaying the listings appropriately, but if MLS start to enforce the “primary website” element (which I was unaware of), then it could start to be an issue. But from everything I’ve heard, they seem to have great interest and support from the brokers currently using their system, which I think will greatly enhance their chances into the future…

  4. Dustin-

    Well, you now have my attention. The BHB flap elevated you from the “newly added” to the top of the list. You’re smarter than me, and I’m really interested in what you’ll say next.

    I look forward to it..all.

    Best,

    CJ

  5. Chris,

    So glad to have you reading, although I would never claim to be smarter than anyone… Not the least of whom would be the BHB folks. Those are some smart cats… uhh… I mean dogs! 😉

    You’re now on my radar as well and I look forward to reading your stuff!

  6. Your interview with Marty Frame was more insightful. Marty came out with stronger points of view. This guy, Alex, was towing the PR-prepped lines a little too much.

    How is what they are doing any different then what Vast is out there doing?

    Also there are a couple of holes in Roost’s “We have all the listings argument”
    1) For any given market, they don’t have FSBOs and can’t due to regs
    2) For a given region, Roost may not have cut enough deals with key brokers to have the appropriate coverage
    3) At a national level, they can’t compete w/ Realtor.com or even any of the other Web interlopers aggregating listings

    I will give Alex credit that he was clear that Roost isn’t in business to support agents – it’s a broker focused model. And that he acknowledges that in this particular market, start-ups need to demonstrate real value or they will go away (VC funding doesn’t keep flowing, just like house prices don’t keep going up).

    Look forward to the other interviews – btw – can you get one from your ex-employer Move.com. Would really like to know if those guys are going to get their heads out of the sand and do something. Everyone always says that it’s theirs to lose.

  7. @Victor – In San Diego I have tried to do something similar to what Roost was doing and was denied several times. As soon as Roost launched in San Diego I contacted Sandicor (the regional mls) and asked about what Roost was doing. I was told that while the rules have not been updated, they did indeed approve the IDX feed to Roost.

    Because Roost is broker centric, and they went after a few powerful brokers, they got the mls to roll over.

  8. @ Not Sold on Roost:

    You make some very interesting points (and many of which I agree with)…

    But I think there is a bit more to the site than you’re giving them credit. Here’s why:

    1) They do have FSBOs… And they are allowed to as long as they don’t “commingle” the listings on the same map/list. See this [san diego] search for an example of how they implemented this.

    2) Because they are grabbing an IDX feed, they only need one broker in any given area to get all the MLS listings.

    3) Definitely not today with their existing inventory of listings, but it’s not clear to me why you think they couldn’t compete in the long-term.

    I’ll work on interviews with the Move team… but I didn’t even go there for the first round.

  9. @roost more digging

    See http://www.roost.com/web/industry.action.

    They have a relationship with iHomefinder.com to get the data. The brokers who use their services simply submit IDX paperwork to their respective MLSs using a roost subdomain.

    If approved, they are good to go. If they must have a custom domain, Roost accommodates for compliance. They are doing a nice job. However, their only differentiation is in the simplicity of their model and the potential to cover “all” listings.

  10. I like the interface, it’s fast and simple and roost group obviously understands the importance of the user experience based on the history with kayak. I 100% agree that users want listings and they want all of them regardless it’s on the MLS or FSBO or new construction or exclusive listings. In looking at the model I think there maybe a few possible issues that may come up.

    1 – The roost model is interesting from a listing coverage point of view as they “only” need 800 MLS feeds and they will get about 90% (2007 NAR report indicated that 10% of agent represented properties did not make it onto the MLS) of the MLS listed coverage. This is a task that I’m not sure even REALTOR.com has been able to accomplish but I’m sure you know the answer 🙂 Additionally, some brokers may not want the FSBO coverage and therefore one of the value propositions of the site may not be fulfilled for the consumer.

    2 – If a MLS faces pressure from the other brokers in the area who don’t like the model, they may pull the feeds or change the rules. At that point, leaving roost to get listings like T & Z via broker submitted feeds.

    3 – The next issue maybe the monetization of the site with the CPC model. Although details having been released its been indicated that it’s on a CPC model. http://www.roost.com/web/realtors.action

    Since users are paying for clicks to each individual listing, it’s not unlikely that a user may look at 20-30 listings in a single session at say a guess of .10 per click to a listing – then that users visit may cost as much as $2 – $3. If the same user grows accustomed to using the site (which would be desired and the ultimate goal of roost) and returns 5 times prior to contacting an agent, then the cost of that buyers visits maybe as high as $10 – $15. If that is the case the brokers would not see the value and could do it cheaper via cpc on the se’s. If the model is only paying once per user session at say .50 then roost would need significant traffic to get profitable. Again, I don’t know the details just making assumptions based on the known CPC business model.

    4 – Getting Traction? Since the site is hosting sub-domains and possible outside domain to be in compliance with MLS rules, it would seem difficult to get organic search traffic like say Trulia. This means everyone needs to come via the front door of the site. This may lead to roost to do significant advertising via cpc to generate traffic. At that point they are doing click arbitrage (paying G .20 and selling traffic to agent at .50) competing directly against local brokers. If there is not enough users the brokers may not see the benefit and pull the listings.

    5 – I also think an upcoming trend of the MLS’s themselves becoming more of a destination site for consumers much like HAR.com is doing and now some of the other MLS sites may impact the roost model. If the trend gets traction and is supported by the brokers, the MLS may change the rules, pulling feeds as they don’t want to create competition for themselves.

    It will be interesting to follow their moves and see if they can make it happen. I fairly certain Alex and team will review post like this to find solutions to the possible issues that have been pointed out – so I don’t doubt we will continue to see them evolve as needed.

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