Web-based marketing integral to real estate industry

Brought to you by

MARILYN BOWDEN

These days, anyone in the market for a new home or a beachfront condo can get a better idea of what's available by browsing the Internet instead of the Sunday paper. According to the National Association of Realtors, there are now some half-million Web sites in cyberspace hawking dream homes.

The Internet has been an important selling tool for the real-estate industry for nearly a decade. But during the recent residential boom, some have taken it to a new level, using the Web as the primary marketing tool to snare buyers for preconstruction projects which exist only in the developer's imagination. For this class of sellers, the Web has replaced the sales center; the virtual tour has nosed out the model unit.

Consumers need to exercise caution before leaping into an investment in a property that, as the market softens and some projects inevitably fall by the wayside, might never be anything more than a computer-generated fantasy.

The rise of virtual marketing

"Historically, the sales office would open before there was a project," says Mark Zilbert of South Florida's Zilbert Realty Group, which specializes in Internet sales. "But with the emergence of the speculator market, which really drove preconstruction sales, we entered the era of the instant sellout. By the time the sales office was built, there was nothing left to sell."

While developers were once leery of Internet listings, Zilbert says, broader outreach at lower cost has converted many to the gospel of virtual marketing.

A well-designed Web site is now a must for large projects, says Liam Sullivan, spokesperson for real-estate marketing firm Cotton & Co. The company currently has more than 60 Web sites up and running for projects all over the United States and the Caribbean.

"It's a tool that people have come to expect," Sullivan says. "People want to shop from their living rooms. Eventually they might visit the project site, but some of them buy just off the Web."

Sullivan says virtual tours using sophisticated technology can convey a much better idea of what a project will look like than a visit to a construction site.

An integrated approach

All this doesn't mean that all developers are ready to forsake tried-and-true methods. Many prefer an integrated approach.

"While we use the Internet to expose our product, we rarely consummate a sale that way. So we're not doing away with bricks and mortar,'' says Pamela Liebman, CEO of The Corcoran Group, a New York City-based residential developer and marketer.

No matter how quickly a project "sells out," a sale isn't really a sale until the unit is delivered and the contract closed, says Edgardo Defortuna, president of Fortune International, a Miami-based real estate and development firm.

"Even if we are mostly sold out, we still build a sales office and models," he says. "There has to be something to keep the buyer excited during the two or three years the project may be under construction."

Another thing the Internet will never be able to replace, Defortuna says, is the relationship between seller and buyer. "There is no substitute for personal contact," he says.

The industry online

Industry statistics make it clear that the real-estate profession is not in danger of losing ground to Internet sales.

Citing a recent survey of 135,000 homebuyers by the National Association of Realtors, NAR spokesman Molony says that though 77 percent used the Internet to search for properties, 81 percent used an agent to consummate the sale.

"The Internet is the norm today," Molony says. "But people still want a Realtor to explain the contract and handle the paperwork."

Statisticians for The National Association of Realtors deal only with resale properties, which are documented on multiple listing services. Tracking the preconstruction market is more difficult because there hasn't been any coordinated catalog of what's available at what price - until recently. Dean Isenberg, a Florida Realtor and entrepreneur, has introduced sell-your-preconstruction.com, a nationwide listing service he hopes will become "the eBay of preconstruction properties."

Let the buyer beware

Seasoned brokers say anyone buying a product that doesn't yet exist needs to be careful.

"It's relatively easy to sell preconstruction over the Internet," says The Corcoran Group's Liebman. "People think they're getting a bargain, and getting it easily. But in exchange, they have to go by the word of the developer and the offering document, without actually seeing what they're getting."

Internet buyers, she says, "need to read those offering documents very carefully, and have an attorney read them as well."

Mortgage rates are headed into hibernation until the next Federal Reserve rate-setting meeting.

The benchmark 30-year fixed-rate mortgage fell 12 basis points to 6.77 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.28 discount and origination points. One year ago, the mortgage index was 5.84 percent; four weeks ago, it was 6.93 percent.

The benchmark 15-year fixed-rate mortgage fell 10 basis points to 6.39 percent. The benchmark 5/1 adjustable-rate mortgage fell 8 basis points to 6.47 percent.