James T. Berger, Managing Editor
November 2006

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Those survivors of the Dot.Com disaster of a few years ago are now really starting to reap the rewards. Earnings from Amazon, Google, Yahoo and EBay have fulfilled the prophesies of those gurus who saw the power and potential of interactive communications.

The dismal earnings reports of Amazon.com in the few years after its formation are history as that company surges forward and becomes increasingly more profitable.

The scorched earth aftermath of the dot.com bust eliminated many start-ups who saw the Internet as a means of selling real estate and mortgages. The rationale seemed so obvious. The real estate and mortgage markets were purely competitive environments. Therefore vendors who could communicate information quickly and completely would get a competitive edge at least in the early stages of the search process.

However, it didn’t turn out that way. Perhaps it was a form of intellectual inertia but people preferred the more traditional face-to-face channels. Maybe they were afraid of the Internet or insecure using the new technologies. They opted to shop for property using Realtor channels, and the start-ups failed to produce the numbers they promised to the venture capitalists who soon lost patience and shut them down.

Now, a few years later, that early promise is being fulfilled. Perhaps it’s the entry into the market of computer-savvy Generation Yers and the maturing of computer-wise Gen Xers, but the real estate companies are reaping huge rewards from Internet-generated sales leads.

As a freelance magazine author, this writer has observed a significant swing in buyer behavior in the multi-family (apartments) real estate markets thanks to the Internet. In both upscale market-rate properties and in lower priced tax-credit housing, management companies are relying on the Internet to feed the applicant pipelines.

Branding seems to be the common denominator in directing prospects to property managers. In the case of the upscale property management company, Chicago-based AMLI Residential, its target market is young, affluent, time-starved buyers. Some 25 percent of their tenants use the Internet as their first point of contact. They are using the Internet not only to do the initial screening but to accomplish the entire rental process. AMLI marketers tells stories about tenants who have transferred from one market to the next and don’t see the apartment they have rented until the drive up to the door. It’s the brand the does the selling.

In the affordable housing markets, two Washington, DC-area based companies – The Shelter Group and KSI Management – are both heavily reliant on the Internet to produce leads and sales. Both have created brands for their properties. The Shelter Group, which has created independent living elderly communities, has created the “Park View” Brand. KSI, whose tax-credit apartments, are targeted to families of all ages has created “The Fields” brand. Both are heavily reliant on the Internet for their marketing. In the case of KSI’s “The Fields” brand, its chief marketing officer reports that 70 percent of its tenants trace their initial contact to the Web.

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Author
James T. Berger, Managing Editor of The Wiglaf Journal, specializes in both finance and marketing and has spent a number in both the investor relations field as well as an account manager and officer at several Chicago advertising agencies.

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