The rumble of Google potentially entering the real estate game became a roar in 2009. They updated Google Maps to better display real estate listing information in July, and as of last month the rumors are swirling about a potential acquisition of Trulia.

Google and Bing have clearly been trying to surface more and more detail directly in the search engines, and showing real estate listings directly is no exception. It is pretty clear that Google has big aspirations to be a player in the real estate search game, and we are likely to see that begin to play out in 2010.

Galen Ward of Estately wrote a post on TechFlash a few months back saying that “Google real estate is the king of inferior products.” It looks like they may use acquisitions to change that, with potentially far-reaching consequences for the real estate industry and for many local startups, including Zillow, Redfin and Estately.

What makes for a successful real estate search site? Consumers are driven to use real estate sites by four key factors that Google will need to win in this market.

1. Data Reliability: Active real estate buyers need the most reliable listing data to find the homes currently for sale. Today that reliability only exists for sites that are fed by the thousands of local Multiple Listing Service (MLS) databases used by real estate agents. Google’s current listing database is incomplete and out-of-date. Zillow and Trulia fare better here with feeds from some large brokerages and a few MLS systems, but they are still not perceived as “up-to-date” or “complete.” Redfin is a brokerage, so they have an advantage and are able to show live MLS data, but only in select metro area where they do business. The top real estate site remains Realtor.com. They get feeds from most MLS systems in the country and are closely aligned with local real estate agents. Google’s popularity in search and mapping will make an easier case for brokerages and MLS systems to feed data directly to them, and this is the most critical aspect to their long-term success.

2. Data Depth: Depth of property data is also critical to success. An acquisition of Trulia (or Zillow) instantly gives their listings all of the additional data that consumers have come to expect like previous sale data, tax records and value estimates.

3. Search UI: A slick and easy to use search UI is also critical, but so far has been easily trumped by data reliability. There is no better example of this than Realtor.com, which has yet to adopt map searches, and can be described as rudimentary at best, but retains the top spot because consumers perceive it as the authoritative source of listing data. Google’s current real estate search is also rudimentary, but could be easily improved through acquisition or in-house development.

4. Popularity: Only a handful of sites are truly popular and regularly used by home buyers. Sites that bubble up to the top of searches will ultimately win this game. While Google is a minor player today, they have an obvious (and likely unfair) advantage here, by surfacing their own real estate listings ahead of everyone else.

COULD GOOGLE POWER LOCAL SITES FOR AGENTS?

With over a million real estate agents out there in the US, the internet is littered with hundreds of thousands of different real estate search sites. Every agent seems to have a site, but most are junk with little or no actual usage.

Agents put these sites together using technology vendors who are able to access the MLS data feed on behalf of the agent, known as Internet Data Exchange (IDX). A typical IDX site takes a day to setup and costs a modest $25 to $30 per month.

It is a basic requirement to be a real estate agent, even though no one actually uses these sites. Google could offer to host IDX sites for individual agents, instantly beefing up their listing database and giving individual agents a respectable search experience.

Even more interesting would be if Google could pay for the sites with integrated Google advertising and offer them to individual agents at no cost.

WHO WILL WIN THE SEARCH ENGINE RANKING GAME?

The long-term winners in the real estate search game will be those who maintain their lead in search engine ranking. Most large brokerage companies don’t even rank on searches and wouldn’t know how to optimize their sites if it hit them in the face.

Small independent brokers likely don’t have the technology savvy or budget to compete. Both are being steamrolled in popularity by the likes of Zillow, Trulia, Realtor.com and Redfin, who use the agent’s own data to outrank them, sometimes charging agents for the privilege.

Will Google use their ownership of the top search engine to feature their search results first? I’d bet on it.

THE BATTLE FOR LIMITED ADVERTISING BUDGETS

Advertising spend by real estate brokers has been declining precipitously, most obviously with the virtual halt in newspaper classifieds.

The web has decimated the traditional advertising model in real estate and agents are far pickier about paying for advertising. The void in traditional advertising has been filled by various online companies, all promising exposure for your sellers’ listings and the potential for clients finding you online.

Everyone wants a piece of the pie, whether it is banner ads from Zillow, monthly fees to Trulia, fees for additional photos on Realtor.com, or referral fees to Redfin, not to mention countless other vying for limited advertising dollars.

They won’t all win, and if Google can provide the highest search ranking and biggest exposure, they will be the greatest beneficiary.

A LOOMING BATTLE WITH THE NAR?

The National Association of Realtors (NAR) is not sitting idle in the battle for real estate information. A couple months back, they announced that they are developing a new database called the Realtors Property Resource (RPR) and acquired a number of technologies to get there.

The idea is compelling, which is to become the most comprehensive national database of real estate information by combining MLS data, tax data and parcel information into a single resource. No one has effectively done this to date, as MLS listing data and tax parcel data have historically existed in two separate silos.

The RPR is a clear middle finger to a number of big technology players in real estate. The NAR wants a tool for their members that has better search than Redfin, better automated valuations than Zillow and more statistics than anyone else can muster.

Sounds compelling, until you read the fine print.

This supposedly wonderful database will only be available to members of the NAR.

The association is trying in vain to protect Realtors as the only authoritative source of real estate data and statistics, which is a Pandora’s box opened long ago by the internet consumer.

An entry by Google clearly pits the data hungry general public against Realtors trying to maintain their lock on industry data. I’d bet that the internet consumer prevails easily in this battle.

A BROKER'S PERSPECTIVE

I founded findwell, an online brokerage here in Seattle. We power our real estate search with Estately’s technology, and almost all of our clients find us online.

Our business depends heavily on the outcome of this online battle, but at the same time our core business is not actually threatened by the battle. As a brokerage, we ultimately get paid to facilitate transactions for buyers and sellers.

The complex and emotionally-charged process of buying a home leaves a role for agents, and most of the companies battling it out are not actually interested in the messy, service-heavy business of actually being a broker.

However, as brokers, we ultimately control the advertising dollars that are fueling this battle.

Today, there is no clear winner, so we have a scattershot approach of buying as many advertising options as we can reasonably afford.

We need to expose our seller’s listings to the broadest possible audience and at the same time develop the strongest possible lead sources for future business.

This won’t last forever, and the companies that prevail in this battle will be the sites that give brokers like us real, tangible business.

Google already provides many clients to us through their search engine, and we’d certainly be interested in having our information surface prominently in their real estate search. I do worry, however, that their entry will siphon traffic away from our own site and make our job of sourcing new customers that much more difficult.

YOU CAN MAKE MONEY WITHOUT DOING EVIL (SOMETIMES)

Google’s long-standing philosophy is that you can make money without doing evil. As their market dominance and ambitions have grown, I’d have to call that into question, with the occasional bit of evil needed to achieve their ever larger goals.

Will a major entry into the real estate search business be beneficial to consumers and agents? Yes and no.

If they can provide a compelling search experience, quality data and do more to drive business to the agents who own advertising dollars, they can be a positive force that continues to put more data in the hands of the consumer.

At the same time, they have a position of market dominance that could easily decimate other businesses reliant on those same real estate advertising dollars, ultimately hampering innovation in the space.

Certainly it poses interesting questions for the future of a number of local startups like Zillow, Redfin and Estately, and certainly begs the question of a response from Bing in 2010 as well.

Kevin Lisota is founder and president of Findwell, a Seattle-based online real estate startup. Opinions expressed in guest posts are those of the author and don't necessarily reflect the views of TechFlash.