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Follow-up to bc of AEO… You Need the Quote
My last article, ‘bc of AEO… You Need the Quote,’ struck a chord with readers. So, it’s time for a follow-up—one that goes deeper into what happens when Answer Engine Optimization (AEO) collides with an already fragile housing market and a portal model built for a web that no longer exists.
First, Credit Where It’s Due
Portals like Zillow, Realtor.com, and Redfin were transformative. They gave consumers transparency, standardized listing search, and created a lead-generation engine that powered an entire industry. Zillow’s Zestimate and Redfin’s map-based UI were iconic innovations that changed consumer expectations forever.
But innovation that defined an era doesn’t guarantee relevance in the next one. The landscape is shifting from search engines that deliver links to answer engines that deliver decisions. That’s a different game entirely—and it breaks the economics portals were built on.
The Market Context: Scarce Listings, Longer Timelines
Here’s the paradox:
Inventory remains 40% below 2019 levels (NAR).
Yet homes that do hit the market are sitting longer—median DOM has climbed toward pre-pandemic norms in many metros.
Why?
Affordability squeeze: Mortgage rates near 7% + sticky prices = fewer qualified buyers.
Seller psychology: Anchored to 2021 pricing, sellers resist cuts.
Inventory quality: Much of what’s left needs work or is in secondary markets.
For advertisers, this means longer ad cycles and higher cost per lead. For portals, it means their click-driven economics are more fragile than ever.
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Why AEO Breaks the Old Funnel
Portals built their success on this predictable loop:
Search → Click → Lead → Monetize.
But AEO collapses that loop.
When consumers type or speak:
“Show me three-bedroom homes under $500K in Cleveland.”
“Who’s the listing agent for 123 Main Street?”
“What’s the average price in Austin?”
They no longer need to click. Google or ChatGPT serves the answer in-line. The answer becomes the destination, and the portal becomes optional.
Signals of Change: Acquisitions Tell the Story
This year, Redfin and Movoto were both acquired—at very different valuations, but for arguably similar reasons:
Traffic-driven growth isn’t enough.
SEO-based lead arbitrage is losing leverage.
AI-driven distribution is changing where value accrues.
Executives likely saw what’s coming: top search rankings don’t matter if no one clicks.
Enter MCP: The Infrastructure Shift No One Can Ignore
In my other recent piece, Adapt or Die: MLSes’ New Love Affair with AI, I argued that MLS organizations embracing AI signals a bigger transformation. The old static IDX model isn’t built for an AI-first world.
That’s why MCP (Model Context Protocol) matters:
It enables real-time, machine-to-machine data exchange, making listings dynamic and AI-ready.
It replaces fragile IDX feeds with structured, contextual data that conversational interfaces can understand instantly.
It positions whoever controls this layer—brokers, MLSs, or tech players—as the gatekeeper for AI search experiences.
Think of MCP as the new “distribution backbone” for real estate. If AEO is the interface, MCP is the supply chain feeding it.
The Stakes: Measured in Billions
Consider current ad spend:
Google alone captures around $90–100M+ annually from this ecosystem.
In an AEO world:
Portals will spend even more trying to buy back visibility.
Or watch ROI implode as the click becomes obsolete.
What Portals Can Do to Adapt
This isn’t a death sentence—it’s a blueprint:
Pivot to AEO-Optimized Content: Move beyond static listings. Use structured schema, conversational Q&A, and AI-readable data.
Invest in MCP Infrastructure or AI Partnerships: Control the pipes that feed answer engines, not just the pages indexed by Google.
Guarantee Broker Attribution: Give brokers clear visibility and control of their listings to rebuild trust and differentiation.
These aren’t defensive moves—they’re survival strategies.
Who Wins When the Funnel Breaks
Brokers with Scale: AI-driven search depends on verified, structured data. Large brokerages that control their own listing management platforms will be able to feed data directly into answer engines—and retain attribution without relying on intermediaries.
Data Infrastructure Innovators: The real winners will be those building next-generation systems—especially MCP-enabled platforms—that can syndicate context-rich listings in real time for AI consumption.
Advertisers Who Pivot: Brands that move quickly to optimize for AEO—leveraging structured data and conversational content—will own visibility in the answer layer, leaving slower competitors behind.
Who loses?
SEO-dependent portals are betting on traffic metrics from a fading era.
Lead marketplaces are chained to click-through volume.
The Hard Truth
This isn’t a tweak. It’s a structural reset in how consumers discover properties and who controls that path.
If your strategy still starts with “rank first on Google,” you’re already behind. The real estate funnel doesn’t begin at a search bar anymore—it begins and ends with an AI-generated answer powered by the right data layer.
And if you’re not the answer, you don’t exist.
This is my opinion, not financial advice—so don’t bet the house on it.
Full disclosure: I’ve worked with, advised, or collaborated with some of the companies mentioned. If that bothers you, welcome to real estate.
xoxo,
Maximillian Diez
GP, Twenty Five Ventures
P.S. Stay with me on this journey.
If nothing else, thanks for reading.
