Zillow’s new “coming soon” feature, which allows certain agents, multiple listing services and brokerages to market homes on its website before listing them for sale, has kicked up a host of questions for the real estate industry.
Will it undermine the MLS? What regulatory or legal implications might it have for brokers, agents and consumers? Is it a good or bad thing for the industry?
One thing is clear. Zillow is leveraging a practice that was already taking place in the industry within brokerages, Facebook groups, and on its own site and those of some of its rivals. Premarketing of listings has become a fairly common practice as tight inventories in many markets spur intense interest in any hint of a “coming soon” property.
Zillow’s “coming soon” feature, which allows the premarketing of homes for up to 30 days on Zillow.com, is restricted to agents who advertise with the portal and the brokerages and MLSs who provide Zillow their listings in a direct feed.
Some MLSs have been toying with the idea of adding “coming soon” fields to their databases for the last two years.
“I believe ‘coming soon’ will become another status in the MLS, just another form of advertising,” said David Charron, president and CEO of Metropolitan Regional Information Services (MRIS), an MLS serving over 40,000 members in Washington, D.C., and four nearby states.
“I see (Zillow’s new feature) as an opportunity to engage a group of people to do it within the MLS,” Charron said.
MLSs will have to embrace more of the creativity exhibited by Zillow as they evolve, he said.
“If we stand still and hope it will pass, we’re going to be left in the dust,” Charron said.
Zillow as consumer laboratory
Zillow, with its massive consumer reach of more than 45 million unique visitors per month, is a good laboratory for the industry to see how consumers take to seeing premarketed homes, Charron said.
The new feature might spur the industry forward, which can get stuck in a mire of its own rules and regulations, he said.
“MLSs have had a corner on the market,” Charron said.
With Zillow innovating, “we simply have to work harder to convince people that we’re the best place to list properties for sale,” Charron said.
Zillow’s new feature brings premarketing into the light of day and “I tip my hat to them,” he added.
Howard “Hoby” Hanna, president of Howard Hanna Real Estate Services’ Midwest region, said he doesn’t see Zillow as an intermediary trying to dislodge the value proposition of brokers and agents, but a marketing partner “that isn’t handcuffed by our industry and its traditional practices.”
Hanna pointed out that brokerages have been doing a version of coming soons for themselves for years. For instance, large Chicago-based brokerage @properties released an app last year that facilitates communication among its agents about coming-soon properties.
At Howard Hanna, agents enter “coming soon” listings into Hanna’s back end before they must hit the MLS, typically 24 to 72 hours after a listing agreement is signed. The brokerage calls them “Hot Leads.”
That inventory is not just available to Howard Hanna agents and brokers, Hanna said. It’s also open to consumers who sign up and have an account through Howard Hanna’s website, he said.
By monitoring the Zillow “coming soon” feature and how consumers respond, the industry has a window into how consumers respond to them and what they want, Hanna said. “We win in the end,” he said.
Howard Hanna, the fourth-largest brokerage in the U.S. by transaction sides in 2013, sends all of its listings to Zillow in a direct feed. Zillow approached Howard Hanna to participate in a beta version of its “coming soon” feature and the firm declined because it’s concerned about possible industry pushback, Hanna said.
But the brokerage is watching, Hanna said. “We’re curious to see how the customer responds.”
“Someday we may look to participate,” he added.
Challenge to the MLS
Hanna said he could see that premarketing on portals like Zillow that get soon-to-be listings out in front of consumers could be a challenge to the value brokers and agents see in an MLS. They might question why they’re paying MLS dues, Hanna said.
Some, including Galen Ward, CEO of brokerage and referral site Estately, think Zillow’s move will undermine the MLS system.
“I can see that MLSs would see this as an attack at the front gate,” said Gregg Larson, CEO of the real estate consulting firm Clareity Consulting.
The new Zillow feature opens up a way for homes to more easily be sold outside of the MLS, potentially eroding the MLS’s decadeslong central place in the industry.
For instance, Larson said he could envision listing agents telling their sellers they’ll knock a point or two off of their commission if they sell the home through a premarketing platform like Zillow’s and capture both sides of the deal.
Zillow’s new feature could also draw more serious homebuyer eyeballs to Zillow, Larson said. “This is a way of getting traffic that actually matters.”
“As a buyer, if I’m really in the market for a home, all I can think about is the new ones coming on the market,” Larson said. This product will drive serious buyers to pore over the latest listings hitting Zillow’s premarket inventory, he said.
“Hats off to Zillow,” Larson said. “This is clever.”
In some ways, Zillow has stolen the thunder of big brokerage network The Realty Alliance by moving upstream of the MLS, Larson added.
The Realty Alliance, which counts Howard Hanna as one of its 60 or so members, is said to be working on a secretive plan to pool its members’ listings into a central database in order to give its members some leverage with MLSs.
Most effective marketing tool?
“I see the new ‘coming soon’ feature by Zillow to be directly competitive with MLSs,” said Jim Harrison, president and CEO of MLSListings Inc., the third-largest MLS in California with about 16,000 members.