Real estate industry grappling with prospect of ‘Zulia’

Most Inman News readers think merger of Zillow and Trulia would be bad for them

If reported merger talks between Zillow and Trulia do culminate in a deal, a slim majority of Inman News readers who responded to an online poll Thursday said that would be bad for the real estate industry.

Would a merger of Zillow and Trulia be good or bad for the real estate industry?

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Results of online poll of Inman News readers as of 5 p.m. Pacific time Thursday, July 24, 2014. The poll remains open.

But some investment analysts and real estate industry experts say the repercussions from the two biggest property search portals becoming one aren’t so clear cut.

If a merger of Zillow and Trulia does take place, it would lead to one, clear leader in the space — and perhaps increased advertising costs for brokers and agents.

Other than that, however, brokers, agents and multiple listing services won’t be hugely affected by the deal, said Steve Murray, president of real estate consulting firm Real Trends.

“For the agent on the street, a merger between Zillow and Trulia doesn’t change much,” Murray said. They still have to deal with buyers and sellers, he said.

Costs for online advertising would go up, but the resulting colossus would also attract more consumers, which would theoretically make the advertising worth more to brokers and agents, Murray said.

Murray says he sees room in the future for two separate portals that get 100,000 agents to each pay $1,000 per month to advertise on their sites. A merger between the two biggest sites simply unites that estimate, he said.

But Bradley Safalow, founder and CEO of stock analysis firm PAA Research, said he “can’t see how this deal works.”

“Forgetting about the fact that Zillow and Trulia hate each other, a merger would make it easier for brokerage firms to stop working with them or squeeze them on featured listings programs,” Safalow said.

Brian Boero, partner at real estate design and marketing firm 1000watt, says that the agent ad and software market the three large, public companies are going after is not as big as many think, so a merger sometime in the next couple of years makes sense.

“The rumor mill has been grinding on this subject for the last six to eight months, but nothing’s hit yet,” Boero said. “We’ll see. If the Big Three, in some combination, became the Big Two you’d lose some of the competitive energy in the space, which may cause prices to drift up for agents, but, again, this is all speculative.”

Given their overlapping services, Gregg Larson, CEO of real estate consulting firm Clareity Consulting, questions whether the U.S. Federal Trade Commission would allow the deal to go through if it happened. However, lawyers on both sides are likely vetting that issue and if talks lead to a deal, then any antitrust issues might be moot, he said.


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