The guest opinions presented below are responses to Inman News’ latest ‘Real Debate’ question: What does a Zillow-Trulia merger mean for brokers and agents? Share your own thoughts in the comments section of this article.
Deal will drive agent rankings, partnerships and transparency
Jim Klinge is the owner of Carlsbad, California-based Klinge Realty and creator of the real estate blog bubbleinfo.com.
Realtor.com should be the pre-eminent real estate website on the planet, but instead it just got run over by Zillow-Trulia. The people at Move Inc. and the National Association of Realtors’ leadership have failed you miserably, but it is too late now.
Get over it.
What does the merger mean? It means that Godzillow will be doing more to drive consumers to their websites. Transparency will increase, and consumers, armed with more knowledge, will be empowered to make better decisions.
At least that’s what the consumers will think.
Have you noticed how consumers can recite the comps off the top of their head now? Can you do that? You better hope so, because consumers will expect their agent to know more than they do.
The agents who stay ahead of consumers by immersing themselves in their craft should enjoy a healthy business for years to come.
Other things the merger will cause, and agents should embrace:
- 1. Agent rankings — Zillow already allows each agent to list their past sales and testimonials from past clients. It is inevitable that Zillow or someone else will create a place for consumers to check on individual agents. Don’t like it? Increase your production and you will like it more.
- 2. Big real estate corporations to partner with Zillow-Trulia — It will be easier and more cost-effective for the big franchisors to ride on the Z-T coattails than to fight it. Their “strategic partnerships” will solidify the legitimacy of Zillow-Trulia in the consumer’s mind. Realtor.com should join the Zillow-Trulia team while we still have leverage.
- 3. Accurate enough — Agents need to quit bashing Zillow with the “wildly inaccurate” claims. They are much closer than they used to be, and Zillow is accurate with their other vital information, like the nearby listings and comps, schools, maps, mortgage payments, etc. The consumers take a Zestimate with a grain of salt, and are tired of hearing agents harp on it so much.
- 4. Transparency — The merger is just the beginning. Other outsiders are taking direct aim at Realtors, hoping to create a fancy Internet website to replace us. Everything about the properties, Realtors and how we do business will be under scrutiny — get used to it.
The merger is just another press release. The bottom line is that Zillow-Trulia is another place for agents to farm for prospects. Agents can either get leads from their listings (which are still advertised for free) or they can choose to pay for advertising packages. Or you can ignore Zillow-Trulia, but at least know that the consumers love their websites.
Agents should acknowledge the existence and benefits of Zillow-Trulia, and keep providing better and more powerful information. That is what consumers want and need. Realtors who work harder and smarter will keep providing the critical part of the equation: expert help in the moment of need.
Expect to be squeezed
Tim Ellis is the creator and editor of Seattle Bubble. He was formerly employed by Redfin and is currently a Redfin shareholder and an employee of Porch. The opinions expressed here are his own.
If I were an agent or broker who used Zillow or Trulia as part of my personal marketing strategy, I definitely would not be celebrating the news of Zillow’s $3.5 billion acquisition of Trulia. This is a combination that portends plenty of potential downside, and very little upside.
The best way to analyze what a combined Zillow and Trulia will likely mean for brokers and agents is to look at Zillow’s own statements, both this week and in recent years.
Here’s the most relevant portion of Zillow’s announcement of the merger:
Both Zillow and Trulia are primarily media companies, generating the majority of revenue through advertising sales to real estate professionals. Despite continued growth as public companies, significant opportunities of scale remain, as the majority of advertising dollars in the real estate sector have yet to migrate online or to mobile. For example, the two companies’ combined revenue currently represents less than 4 percent of the estimated $12 billion real estate professionals spend on marketing their services to consumers each year.
There it is, plain as day. The primary goal of both Zillow and Trulia is simple: Squeeze agents, brokers and other real estate industry professionals for as much advertising money as they possibly can. Zillow wants to “migrate” more and more of your money onto its balance sheet.
How does Zillow intend to do that? Probably not by making many changes on the consumer front. Zillow and Trulia’s well-documented data quality problems are seen as a feature, not a bug. Here are a couple of public statements from Zillow CEO Spencer Rascoff on that topic:
Zillow claims that acquiring Trulia will provide them with “a tremendous opportunity to combine our resources and achieve even more impressive innovation that will benefit consumers and the real estate industry.”
However, so far Zillow’s primary “innovation” in its nine-year history has been to build the platform with the biggest traffic numbers, and to aggressively market said platform to agents and brokers as a necessary advertising strategy.
And why should they act any differently? We’re not talking about a benevolent nonprofit here; we’re talking about a pair of public companies whose primary goal is to maximize shareholder profits.
So how is the new Zillow-Trulia hydra likely to make good on that goal to maximize profits and grab more of that enticing $12 billion pie? Well, let’s look at Zillow’s own statements again.
“The combined company will maintain both the Zillow and Trulia consumer brands. …”
Why consolidate everything onto a single site that can sell only a limited number of advertising slots per ZIP code?
With the Zillow-Trulia-StreetEasy-HotPads-AOL-Yahoo network, every ZIP code can be sold to you over and over, but with a single entity setting all the prices.
Excited yet, agents?
Evolve, agents! Even if the MLS doesn’t
Agents who adapt and evolve will survive. The big question here is whether the multiple listing service will survive. MLSs will survive now. But is it even possible for them to evolve?
Since the MLS went online, agents have debated whether they control the power or if it’s slowly shifting to the customer.
I emphasize the word “customer” here. You see, in real estate, a customer is someone an agent begins a dialogue with about buying or selling a home. The customer becomes a “client” only when that customer signs an agreement to work exclusively with an agent and brokerage.
One area of power an agent is still holding on to is the ability to filter out the vast amounts of minutiae that can show up in an online search. Have you ever Googled “real estate for sale in X”? The numbers of sites that show up is overwhelming.
Behold: the almighty multiple listing service! The one-stop shop for agents to get the “real” information for their clients.
But imagine if, five years from now, only one site shows up when a customer does an online search?
If realtor.com is losing ground and “Zulia” is gaining it as fast as some agents seem to think (this can also be measured by gauging the speed in which the sky is falling), that could mean that we aren’t far away from Zillow listings being the only thing to show up on a search results page.
Furthermore, if features like Zillow’s “Make Me Move” gain some traction in the marketplace, would those customers ever need to become clients?
Real estate agents would HATE this because Make Me Move essentially funnels a customer straight to a seller.
We haven’t even gotten into the fact that the multiple listing service requires seller’s agents to make offers of compensation, and Zillow does not. Want to fight for a commission on a home that a customer found on Zillow? Good luck with that.
I agree with Brad Inman’s view that the Zillow-Trulia merger could be “checkmate.” Zillow says it doesn’t want to become an MLS, but it is naturally heading that way, regardless of whether it wants to or not.
If Zillow and Trulia control accurate listing content, they will control the consumer. If they control the consumer, then we agents need to figure out how to stay relevant.
Have we reached the tipping point where consumers will have just as much information as agents?
Evolve, agents! Even if the MLS doesn’t.
You just lost leverage
Ray Schmitz is a real estate tech entrepreneur, broker and investor based in New York City.
Suppose you are a big broker looking to use the portals to give your agents an edge over the competition. Now that Zillow and Trulia have tied the knot, if you are looking to strike a deal (like the agreement Douglas Elliman inked with Zillow in June), expect to pay up. You can’t play one portal against the other anymore.
Small, independent? Well, you never had any leverage anyway.
As an agent, the merger’s impact depends on how the portals fit into your practice.
If you pay for one company’s tools but not the other’s, the good news is that, since rival product teams will put their heads together and swap trade secrets on what works for you and what doesn’t, both companies’ services should improve.
That could justify raising prices. Each portal will also be able to raise prices more easily because defecting from one to the other will no longer hurt.
On the demand side, real estate traffic is becoming increasingly concentrated on a smaller number of sites. Will the shift compel more agents to start advertising on the major portals?
Today, for every agent that does advertise on a portal, many more do not. The demand could multiply, and with it, prices.
Are the portals the dominant source of your business? If so, those price increases will sting.
No matter what anyone at either company says right now — after all, this is that delicate stage where a deal is signed but subject to regulatory approval – in the long run, prices are going up. Shareholders will demand it.
If you have been in business for 20 years or more, and generate nearly all your business by referral, then you don’t need to pay the portals. You probably don’t care what they do.
In case you are reading anyway, keep coasting. Sooner or later, over half the buyers will be less than half your age. When business finally just seems to slow down, and maybe you don’t understand why consumers no longer understand what value you add — at that point, retire. You earned it.
Forget about being “guardians of the data”
Bret Calltharp is a business development specialist at Metro Vancouver Properties, a 10-office Re/Max franchise group in Vancouver, British Columbia.
The merger is a game changer for agents who haven’t already adjusted their business plan to accommodate the major portals. You simply cannot ignore these advertising behemoths any longer. They are experts at getting themselves in front of the consumer, and the merger will only increase their reach.
The more interesting question is whether this will finally get our industry past the “guardians of the data” mindset. Internet data exchange (IDX) changed the real estate landscape over a decade ago, and we’re still seeing the ramifications of that shift whether some wish to recognize it or not.
Agents need to re-evaluate their value propositions. We’re long past the point in the industry where a consumer must go to the original source for information (the listing agent) on a property. The genie is out of the bottle.
We can make all of the “Zestimate” jokes we want, but the fact is every lead you receive on a property that’s no longer on the market or a listing with incorrect data is an opportunity for you to communicate your value to that prospective client.
Listing agents are a critical component to a successful transaction, and there’s a lot of effort that goes into securing, marketing and promoting those listings.
However, at the end of the day a listing isn’t “your” listing. It’s your client’s. Sellers want a successful transaction and a comprehensive marketing plan that includes optimal exposure of their property, and it’s a rare client these days who won’t expect that plan to include Zillow and Trulia.
Your clients do not care whether you had to pay to receive “your” leads on that property. They want the property to sell at the highest and best terms possible. Any fees you pay in that pursuit, whether it’s a classified ad in the newspaper or advertising with Zillow, are a cost of doing business that is offset by the commission.
The sky is not falling. The National Association of Realtors’ 2013 Profile of Home Buyers and Sellers told us that only 4 percent of sellers and 9 percent of buyers found their agent online. Meanwhile, 54 percent of buyers and 63 percent of sellers surveyed found their agent through a referral from friends or family or were a repeat client.
It’s not control of “the data” that makes or breaks an agent; it is what you do with that data. If you provide professional service, guiding and educating your client through the selling or homebuying process, you should achieve a successful transaction. And if you continue to provide that professional service, actively staying in touch with past clients and delivering value to them after the transaction, you will have a successful career.
There’s no website that can replace an honest-to-goodness personal relationship built on trust and respect. As one agent put it during a recent discussion, “If you think you can be replaced by a website, you probably should be.”
Your thoughts? Join the debate in comments below.