Zillow’s plan to acquire Trulia seems to be the most significant event of the year in real estate, and it’s tempting to choose a side.
But it’s quite clear from the debate there is no clear “right” or “wrong.” In general, this acquisition seems like another phase in the natural evolution of the real estate industry, one that lays the ground for a new reality, within five to 10 years.
Change is happening on the consumer side, led by innovation and technology. It’s now up to the brokers and agents to make the leap forward.
Most agents do not spend advertising dollars on ZT, and this is a huge expansion opportunity for the portals. More agents will spend more money advertising on ZT.
That brings us to a different problem that is far more disturbing. Agents do not know how to measure their online marketing return on investment (ROI). I believe most of the agents who are currently using ZT as an online advertising platform do not stop and calculate whether their buck spent on ZT was worth it. The portals are very lucky in that respect, but I suspect agents will not stay ignorant for too long.
That also raises another strange paradox. Zillow and Trulia are dependent on agents’ listings. Agents are much less dependent on ZT. Agents still get most of their business from referrals, personal connections and local branding.
Amazingly, it seems like Zillow and Trulia have the upper hand in this strange relationship, where the party that enables the creation of value for the other party is the one actually paying.
There is one clear point about this acquisition. ZT is going to dominate online real estate advertising. As offline advertising loses its ground, ZT will increasingly become the go-to marketing platform for brokers and agents. It won’t really matter what value added services they offer, they will simply have the traffic. This is hard to beat.
Agents adopt behavioral patterns. They do the same things they are used to, using the same tools, repeating the same processes and trying to perfect within the boundaries they set to themselves. This behavior creates a pleasant feeling of known and eliminates uncertainties. It also destroys the personal sense of innovation.
As they search for a competitive edge, agents limit themselves to the boundaries of what they know, not what they wish they had. While their clients are constantly looking for more, and open to exploring and adopting, agents are behind.
But agents are not entirely to blame. Brokers tend to stifle agent innovation. Not all of you, but far too many. Wake up. It is a DNA change that is needed, to shift from “real estate expert” to “Internet expert.” Knowing many brokers in our industry, it is quite safe to predict that most will not change their skin, nor their DNA.
Agents are the real mass and power behind this industry. But it’s agents who allowed ZT to become a giant, and it’s agents who let brokers set the rules.
The next few years will belong to agents. They have been taken advantage of to a point where they feel something is clearly wrong.
Agents have been squeezed by traditional, old-fashioned brokers who did not care enough about their needs, or who simply could not provide them what they really needed in this evolving world.
They have been preyed on by advertising platforms that care primarily about delivering rapid growth and profitability to shareholders.
Agents have been stuck with outdated tools that cannot cope with the demands and expectations of buyers and seller.
It seems like the only ones besides the agents themselves who still respect the agents’ work are their clients, who, surprisingly, are still willing to pay the standard 6 percent commission and trust a stranger with the most important economic decision of their lives.
It is frustrating to see a group of professionals who should be making a respectable living in a $70 billion annual commission market left with too small a piece of the cake, as they are squeezed between brokers’ high splits and cash-hungry advertising platforms.
I have no intention of picking a fight with anyone. My bottom line is the same bottom line that disrupted so many other industries in the past few years. Nothing can stop it from happening in real estate.
The time has come, my friends, for agents to set the rules in this industry. Technology is your key, make it your weapon.
Tamir Poleg is the founder and CEO of Real, an innovative, technology-powered brokerage.