- Last week, the National Association of Realtors board of directors authorized a contract worth over $30 million to provide zipForm Plus to all members.
- Zillow Group's purchase of dotloop expanded its influence over the real estate transaction.
- As a member benefit, the product being provided is probably not worth the cost, but as a move to hedge against Zillow, it is a strategically sound decision.
This week the National Association of Realtors board of directors voted to approve a deal that would provide zipForm Plus free to all Realtors.
The three-year deal will cost NAR more than $30 million. The announcement of the proposed deal focused on zipForms as a member benefit. While certainly part of the rationale, on a strategic level, it represents the latest move in the ongoing battle between NAR and Zillow Group.
The next front
Real estate technology can be divided into three categories: lead generation, transaction management and database or contact relationship management tools.
Zillow and realtor.com have battled for the past decade over the first area, with Zillow winning that round. The purchase of dotloop by Zillow Group signaled the opening bell for the second round: control of the transaction process.
Within that context, the deal with zipLogix was a smart and well-timed response by NAR. The move, however, was not universally embraced.
Opposition to the deal focused on two main aspects: the expense to NAR and the quality of the product provided. The first three years of the contract will be paid out of reserves, so it will not require a dues increase.
Beyond that point, if the contract is renewed, some fear it will require NAR to raise dues for its members.
The second reason people opposed the zipLogix contract focused on the features that would be missing from the product provided, primarily electronic signing and access from mobile devices. ZipLogix offers both of those features, but at an additional cost to the agent.
Both of those concerns are legitimate. If, at its core, giving members zipForms were really about the member benefit, I would agree the price is too high for the benefit.
However, the strategic importance of creating and providing a transaction management tool controlled by Realtors greatly outweighs the shortcomings of the current benefit.
While Zillow gives lip service to the belief in the importance of real estate agents, its primary objective is to generate revenue. It has done that off the backs of real estate agents by selling leads and advertising space on its website.
Having established its position as the most popular site to search for homes, the purchase of dotloop shows its desire to increase its control over the entire real estate process.
The dotloop purchase makes Zillow a player in more areas than lead generation. Agents need to question the long-term motivation of Zillow and whether they feel comfortable giving the company a greater presence in the transaction. NAR needed to respond, or it risked losing yet another battle.
The deal to provide zipForm Plus will inject zipLogix (which is entirely Realtor association-owned) with the capital it needs to develop an alternative transaction management platform, a platform supported by a company that believes in the central role of the agent in the transaction.
What will be seen over the next three years is whether zipLogix can fulfill this vision. In the board meeting, the point was made that several startups have made more progress toward a comprehensive transaction management system than zipLogix, and in less time.
“A good plan violently executed now is better than a perfect plan executed next week.” – U.S. Army General George Patton
In the past, NAR has been criticized for responding too slowly to changes in the industry. This deal illustrates a willingness by the association to take proactive measures in a timely fashion to defend its members.
As a member benefit, there are probably better things NAR could have done with $30 million. When viewed as a long-term move to hedge against further dominance by Zillow, however, it was a timely and strategic decision.