On the surface, Zillow’s inaugural Premier Agent Forum in Las Vegas was focused on highlighting the next generation of Zillow products and helping agents get the most out of the Zillow platform. Hosting a conference is a common play for technology providers in other industries – Oracle and Salesforce among the most notable – yet Zillow’s stands out in real estate as one of the biggest branded confabs, more akin to Keller Williams’ Family Reunion and Re/Max’s Re/Charge. The parallels to the brokerage-sponsored agent events are far from a coincidence.
While the industry worries about inaccurate listing information on Zillow.com and which brokerage is syndicating or pulling listings from the site on any given day, Zillow is methodically outflanking real estate brokers on a much larger scale. Move by move, the Internet giant is making brokerage brands obsolete by over-delivering on the value they provide to agents. In contrast to many broker/agent relationships, Zillow is building massive brand loyalty by providing the tools and marketing agents need to be successful. Brokerages will need to respond in-kind or face being the odd man out of the homebuying equation.
Zillow makes its move
It started with Zillow’s ability to aggregate demand and generate leads for agents. Zillow is the number one real estate destination on the Web, resulting in a massive and (perhaps more important) reliable source of leads for agents. Rather than designing a complex and time-consuming marketing program, agents can simply pay Zillow and watch the leads flow in. The company took the next logical step to make the leads they deliver more valuable by purchasing Trulia and its agent technology solution, Market Leader.
Leads and technology solutions were two of the biggest value additions that brokerages brought to agents beyond a place to hang their license. Now Zillow does both, and does it better than most individual brokerages. This reality is why Realogy purchased ZipRealty – to up their technology offering to agents.
At the Premier Agent Forum, Zillow debuted branded agent videos as a benefit for Zillow Premier Agents. Notice anything missing? Hint: It’s the brokerage brand. Zillow now provides not only leads and technology but also agent-specific marketing, and all at a level not seen from most brokerage brands.
Between marketing support, lead generation and lead management technology, Zillow delivers far more value to agents than some brokers – effectively commoditizing the broker value proposition as little more than a legal formality for agents in order to be paid. Ironically, Zillow is helped by direct feeds from brokers and their complacency around the MLS and listing syndicators.
Is NAR next?
As the Zillow machine disintermediates brokers, it’s relatively easy to look ahead at who might be next. The National Association of Realtors could be the next group sitting on the outside looking in, wondering where its members went. It’s far from a certainty, but given NAR’s deep pockets, legislative sway and massive member base, it’s not inconceivable that agents might start to reconsider whether to spend their money on the annual dues to call themselves a Realtor or invest it instead in being a Zillow Premier Agent.
NAR membership offers a brand association that’s been damaged by the housing collapse-driven economic downturn and a code of ethics that doesn’t seem to go far with consumers. Zillow membership? Guaranteed leads, technology and top-rate marketing. Ultimately, the choice could become an easy one to make for an agent who is worried more about the bottom line than business as usual.
Can brokers make a stand?
If brokerages want to remain relevant to agents beyond merely being a place to hang a shingle, they have to move quickly. Fortunately, brokerage brands still mean something to consumers where it matters most: the last mile of the transaction. This local defense is something that brokers need to maintain and fortify as consumers move from a national portal to local expertise to close the transaction. But brokers cannot rely on this advantage alone. As Zillow adds more pieces to the puzzle, this local advantage gets diminished by the seamless buyer experience from online search to keys in hand.
Brokers need to double down on offering technology that helps agents be more successful in meaningful ways: delivering more active leads and helping agents close more transactions. To do this, brokers can’t rely on homegrown technology solutions to generate leads and collaborate with clients. Instead, they need to partner with technology firms that align consumer needs with the broker-agent model.
Will Zillow become a brokerage? (Does it even matter?)
Will Zillow become a brokerage or franchisor? Company spokespeople have insisted time and again that it will not. The bigger question is, does it even matter? Regardless of the business model, Zillow is simultaneously creating value for agents through the lead generation, tools and marketing offered to its customers while extracting it from brokers.
Why become a brokerage when you can turn the broker layer into nothing more than a commodity? By removing the value from the brokerage layer, Zillow can collect that money without becoming a broker itself. When you have most agents loyal and reliant on you, it doesn’t really matter which business model you choose. And if Zillow eventually becomes a brokerage, it’s not hard to see where Zillow Premier Agents are likely to affiliate.
This is the reality that brokerages face. Rather than worry about things like information accuracy, brokers need to focus on how to remain relevant to agents in the face of a Zillow that is building hooks into nearly every part of the transaction. Only by making agents more successful will brokerages be more than a legal formality.
Delivering best-in-class technology, training – and, yes, leads and marketing – are the best opportunities for brokers to remain integral to agent success. Without these benefits, agents will be more eager to tout their affiliation to Zillow. When that happens, regardless of business model, Zillow will finally have its checkmate.
Andrew Flachner is Chief Real Estate Enthusiast at RealScout, the collaboration platform for agents and their clients.