Zillow bought Trulia for $3.5 billion dollars. So, now what? Well, there is no one right answer to this question. Every major news outlet, social media site, and real estate blog have weighed in with predictions; some wild, some hopeful and some downright dire. The bottom line is this – the #1 and #2 portals used by consumers (and agents!) for viewing real estate property data merged, and they are expecting that merger to reduce their overhead by over $100 million dollars. Local reaction has been mixed. Some comments heard from Berkshire REALTOR members …
- “Great, one less company I have to pay to get my listings positioned.”
- “Wow, there goes Realtor.com”
- “It’s only a matter of time before NAR folds the tent and we’ll be paying our dues to Zillow…only they’ll be called subscription fees”.
- “Well, interesting development. Just when Zillow opens up “Coming Soon” listings that bypass the MLS. Wake up everyone, we’re selling out our sellers for a double sided transactions, and losing our MLS in the process.”
- “It will take a while, but this could be the game changer we’ve been expecting.”
- “It’s our own fault. We [NAR] focused on politics instead of business”
- Berkshire REALTOR Dave Sefcik sent a note after this announcement sharing his reaction: “I would venture to say that we are one very short step away from Zillow getting sellers to willingly show their homes without the aid of an agent and then do the price negotiating via an on-line process … think eBay on steroids. All Zillow needs to do is reach out to home inspectors to get them on board and the cycle will be complete … (they already have Zillow Mortgages and are reaching out to attorneys) Buyers can then: locate the home on-line; arrange to see it via the same site; negotiate the purchase price without having to be eyeball to eyeball; sign a generic contract (also on-line via Doc-u-sign) and order up the home inspection. Oh, and you can pay for all of it via Paypal. I realize some of my thoughts are just caffeine fueled rantings, but stranger things have happened. Who ever would have thought that a book seller could suddenly monopolize the entire retail world ….. think Mr. Bezos and the folks at Amazon.”
While we have been wringing our hands about our inability to trademark the “MLS” for the last several years, Zillow was named, founded, and built to become a household name. We have, for a very long time, underestimated the importance of providing the consumers what they WANTED (not just needed) to preserve the status quo of how this business is transacted.
In my humble opinion, our future rests solely on how well we satisfy the real estate consumer in the coming months and years. We, as an industry, need to collectively analyze what we are providing to the consumer and make sure it provides VALUE and benefits needed. If we can do that, and if we can communicate and articulate our value clearly, then the industry will survive with licensed real estate agents integral to the process. If we can only point to simple services (opening doors, listing of rooms, making appointments) then we will be marginalized by much cheaper technology that can handle those routine tasks.
As Bloomberg Business Week noted: “Zillow founder Rich Barton had helped destroy the travel agent business with his previous company, Expedia, but he understood that the real estate market was unique: Barton said, “Buyers and sellers liked getting professional advice on such a large transaction.” Instead of trying to revolutionize real estate in one stroke, as local Seattle company Redfin was attempting at the time, Barton set out to change it from within, slowly building an audience by unlocking new kinds of information for buyers and sellers.”
There are two differences we have always cited between the real estate and travel industry:
- Our product is unique and requires stringent investigation, study and professional input to assess value (Realtor, home inspectors, contractors, lenders, environmental professionals, etc. It is not a standard plane seat.
- The transaction requires intensive knowledge of laws, regulations, buildings, market dynamics, care with client funds, representations, negotiation skills, industry knowledge, reputable resources and more.
The problem (which normally goes unsaid) is that many members are unable or unwilling to offer that value, or can’t surely articulate it. The decline of professionalism by some (failing to return calls, diligence with paperwork, lack of market knowledge, poor pricing, lack of availability to show property, and no advanced training in sales, legal, environmental, industry or negotiation skills), diminishes all. The easy and inexpensive entry into the business (a hairdresser needs more hours of education), and no minimum level of service imposed by law or brokerage policy continues to erode the core of our collective value.
I challenge every brokerage to raise the bar. Set higher expectations for agents and teach everyone to understand and explain why your role is CRITICAL in the home buying or selling process. That is the way through these challenging times. Be a critical asset to your clients.
At the Past President round table, there were several comments, “We need to get across that Realtors are not a taxi service”. That is 110% correct! But if we can’t offer more than a glorified taxi service, shuttling buyers randomly from house to house with little pre-qualification or care – opening doors for sellers and putting bad photos online for them, then we will be overtaken by consumer-centric companies that can offer services needed. We need to have the tools, education and intelligence to offer value when fulfilling our fiduciary roles.
When there is a bad septic system, a title issue, a divided family after the death of the parent, flood zone issues, wacky zestimates, wet basement, multiple liens, un-permitted work in the home, boundary disputes, heavy negotiation tactics, lead paint, zoning mis-classification or any one of a thousand issues that arise everyday in our industry, sellers and buyers need a PROFESSIONAL, SKILLED, KNOWLEDGEABLE REPRESENTATIVE. Clients are putting their entire financial future in your hands. Be worthy.
Bottom line: Real estate isn’t immune to change, and the online companies are accelerating change to meet the new demands of the consumer. Are we?
Nobu Hata, our technology guest speaker in September, posted two links to some excellent articles on the Z and T merger from two members who are leaders in the online real estate space.
- Bill Lubin, Zillow, Trulia and Realogy – Lessons From Wall Street
- Brian Copeland, “Will the Zillow Acquisition End Your Business? His message: Define your Value Proposition
- Realtor Magazine Blog Article
- New York Times Company Analysis of Buyout
Look above to leave a reply … share your thoughts here too (we’re testing the feature, so hopefully it will work!)