Last week, Zillow announced its purchase of fellow real estate search engine, Trulia, creating the veritable 800 pound gorilla for online house hunting. Together, Zillow and Trulia attract over 130 million visitors each month, making them (obviously) two of the largest real estate websites in the world.
Here's what San Diego realtor and blogger Jim Klinge had to say on how this merger could thin out America's real estate agent population within two years:
The local associations of realtors and the MLS companies who have feasted on having realtors paying dues regardless of production will suffer – and should die off completely if 20% of the realtors are doing 80% of the business.
They can’t survive an 80% reduction in dues.
When consumers see that their agent-friend down the street hasn’t sold a house in six months – they will hesitate. The Zillow advertising will encourage you to select one of their top producers instead (the ones paying for advertising).
This is realistic - if not foreboding - analysis, and one that brings into question the future role of real estate professionals.
As we've been seeing for years: today's real estate agents & brokers are constantly being pushed to provide more & more value for less & less money.
Homeowners & shoppers are becoming more proactive and involved in their search for a new home, more than ever starting this journey online. Plus, people are electing to go the FSBO route or hiring discount / flat fee brokerages.
Is This All Bad News? Not Exactly...
According to former Fannie Mae executive Tim Rood, this huge acquisition will possibly help some, at the expense of others:
"Realtors, they're independent contractors. They just want to win more customers. So if Zillow wants to spend all of its money advertising and Realtors can get more targeted, pre-qualified buyers, they're perfectly happy," [...]
However, he said there are a number of things about the Zillow-Trulia business model that will promote the high producers at the detriment of the low producers who only sell a few houses a year. That, in turn, can hurt the National Association of Realtors and the multiple listing services. About 80 percent of real estate sales go to 20 percent of the producers, but 100 percent of them pay dues to the National Association of Realtors and the multiple listing services, he noted.
Indeed, this trend toward consolidation & market domination by top producers is also something we've been seeing for a while ... since even before Trulia or Zillow came onto the scene.
The real question will be how much this actually effects your real estate business. If you're already a top producer, you are likely in for promising years ahead. If you're already making less than 5 deals per year, you are in for some serious potential hurt unless you change your ways ASAP. And of course, if you are the traditional MLS monopoly holders or NAR, the Zillow & Trulia merger might look pretty intimidating.
How To Cope: Online Consolidation Of Real Estate?
To be fair... while comparatively giant on the web, the combination of Zillow's & Trulia's revenues still only "represents less than 4 percent of the estimated $12 billion real estate professionals spend on marketing their services to consumers each year."
In our opinion, there are plenty of options out there beyond simply Zillow & Trulia ads. In fact, managing these types of campaigns still seems to be one of our less popular services, and only favored among the especially tech savvy or mature firms. Much more often requested are the more "traditional" avenues of lead generation (like telemarketing, direct mail, newsletters, and the like). The power of online consolidation is that - if you have the know-how & budget to take advantage - you can get greater exposure & engagement more efficiently (and often cheaper) than ever before.
In the face of the ever consolidating & competitively difficult real estate landscape, the key seems to be leveraging the assets you do have to get greater & greater ROI. While this is always important if you want to grow a successful business, today it is becoming crucial just to stay afloat. Real estate is getting more & more sophisticated, and consumers are expecting more & more value for less money. With the integration of the web into everyone's home buying process, it's no longer optional to be tech savvy (or have people who are integrated into your teams).
This means carefully managing your time and budget to focus on systematically profitable online activities. Every second counts in today's uber-competitive real estate market, and this Zillow+Trulia deal is only going to continue to move the trend in this direction.
Perhaps the change won't make too much of a noticeable difference in the short term anyway: Zillow plans on maintaining the two distinct brands, allowing the company overall to continue offering differentiated products and user experiences while attracting more subscribers and maximizing free content distribution across multiple platforms, apps and channels.