Jan. 19, 2006 - ZIP, Zillow and ZAP

OK, lets Get Real for a minute.

On the one hand we have the consumer who wants:

"What they need, no more; no less, for a price that seems reasonable."

Now, lets look at the service providers, both as you know them, and as I know them as an insider. From an insiders perspective there are three tiers of service providers. The traditional full service model, the discounted full service model and the stripped down to you are mostly on your own model. None of these are good or bad in and of themselves. Its more a matter of what is good or bad for you, depending on your skills. But thats for another day. Just wanted you to know that each of these is good for someone. Only question is which is right for you.

Technology has added a fourth option that is not a model in the service provider sense, but one that many consumers at present are opting for, which I will call ZAP.

I have to use analogies because I am somewhat limited by my insider position in discussing commissions and companies. Straight shooter that I am, being a little vague is not my normal modus operandi, so bear with me. Hopefully my descriptions and analogies will be obvious enough for you to follow. If not, you can ask questions in your comments or by email.

Lets discuss and eliminate the ZAP option first, since it is not a service provider, but a place where many consumers get trapped without knowing that they are getting ZAPPED. It is worth mentioning here that ZIP is not a ZAP. Now back to ZAPs. The most obvious ZAPs have a button that says Find a Realtor, or something of that nature. When you hit that button to find a Buyers Agent or Sellers Agent you are decreasing your ability to negotiate the commission, without knowing it. The technology whizzes who create these websites take a portion of the commission, without disclosing that to you the consumer. They do not provide a service to you, the consumer. They provide a service , for a fee, to the agent who is a participant at a cost. There are many of these and we call them lead generating sites, bottom feeders or troll sites.

Lets take a specific example of how these work, and there are many of these available to you. Lets say you are a buyer, rather than a seller, of real estate. You go to look at property on one of these sites, which is how they reel you in. You then hit the I need a Buyers Agent button and are connected with an agent. Lets say based on the price of the house you will eventually purchase, that the commission will be $9,000 as pre-set by the seller of that house when he listed it for sale in the mls. When you connect with the agent by hitting that button, you have generally spent in that process of merely hitting a button on the website, the money you could have negotiated toward your closing costs or repairs or against the purchase price.

The agent who gets you has paid for you. He pays for you out of the $9,000 on the table in your transaction. Sometimes he pays it up front in a monthly cost of say $1,000 a month. So if it took three months for that agent to get you (the lead), he has paid $3,000 for you. When you try to negotiate something for you from the $9,000, the agent has already given $3,000 to the 3rd party ZAP company, and so you get ZAPPED, as your ability to negotiate has been diminished or entirely eliminated without your knowledge.

Some other sites are not pay as you go for the agent, but pay as you close. In that case the agent will owe the ZAP a percentage of the commission, if and when you close escrow. Again, the monies you may have been able to negotiate with your agent have been sucked up in advance without your knowledge.

Some of these sites operate like the one sided mirror glass of an interrogation room that you see on shows like Law and Order and the like. I find these lead generating Big Brother website options to be exceptionally creepy, but hey, thats technology at its best, I guess. When you sign up to the site to view and save property, you are assigned to an agent in the queue without regard to whether or not it is a good match. Those who have paid in to look at you look at property, get the leads kind of like the way a lottery ball pops up to the top and gets pulled. I'm trying to give you the facts without editorializing, but its difficult for me as I find these sites intrusive and deceptive.

OK, back to facts. The agent who wins you in the lottery of the moment, gets to see everything you are doing from the inside without your knowing he is watching you. He can see what properties you are viewing. He can see which ones you are saving vs. ones you are trashing, he can get inside your head a bit. He gets all of the info you have put in to register for the site. You then get an email from him, and maybe a phone call, saying Would you like to go see X property? You are dumbfounded and amazed and think he is absolutely clairvoyant! Or maybe you DO want to see that property and don't think about how he guessed you might want to go see that property and you just go see that property without a second thought.

LOL OK, I cant stop editorializing, can I? Don't you find this just absolutely creepy? Maybe its me. Ill stop here for today and will continue after some of you comment on this so far. Maybe its just me. What do you think? Id like to hear from you before I go any further. After 5 comments I will go to Part 2 of ? 

As to the Title of this entry, lets review. We are mostly talking about ZAPs that ZAP you, the buyer consumer. ZIP is NOT a ZAP. While you all sit at the edge of your seats awaiting Zillow and its wonders, we all (the insiders for lack of a better term) are sitting back expecting another exploitative ZAP type. Of course No one knows, but the Shadow, but at least know what to look for when it comes. My expectation is that it will not give you what you want. That being What you need, no more; no less, at a reasonable cost as noted in the second sentence of this entry above. (Someone let me know if that IS what the consumer wants, please. Thanks.) 

But it will WOW! you with its technology, reel you in, and then sell you off to the highest bidder. No one knows yet, but if you hear anything new about it let me know and I will decipher the code. 

Five comments from YOU, the reader, and then we will move to the actual means a buyer has to negotiate their commission, unless they have already shot themselves in the foot by being totally or partially ZAPPED without their knowledge, from the ability to negotiate.