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December 2006
Dec. 8, 2006 - The Big Z |
Online real estate service company Zillow announced this week that it will be providing an internet-based, searchable listing database, free to sellers and to real estate agents. The site will include many attractive features for shoppers, including a homeowner price posting service titled “Make Me Move”.
Of course there’s a heart-rending wail from the real estate community, including the head-in-the-sanders who say “It will never work”. But of course, interactive real estate sites ARE working already: they are called ‘e-bay’, ‘Craig’s List’, Google, and now Zillow.
There are lots of reasons for the popularity of interactive sites like these, and lots of reasons why some of the greatest Internet marketing minds are putting significant resources into creating them. The point here is, there’s a learning opportunity for the real estate community—one that isn’t going to go away. Inman News posted a thought-provoking analysis of what Zillow’s announcement means to the real estate community, and I think this article bears some analysis.
I am not quoting the Inman article directly—you can read it yourself. But the major points it makes, and my editorial take on them, follow:
1. Zillow has announced what is, in essence, an MLS alternative. It may even be a replacement to the MLS, I think: we have to confront the real question of whether or not Realtors® really NEED or want an MLS. Brokerages are “incentivizing” in-house transactions, and specialty brokerages are not always offering cooperation and compensation to other real estate companies. Technology is making direct consumer contact readily available, and even fun, and certainly much more acceptable as a way of doing business. In some legal scenarios, Realtors® have become representatives or advocates of buyers or sellers, rather than transaction specialists. This may spell the demise of the offer of cooperation/compensation traditionally assigned to an MLS, and make a comprehensive data aggregation tool the greatest resource in completing a transaction.
2. In Zillow’s model of a data aggregation, Zillow can gather the data from many sources and can do what it wants with the data collected. MLSs, on the other hand, are limited—data mining and other areas of data income potential, for instance, are not available to the MLS. Zillow is also able to avoid troublesome copyright issues if the content is permission-based.
Detractors will say that the drawback is listing content accuracy. But there are ways around this—ways that Amazon, and e-bay and online marketers use already. Those methods include interactive input. The scenario: I as buyer view a listing which has been advertised in glowing terms by the seller. I find that the place is a dump, and that the listing is inaccurately described. I am given the online opportunity to rate the property, comment on the accuracy of the description, even censure the seller. I do that, and an evaluative community is established, a familiar concept to online purchasers. The logical extension is that I can do the same with the agent I hire to facilitate the transaction as well.
3. Because Zillow’s service is consumer oriented, and because its resources are vast, its web product is (and will continue to be) more consumer-attractive than the services even the largest real estate companies or MLS operations can afford to develop for either the real estate professional or the consuming public. Some of Zillow’s initial services include an elegant user interface, nifty mapping features, and very creative web applications to attract consumers and real estate professionals looking for property on behalf of consumers.
6. Zillow can include property record data and listing information in a dynamic mix to assist in price determination and provide background to the consumer and the agent alike. This position will likely become a huge asset in its development.
7. This new site will contain a direct selling model—buyers can contact sellers directly. Realtors® will say that this is a risky way to buy and sell property, but it is most likely that a whole new industry of auxiliary services will be created to enhance direct sales. It’s clear to me that a majority of buyers begin searches on the Internet, but that they hire professional assistance to facilitate the transaction. In a country where there is more money than time, that model of paying for professional assistance is unlikely to change. I suspect the real estate industry will quickly reinvent itself to accommodate the new role.
Well, all this is good as far as it goes. Of course the unanswered questions loom—and one of the biggest ones in my mind is how much money and resources will organized real estate squander in trying to prevent the inevitable?
Another question challenges the traditional role of the association: when (not ‘if’, Saul Klein) the MLS goes away, how will the local association survive? Does the disaster planning that seems to be a current fad in association management include the loss of the organizational cash cow?
The word ‘Zillow’ is a lot like ‘Zorro’ with good reason: a big ‘Z’ has been slashed with a very sharp sword…and the curtain of tradition has been defaced. The damage is terminal. Get used to it. |
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A behind the scenes look at organized real estate--what works in an association, what doesn't, and what a long time AE sees as challenges facing the industry from the viewpoint of its professional organization.
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