Zillow and the Future of the Real Estate Industry
Zillow is now offering a "great deal" to agents: You can post your listings for FREE! What great exposure, and how kind of Zillow to offer such a wonderful service to agents without taking a dime -- what a nice company!
I'm having two opposing thoughts about this. The first is the traditional one that I have always believed:
I do not understand why, like lambs to the slaughter, we continue to support and build entities that will put us out of business. Third parties like Zillow cannot (yet) compete with the multiple listing service because they don't have the property information. So, wa-la, they ask agents to supply it for free (cause we love free and will do anything for exposure) and we provide them the very thing that will seal the fate of the MLS.
My second thought is coming from a new mindset since the writing of my book, Ripping the Roof Off Real Estate:
The MLS, as we know it, is terminal. Whether you believe that our MLSs sold us out or it's just the natural consequence of the free flow of information in the Internet age, the MLS, as THE place for property information is ending. To try to make it be like it used to be is like putting the toothpaste back in the tube. As much as we dislike the thought, I believe that buyers and sellers, armed with information that they got WITHOUT going through an agent, will find each other more and more. Many sellers who have time will do their own marketing activities and buyers will do more of their own house hunting without us.
This is why, especially during down periods in real estate like now, it is vital that we learn how to perform real estate consulting services. Consulting is where our future lies. The Internet is a wonderful thing and we can provide and distribute information more quickly and efficiently than ever. But what it can NEVER do is interpet what that information means -- only a real estate professional with years of experience can do that. We know that most people lose money when they try to buy or sell on their own but where they lose it is not in the marketing and searching, but from contract to close.
A seller can find a buyer easily enough but he doesn't have the foggiest idea how to negotiate the contract, or more importantly, how to troubleshoot the transaction to close. He gets a pre-approval letter from a buyer and don't know if the lender is reputable or if the lender has a reputation for business practices that may hold up his closing. For-sale-by-owner sellers do not understand commitment dates and they get hammered on inspection issues. Ditto for buyers.
Worse, because we have stubbornly stuck to the commission-only-sales model, there is no framework for hiring a real estate professional to provide this important contract-to-close counsel. Most people hire attorneys and attorneys cannot do what we do because they don't know what we know. They don't know property values so it's hard for them to negotiate a good contract; they cannot distinguish the good lenders from the bad ones; and they certainly will not babysit a transaction, making sure the dates are adhered to and everything goes as it should.
The value in learning the approach to consulting is not so that you can replace the transactions you do by commission with fees overnight. Most people, in the near future, that want full service may very well continue to want to pay by commission (though this is changing). The real value in learning consulting is that you develop streams of income that you never would have had because you can provide consultative services by the hour or a flat fee for the services that they would rather not do. And don't forget all the help that people need that don't involve a transaction: a re-financing decision, a move-versus-improve choice, tax abatement questions etc. We have been working for free for so long that we have given away, as an industry, hundreds of thousands of dollars.
When I see entities like Zillow continue to grow, I can't help but put out the clarion call that consulting is our future and it's a very good future for those who embrace it because you get paid for your knowledge, not your access. And while many "jobs" you do will pay you in the hundreds, not the thousands, the time you put in will be well paid and you will have time to devote to other clients. I am amazed when agents think that our $500 ACRE™ (Accredited Consultant in Real Estate) online designation course to learn this new model is expensive: shoot, you make it back in one consulting job. And you have built the skills you will need to survive in the future.
I have always been one to look ahead and I think that I'm pretty good at it. When I got into real estate I immediately built my first web site and had all the others laughing at me -- they don't laugh anymore. I was the first in my office to get accredited in buyer representation -- everyone told me that buyer agency would never go anywhere but they don't say that anymore. I see the future now as clear as day that our industry's future is being paid for what we know, our judgment and experience, not our access to the MLS. And the public will NOT hire us to provide objective counsel as long as we stubbornly stick to commissions only.
I love my industry but I want us to stop working for free and start getting paid what we're worth. The commission sales model worked when all we had to do was move product but now we are charged as REALTORS® with providing objective, fiduciary counsel to our clients and putting THEIR interests above our own. We can't continue to do that as commissioned salespeople -- the public just doesn't believe that we will advise them against our own best interest and until we can provide them some choices, we will continue to see them go elsewhere.
So, the next time you see an entity like Zillow who's goal can only be to take your access and then put you out of business down the road, think about developing the tools that Zillow can NEVER provide -- taking that mass of data and making sense of it all for the real estate consumer who needs it so badly.
(Mollie W. Wasserman is a pioneer in the development of Real Estate Consulting. She is the founder of the Accredited Consultant in Real Estate (ACRE™) designation, and author of a new book Ripping the Roof Off Real Estate - How a Multi-Billion Dollar Industry Came to Have an Identity Crisis. Mollie is a real estate broker, ABR, e-PRO 500 (Select 50), iSucceed Mentor as well as one of only 200 Cyberstars™. You can view her blog, The Consulting Times, or team's web site.)
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