Both Zillow.com and Trulia.com could vanish tomorrow, completely – websites crash and stay down forever – and it would make ZERO difference, at all, in the successful sale of any home in Austin TX, or elsewhere in the U.S. Period.
There is no hardship or selling disadvantage created for sellers or their listing agents if their real estate listings do not appear on these real estate entertainment and advertising websites because it is not the purpose of these consumer portal sites to sell homes, but instead to sell advertising to Real Estate Agents.
These consumer sites not only fail to cause homes to sell, the websites fail to create smarter, better educated buyers and sellers. Instead, they create consumers exposed to bad data, and too much of it. Including the ridiculous Zestimate, which everyone knows is inaccurate but which nonetheless remains the “favorite” feature of Zillow.com users, according to Zillow.
Thus, at a Real Estate Syndication panel I attended a couple of weeks ago in Austin, which included a panelist from Zillow, when asked about the fact that these websites often serve to simply confuse and mislead consumers, the response was that this is a good thing for Realtors. The Zillow panelist offered up that, by creating a mis-educated, confused consumer, Zillow is creating an opportunity for the Realtor to step in and straighten things out by filling the gaps and providing correct data and information.
We get to un-confuse the consumer as our value proposition, and for that we should be grateful. So, as a consumer, is it your desire to be confused and mislead, then have a Realtor “un-confuse” you? Or would you rather just get good info from the start?
Don’t get me wrong. These sites are here to stay. Like it or not. Bad and outdated data or not. That cow has left the barn.
The real estate industry deserves this because of its slug footed, incompetent adaptation to the internet, and by resisting the inevitable opening up of listings to the public instead of hidden behind an MLS wall. When we needed to skate to where the puck was headed in 2001, we skated instead to where it had been 10 years earlier, and planted a flag as the rest of the world disappeared over the technology horizon.
In many ways, we’re still doing that. But like Alcoholics taking the first step, admitting that we are powerless over the internet and technology, it takes more than admitting we have a problem. We need a plan to follow, some steps to take, and a re-examination of the role of the future Realtor in real estate transactions.
There seems now to be a heightened awareness of this, though we still can’t help ourselves, hampered by a combination of industry ineptness and bound by rules designed largely for when the MLS was a printed book, before computers. Realtors invited this disruption, and the filling of the online listing void, through the incompetence and ignorance of our own industry leaders and members. We have only ourselves to blame. When we needed leadership with vision, we got one bad decision after another.
Still, it would be good if consumers and agents understood why consumer listing portals exist, and who is served.
Does the Online Portal Serve the Seller and/or Listing Agent?
It is not the seller or her listing agent, because the sites in fact do not cause homes to sell a day faster or for a dollar more. I’ve run the stats on it in Austin (where only about half of Active homes for sale even appear on Zillow), and in fact, the opposite is often true. My guess as to the reason is that experienced effective sales agents, including myself, understand that online portals have no causal role in actually selling a specific home, and we’re more likely to instead focus on those things that do matter, like proper staging, prep and pricing. And the effective managing of multiple offers. Exposure on Zillow is in fact irrelevant.
Does the Online Portal Serve the Buyer and/or Buyer Agent who Buys Leads?
It is the Buyer Agents who are the true paying “customers” of Zillow/Trulia, and who appear next to other agent’s listings online, but with rare exception, they are not served by the existence of online portals. Those other 3 agents you see next to a listing that isn’t theirs? … they’ve never seen the home and they know nothing about it. But your inquiry (you are a “lead”) about the home goes to them because they paid to receive it. This is true at Realtor.com as well, except you don’t see the agent who receives your lead in advance.
Those agents churn through the annual zip code purchase contracts at rates that would bankrupt other subscription models such as cable TV and cell phone providers. Zillow won’t disclose the exact non-renewal number, but it is anecdotally known to be very high. The churn rate is high because Realtors are extremely disorganized and un-systemized at taking action on and converting internet leads. This is why finding a Realtor on Zillow is a stupid way for you as a buyer to pick an agent.
Online real estate leads convert at 1-3% on average. An effective Brokerage or Team, running a mindful and purposeful quick “respond and engage” lead capture system might achieve 3-5% conversion during the best of times. And there are some who achieve positive ROI on the lead purchase investment with Zillow and Trulia, but they are the exception. The average agent is wasting money buying Zillow leads because she has no effective system to manage and convert them into clients who eventually close. This isn’t really Zillow’s fault, but it’s the cold hard fact that plagues its low renewal rate on the zip code purchases, which in turns puts the entire business model in peril.
Does the Online Portal Serve the Consumer?
It is not the consumer (prospective buyers and sellers), however much love he professes of Zillow’s online equivalent of flavored sugar-water and eye candy (the Zestimate), because a “student” of Zillow receives absolutely no competitive advantage in the buying or selling of a home – especially in a bare-knuckle seller’s market such as Austin. You still need a great Realtor with local knowledge and transactional expertise to guide you to a winning offer, or winning listing strategy, otherwise you won’t succeed in buying a house or getting top dollar on your sale. No matter how many hours you spend surfing Zillow. Zillow makes you dumber, not smarter.
Well then, what is the purpose or goal of Zillow?
The beneficiaries of the online portals are the founders and investors. Zillow exists to create wealth. On paper it’s worth $4.5 Billion now. More than any brick and mortar real estate company. And it doesn’t provide anything of actual value toward the buying or selling of a home. Kind of funny when you think about it. Sad also. I don’t fault Zillow for this. It’s brilliant. But let’s call it what it is.
When agents pay to advertise a home for sale, or to market their business brand, they measure and hold those advertising dollars accountable. When it’s “free” to post a listing to an online real estate entertainment website, well, “free” seems to be the only thing that matters to those unenlightened agents, and there is no actual accountability or measuring of the efficacy of the listing placement. Which is the problem.
The lack of actually measuring what difference Zillow/Trulia (and Realtor.com to be fair) makes in the selling of a specific home creates severe ignorance among the Realtor population. Does anyone think Zillow would survive if they tried to charge listing agents for listing display? Or would listing agents say, “no thanks, the listing will sell just fine without you, through my MLS and other marketing channels?”
In summary, again, these sites could disappear tomorrow. Completely vanish. And not a single home will sell slower or for less money. The more people who come to understand that, the better conversations we can have about it. But enjoy, and let’s see how this all pans out.