Zillow and Trulia Remain Irrelevant in Austin Real Estate Market

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 Bad and outdated data or not.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.

12 thoughts on “Zillow and Trulia Remain Irrelevant in Austin Real Estate Market”

  1. I appreciate your article, and I can definately see the problem with agents not folowing up with leads quick and effectively being the bigger issue. not just for online leads, but in general. I personally rely solely on trulia to give me leads as I have found it much more effective than print marketing. In fact only referrals have been better for me.

    Until I find a site that has more comprehensive data, (schools, amenities, etc..) which customers I like to work with use more, I most likely will not change. My guess is that anything my brokerage can use will not be as good as they are already 10 years behind, and mostly likely wont catch up.

  2. Steve, Very much on board with you that Zillow/Trulia is a big zero here in Texas. And that MLS simply has not kept up with the times.

    You left out the other elephant in the room, Redfin. Awesome mobile app (including vicinity searches) and recent data. And no, i don’t work for them.

  3. @Michael, that makes sense. Brokers, for the most part, are not on the bleeding edge of anything either. I know I’m not, as I don’t really like my own IDX. I just can’t find a better one.

    @Peter, Redfin is actually a Broker in Texas. Its website is a VOW (Virtual Office Website) and Redfin has agents who list and sell homes. It’s completely different than Zillow/Trulia or Realtor.com.

    Thanks for the comments. Steve

  4. I’m not sure if the role of zillow/trulia is to make house sell quicker or make more money for the seller. Like all eCommerce sites out there, they try to provide information that is otherwise unavailable or hard to find at a lower or no cost to consumers. The incorrect information you mentioned is not caused by Zillow’s coders’ crappy algorithm, instead it is caused by lack of access to more comprehensive sales data. So it sounded like that the people withholding the information are accusing the other people’s guessing is wrong.

    Of course there are other reasons why sales data were kept under lid (tax, cough). I have a feeling that MLS was kept in such antiquated and confusing way is for that reason too.

    You can argue anyway you want, the history of capitalism and each revolution of technology all involved in one central theme: how to reduce cost (middleman, cough)… so in that regard, we should revisit this post 10 years from now, and see what’s changed…

  5. Hi Billy,

    Thanks for your comment. As fast as things are moving, we can probably revisit this post in 2 years rather than 10.

    The agents who submit to Zillow claim “the more exposure the better”, so they do think (wrongly) that this form of advertising is somehow meaningful to the seller.

    Zillow itself says its origin was the goal of “giving the consumer a flashlight” so they can shine it into the dark, murky waters of real estate. So Zillow itself claims to exist for the benefit of the consumer.

    My assertion is that Zillow helps neither the seller or the buyer. It could vanish tomorrow and it would not make one bit of difference, at all, in the sale of any home, or the ability of any buyer to purchase a home. That’s the measure I use.

  6. And the new Zillow book was disappointing…but I checked it out from the e-library so no harm. I will say, I rented a house in 24 hours off Zillow because my new tenant had set up an alert and called me the moment she saw the listing. I don’t think Zillow is the best place to shop for housing, Austinhomesearch and realtor.com are better and easier, but not everybody knows about those sites.

    Zillow can help people get used to listing prices and see the basic condition of homes in an area , eg, in 1970’s homes areas, do most homes listed have newer cabinets and granite or silestone counters and new tile tub surrounds or do the majority have original cabinets but with granite and stainless and the original 6×6 white tile bathtub surrounds? Zillow can help set expectations while getting prepared to shop in earnest.

  7. Sara,

    Agreed on Rentals. We do currently place rental listings into Postlets (owned by Zillow)which feeds the listig to various sites. And we get a decent number of leads from Zillow, Trulia, Hotpads. Those inquiries come straight to us because no other agent is going to pay to receive a rental inquiry. Most of our rental listings still lease through the MLS though as the rental leads are pretty junky for the most part. Still, enough are workable to make it worthwhile. Not so for sales listings.

  8. Bravo Steve. I applaud your post. We must to continue to preserve the process and respect the origination of the broker’s listing. I was told recently that it’s okay to gather up folks who will fudge reviews on Zillow. They proceeded to attempt the sale of a zip code. They try to scare people into joining them. As brokers since the 90’s it’s our responsibility to advise and best represent the consumer (sellers) & (buyers) as they review the data online. You can certainly leverage exposure from social media sites and portals such as Zillow, Realtor.com and Trulia, but to falsify information to become more popular? No way… I won’t do it and I won’t pay them to support it… If you’re not a Zillow premier agent, your listing agent contact info will be trumped by others who pay. No worries! It is the true professional like yourself who continues to deliver a keen local knowledge, solid work ethic, and passion who will keep Austin on the map and prevent it from burning out! A toast to you Sir…

  9. This is awesome. So true that Zillow and Trulia don’t cause any increase in the speed at which a property sells, nor do they cause said property to sell for a single penny more. So that leaves it just as you said, as an entertainment portal that preys upon the dreams and aspirations of real estate agents.
    I ask any real estate agent that defends Trulia or Zillow this simple question: What would happen if you invested the same amount of money into your clients’ real estate experience as you do Trulia or Zillow? You need to realize that any success you may be receiving from Zillow or Trulia is only as good as your next month’s payment. Invest in your clients’ experience, and you will build something that cannot be taken away from you.
    I hope some of you can take time to read my article, Zillow and Trulia agent reviews – 4 Reasons why they’re junk.

  10. Wow! This is so crazy to me because 9 out of 10 buyers I speak with have done prior research on Zillow/Trulia. This just contrasts the difference between the Las Vegas real estate market and the real estate market in Austin. But then again everything is a little different out in Austin. Lol. Thanks for sharing! This info was really interesting!

  11. Steve, Zillow is good for newbee buyers like us and have no idea about the area. It helped me lot in narrowing down the area of interest based on school zone, ratings. If not for zillow I would have to rent house in Austin, live few months to get this knowledge. I agree with billy completely that people who want to keep the data hidden secret find zillow and similar sites initmidating, risky for their existence and focus on negatives, completely ignore benefits.

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