Is Zillow a Threat to Real Estate Agents? Some Say Yes

Ed. Note:  As realtors, we can no longer assume the world hasn’t changed.  The net has changed everything from gathering news, buying shoes, making investments and purchasing real estate.  

Zillow and all the other real estate sites now provide more information to the buyers and sellers of the real estate than ever before.  Some realtors based their entire sales approach on being the “guardian of the data.”  Thinking that if they focused on the data, they would stay ahead of the game.  They either forgot or ignored what being an agent is, an expert service provider.

I have not been one of them.  Agents need to focus on the one thing that can’t be duplicated on any site, providing a service with knowledge of the process of buying and selling real estate.

As noted in this article, underlined near the end, as well as many other sources, sellers can expect to sell their property for more money if they use an agent.  (A buyer of real estate can expect the reverse when using an agent, paying less for the purchase)  The reason is not found in the data, but in the knowledge of the market and the buying and selling process.  

An investment expert once told me, and any good one will tell you, that I could make all the same investments he does and perhaps be just as successful.  After all, I can go on line and gather all the data myself.  But, I would have to spend all of my time researching and analyzing the market.  Then, with experience and knowledgeable judgement (what I lack in the investment field), understand what all the data means and the history of all the investments.  

It is no different with a real estate agent.

Zillow, Trulia and all the other online sites are here to stay.  While they can provide data, they can’t substitute the knowledge and judgement of a good agent.

For more information about the value of using a real live person to help with your transaction, see “Using a Realtor to sell your home.”

Is Zillow a Threat to Real Estate Agents? Some Say Yes

Samantha Joseph, Daily Business Review

October 30, 2014   

Realtor Claudia Rubio with Xtreme Realty Team in front of a typical listing in Grand Isles division of Silver Lakes in Miramar. Melanie Bell

A robotic hand encloses a human one on the cover of the Miami Association of Realtors' October newsletter.

The topic is new technology and listing portals, and whether they threaten the human side of the business—the real estate professionals who rely on face-to-face contact to close deals.

"We should never equate hits with true customer service," the commentary reads.

Real estate brokers have a contentious relationship with online listing sites like Zillow.com, which they say are slow to update listings, deliberately leave old postings in place to lure users, offer inaccurate valuations and profit from trade association data.

And as tens of millions of users flock to apps and websites to trade real estate or list apartments, some brokers say the new platforms are shaking up the industry.

In August alone, nearly 86 million unique users visited mobile applications and websites belonging to Zillow Inc., operator of the largest real estate network on the Web. They viewed more than half a billion homes, scouting information on buying, selling, renting, financing and remodeling.

Their searches fuel Zillow's bottom line, propelling the Seattle company's meteoric rise from a 2005 startup to a powerful corporation with projected annual revenue of $321 million. The firm has more than 800 employees, updated listings for more than 37 million homes, rent estimates and "Zestimates" or valuation data on more than 100 million properties.

Its share price more than quadrupled in the last three years, traded Thursday above $100 a share and has a one-year range $70.28-$164.90.

Its strategic acquisitions gave it control of real estate search site HotPads in 2012, New York-based StreetEasy in 2013 and real estate software company Retsly in 2014.

Already a juggernaut, Zillow announced plans in July to purchase rival Trulia in a $3.5 billion stock deal that would make it the largest online real estate advertising company.

"That kind of shook up the market," said real estate instructor Tony Martinez, broker and president of Xtreme Realty Team in Davie. "Real estate associations are keeping an eye out wondering what's going to happen with big bad Zillow.”

Their concern is that new technology and Zillow's growth cut out the middleman by directly connecting real estate buyers and sellers.

"What's going to be the role of the Realtor? What's happening now is that so many consumers are going to the Internet to see the data, they have almost as much control as we do," Martinez said. "One school of thought is these cannot replace the Realtor. ... But the biggest fear among associations has always been the data. They see themselves as the guardian of the data."

Realtor associations have long controlled the Multiple Listing Service, or MLS, which once belonged exclusively to registered real estate agents but is increasingly the basis of listings on third-party sites.

"Realtors had power because the MLS was a book, and people used to take that book to the grave," Martinez said.

But third-party sites are increasingly competing with the National Association of Realtors' online listing Realtor.com, now set to trade to Rupert Murdoch's News Corp. for $950 million.

"It's pretty obvious that consumers have taken to Zillow. Their traffic is unbelievable, probably higher than Realtor.com, and that's scary," Martinez said. "The complaint is the data is not current. And if they're not getting a direct feed from the MLS, they're completely reliant on garbage in, garbage out."

A move by Zillow to preempt MLS listings led to a lawsuit Monday in the U.S. District Court for the Northern District of California. Top Agent Network Inc., a members-only online community of real estate agents, sued Zillow, claiming the company stole the idea behind its new "Coming Soon" feature. The suit claims Zillow feigned interest in investing in the network but instead produced its own version to share real estate listings before they hit the MLS.

But not all brokers fear the rise of advertising portals.

"Leads are leads," said Samantha DeBianchi, founder of DeBianchi Real Estate and star of Bravo's reality show "Million Dollar Listing Miami."

DeBianchi spends about $500 a month to participate in a Zillow marketing program that allows brokers to appear as featured agents when users search by zip code. The costs vary by zip code, but DeBianchi said she purchases Miami Beach and Fort Lauderdale codes for about 15 leads per month and 10 sales.

"Real estate is a numbers game," she said. "Whatever source you use, you don't know if someone is a qualified buyer until you talk to them. But more traffic in only helps sales on the whole."

That's what Xtreme Realty's Claudia Rubio found in her early days as a real estate agent in Davie.

"This is not an easy business as people think," Rubio said. "When I started I didn't know how to get customers. I signed up with Zillow for referrals and was getting calls and emails from the first day."

In the 18 months she's advertised on Zillow, Rubio said the website delivered 600 leads and generates 99 percent of her sales.

"Not every lead is a good one, but I receive good leads," she said. "It's up to you to convert them."

Zillow spokeswoman Katie Curnutte said the company offers marketing platforms for tens of thousands of brokers each month.

"They're definitely partners," she said. "Most home sellers and their agents believe it's in the seller's best interest to market the home widely, which is why Zillow is such a great platform. With 83 million users per month, there are an awful lot of people looking for homes on Zillow."

The bad news for agents is some of the sellers reach out directly to buyers, bypassing agents to save on commissions. And brokers say the strategy could backfire.

Data from the National Association of Realtors show the median price was $230,000 for agent-assisted sales versus $184,000 for houses sold by owners with no brokers.

"Our concern is that when the public goes on these sites, they have correct information," said Teresa Kinney, CEO of the Miami Association of Realtors. "For our association, it's all about choices for members. Our members want the leads, but it's better if the leads that come to them are accurate."

Read more: http://www.dailybusinessreview.com/id=1202675085497/Is-Zillow-a-Threat-to-Real-Estate-Agents-Some-Say-Yes#ixzz3IOKimR3Y

Morris Hagerman is a local real estate agent with Real Estate One in Royal Oak, Michigan.  He serves Berkley and the other Woodward 5 communities, including Ferndale, Pleasant Ridge, Royal Oak and Huntington Woods.  Hagerman is also a member of the Berkley/Huntington Woods Area Chamber of Commerce.  You can contact him by phone at 248-854-8440, email at morrishagermanproperties@gmail.com or visit his web page.