Zillow Trulia Merger is Apparently Happening - Agents to Become Irrelevant

26 Replies

Zillow and Trulia look like they will likely be merging as shown in this article on CNN:http://money.cnn.com/2014/07/25/real_estate/zillow-trulia/

My question to all the agents and brokers here is, do you think eventually they will figure out how to sell and buy real estate online without the need of having an agent? 

Sure seems it is going that way to me and agents/brokers are on their way and becoming irrelevant. 

Unlikely if you ask me.  Think of how Tesla has had to fight to be able to sell their cars without a dealership.  The issue is the car dealer lobby is powerful and has deep pockets so they've been able to get politicians to make ridiculous arguments against Tesla to protect the interests of the dealerships.  And the realtor lobby is even more powerful and wealthy, so they'll likely place significant roadblocks in the way of that becoming reality.  Just my $0.02

I have to agree with William. the realtor organization is very big.

I can't see Realtors going anywhere either, but educated buyers and sellers can definitely put a dent.   I hate losing 6% on certain deals and refuse to pay that high of a fee.  I flat fee to list, use stuff like craigslist etc., and on some offers I use the fact that I don't have an agent to get a lower sale price (they'll lose it either way).

Ah yes, disruptive technology.  I like to think the agents will become less relevant as oppose to irrelevant, which will put pressure on the least skilled agents and their commissions. 

It is very unlikely this will ever happen. The government likes to put its rules on everything and the housing market is surly one thing it wants to control as people can be screwed out of large sums of money. Having zillow and trulia take out realtors is like saying autotrader was going to take out used cars sales man. If for no other purpose we will stay around for paperwork reasons.  

I guess realtors distinguish themselves and offer value Added services. They are smart enough to adapt to changing times.

You guys seem to be putting a lot of faith in NAR and the political process that keeps agents in place. Really NAR has been doing nothing to protect the agent while Trulia and Zillow gobble up the market share and slowly make the agent a thing of the past. Meanwhile NAR sits idly on the sidelines.

If Trulia and Zillow can make the experience similar to for sale by owner.com and automate  doing the sellers paperwork for him without the added cost then the days of the realtor will be gone. 

I just wanted to add that I absolutely can't stand Zillow. As a true real estate investor, i need accurate, up to date listings. Half the listings on Zillow are properties that are already sold or under contract. Also a lot of listings have incorrect pricing, and a lot of real estate that is listed on the MLS is not listed as for sale on Zillow.

I used Zillow a lot when I first started looking for property to buy, but I ran into so many problems that I now use Realtor.com almost exclusively. Their listings are extremely accurate and extremely up to date since it is actually linked to the MLS.

By the way, I am not endorsing anything, make up your own opinions. Zillow does have some features that are useful that i wish the folks at Realtor.com would include.

402-965-1853

Most of the listings on Trulia and Zillow come from Realtors. So the websites really amount to being a supplement more than a replacement. It would be nice to get a legitimate competitor into the field because Realtors essentially have a legalized monopoly. But it will be hard to replace Realtors because they have a good system that perpetuates their importance. It's quite clever really.

1. Buyers get free service from Realtors so most buyers use them. Who doesn't want free service? 

2. Realtors make commissions by selling the listings of other Realtors, so they pretty much only show those houses to buyers.

3. Sellers want the best chance of selling their house which means making as many buyers as possible aware of it. Since most buyers are using Realtors, and Realtors normally only show houses listed by a Realtor, sellers are motivated to list the house with a Realtor despite having to pay hefty commissions.

Just a quick update for those of you who may have missed it Zulia has bought out Trulia. 

Those sites only have ~60% of the homes that are on the market. Their data is TERRIBLE. Home buying is an emotional process for most people. Agents will always be needed to be the go between for the two parties. 

I guess realtors distinguish themselves and offer value Added services. They are smart enough to adapt to changing times.

Brokers/agents only become irrelevant if the data on these sites is actually accurate.  To date, it is not.

 Judging how unreliable Zillow and Trulia are at what they do (ridiculous Valuations). 

I don't see this being an issue for Agents

investors i know and work with use other means of evaluating property and know not to trust this resources.

until they fix the data they have i don't see them being able to sell property any time in the near future or ever for that matter

Disclaimer: I am also a Realtor in addition to being an Investor. And within the last 2-3 months, I've had two deals where I saved my clients a lot of money. One the first, I was working with a buyer and helped him get the house for $2000 less than what he was willing/going to pay. On the other deal, I found a mistake on the HUD-1 settlement statement to the tune of about $3000. So, go ahead and skip the Realtor if you want to. More power to ya.

Originally posted by @Tyler Facchini:

 Judging how unreliable Zillow and Trulia are at what they do (ridiculous Valuations). 

I don't see this being an issue for Agents

investors i know and work with use other means of evaluating property and know not to trust this resources.

until they fix the data they have i don't see them being able to sell property any time in the near future or ever for that matter

I agree 100%.  For amusement a few months ago I started tracking the valuation of my home on both websites.  Initially the difference between the two was about $6,000.  Today, the difference is almost $32,000.  That is a pretty large amount for my area.  For some bizarre reason, the Zillow valuation is going up weekly while Trulia is going down weekly. 

I just bought a house to live in. The amount of regulatory paperwork involved was mind blowing.

I do not see realtors going away just because of the amount of paperwork involved!

Like @Bryan L. stated, my realtor was knowledgeable in the laws and processes necessary to purchase my place. Trulia and Zillow are not going to give me guidance on Radon testing and the reasons for it… That is just one example among many.

There was a time when travel agents thought "Expedia and airline booking sites are no big deal.  People will always need agents".

There was a time when bookstores thought Amazon was no big deal.

There was a time, not even very long ago, when even computer scientists thought it would be impossible for software to drive a car.  The first DARPA Grand Challenge in 2004 produced no winners.  Now fully automated cars have logged millions of miles.  Luxury brands prominently feature their automation in their advertising.

Any agent that thinks their job will be unchanged ten years from now is fooling themselves.  For that matter, anyone who's job involves doing the same task over and over - whether its a manual task or a mental task - had better be figuring out what their next job is going to be.  Because a bunch of someones are out there right now working on automating your job.  And one of them is very likely to succeed.  

Technological innovation will radically change the industry.  But I don't think anyone knows exactly how.

I tend to suspect that the role of agents and realtors is going to have to change, to be more a professional services model and less an information gatekeeper model. I think there is likely to be a role for someone who really understands the process and can keep the paperwork moving, for a long time into the future. But I also think that there will be a real alternative to the MLS within a decade, and that more and more of the research will be done buy buyers themselves.

The only possible hope for an unchanged industry would be an abusive use of government to protect entrenched interests.  And that is very possible.  The notion that Lyft or Uber should be illegal is absurd, and yet we see police running stings for Uber drivers in some cities.

So in conjunction with good realtors figuring out how to changed their business model over time, I fully expect to see the NAR pushing "consumer protection" measures that require agents/realtors.

And, if you will indulge me in trotting out one of my hobby horses, this is one of the reasons why it is a really bad idea for the "REI" community to be pushing/engaging in questionable practices that will provide the justification for those bad regulations. Because if the alternative to an entrenched monopoly of realtors is a bunch of 22-year-olds with no knowledge or money "investing" in such a way that innocents are hurt, I'll take the realtors.

I don't think most people even know how Zillow makes money. They get listing data from each MLS free of charge - a service that is paid for by Realtor fees and enforces strict guidelines to ensure accuracy.

They then put together great front end search tools to attract lots of buyers as well as marketing the heck out of their service.

They take those buyer leads and sell them back to Realtors. For example, I pay $2,500 for 1/3 of 1 medium sized zip code (so that one average zip code is generating around $7,500/year).

Therefore, if Realtors go away, they lose almost all of their revenue and their free access to highly accurate listing data.

Will their be disruption over the next 10 years - absolutely. But Zillow/Trulia isn't going to disrupt the deal they have with Realtors. Their model is actually taking a huge amount of money out of consumer's pockets because Realtors have to charge more to compensate for all of the paid leads. I think it will be a lot more incremental because of the scale, legalities and the in person requirements in buying a home (this isn't a plane ticket).

Originally posted by @Bill Wallace:

I don't think most people even know how Zillow makes money. They get listing data from each MLS free of charge - a service that is paid for by Realtor fees and enforces strict guidelines to ensure accuracy.

They then put together great front end search tools to attract lots of buyers as well as marketing the heck out of their service.

They take those buyer leads and sell them back to Realtors. For example, I pay $2,500 for 1/3 of 1 medium sized zip code (so that one average zip code is generating around $7,500/year).

Therefore, if Realtors go away, they lose almost all of their revenue and their free access to highly accurate listing data.

Will their be disruption over the next 10 years - absolutely. But Zillow/Trulia isn't going to disrupt the deal they have with Realtors. Their model is actually taking a huge amount of money out of consumer's pockets because Realtors have to charge more to compensate for all of the paid leads. I think it will be a lot more incremental because of the scale, legalities and the in person requirements in buying a home (this isn't a plane ticket).

 All true, Bill, but you know, at first Amazon was partnering with the big publishers.  Ask those publishers what that power relationship looks like now.

I don't get the value of the Zillow-Trulia combination.  Their sites and businesses are a complete overlap.  Agents will benefit because they will only have to advertise on 1 rather than both.  But the traffic to a combined site will NOT be the combined traffic to the 2 sites now.  The only value to this merger is that it eliminates a competitor.  Other than that, I see absolutely no synergies between the 2 companies.

Are they merging platforms, or just companies?

I could see it making sense to maintain the branding separately.  Kinda like how it is pretty hard to rent a vacation home without doing business with Homeaway, whether you know it or not.

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