Zillow and Redfin Downsizing

Two of the big names in Internet real estate in the past few years, Zillow and Redfin, have recently announced layoffs in an effort to "live to fight another day". These events were recently reported in the LA Times blog by Peter Viles, senior producer for Real Estate at LATimes.com
Probably no big surprise for most people in the real estate business as everyone has seen their fair share of slowdown related right-sizing but unnerving none the less as both of these companies seemed to be on the fast track to internet success not so long ago.

Zillow is a company that provides consumers with free estimates of their homes value. While Zillow has seen their fair share of controversy regarding the values they come up with, consumers don't seemed to care as they simply want an estimate and most Zillow estimates seem close enough. Real estate agents have been frustrated over the years as they try to advise listing clients as to what they should list their home for, only to have these home owners try and correct the agent using a Zillow example as to what the value should be. Zillow is not the only site to provide free house values and one site, www.mlsmaps.com, offers home owners three different ways to determine value with Zillow being one of those three.

Redfin, an Internet based discount realestate company, created it's own discord within the real estate industry as a successful Internet discount broker. Redfins position is that with all the great tools on the internet that consumers can use to find and research homes for sale, why should a home shopper pay full commission. A great argument if you are a consumer, horrifying if you have spent the past 10 years charging your real estate clients 6-7% commissions. Now that consumers can view most of the mls listings online, without having to speak with a Realtor, maybe buyers agents need to revisit their model. I think a good listing agent is worth their weight in Gold as selling a home in a timely manner for the highest price is no easy task.

All this considered, it is still a sad day to see two real estate Internet pioneers getting slapped down by a rotten economy. Hopefully things will recover for the real estate industry and these companies in the near future. Best as I can tell, that probably won't be for at least another 12 months if we are lucky. Hang on!

The Zillow Quandry

OK so Zillow is getting a bunch of traffic, that's a fact but the question for Realtors is what kind of traffic is Zillow getting and how can it help me? Is Zillow getting hits from potential home buyers, potential home sellers or simply from people who are curious about the value of their home? Oh by the way, there is another big user of Zillow, mortgage professionals who use Zillow to determine if there is enough value in a borrowers home to justify a refinance. I'm thinking a lot of mortgage guys are using Zillow everyday which really doesn't help Realtors or home sellers.

My take on the deal is that most of Zillow's traffic is from people who are curious about the value of a home versus someone actually looking for homes to buy. Think about it, any home buyer that has heard the term MLS and has searched for their local mls in Google has figured out that the mother lode of homes for sale is not on Zillow, Trulia or sites like them who are busy trying to build a national database of home inventory, but on the sites of local realtors. So to think of Zillow as a great place to find buyers is a bit of a stretch. I haven't spent any time looking at Zillows Q&A section yet and in fact there might be some opportunities for agents to engage prospects in meaningful conversations that ultimately end in real estate transactions, but this is the same activity that Realtors are being told they should be doing with their blogs.

So what's an agent to do and how much time should an agent spend on Zillow and, what is Zillows ultimate motive in all this? Time will tell but knowing what I know about real estate and the Internet today, As an agent I would be spending my time build my web presence/brand in my local market using tools like a blog and an IDX broker reciprocity feed which gives my visitors access to almost all the homes for sales in their area. At the end of the day, the agent is still the one who makes it all happen!

REDFIN WINS!!! As differentiation among agents disappears.

I read a horrifying article on Inman News today about public facing MLS sites owned by the local MLS. The article I read referred to HAR in Houston Texas and explained all the fantastic marketing things they were doing to drive traffic to their site including billboards, radio, tv, print etc. and they are talking about syndicating the listings and automatically feeding this info to some of the big internet home marketing sites like zillow, google base, etc. All the things a great agent might also do to increase and protect their market share. If the MLS’s around the country start to act like internet marketing companies, what is left for the listing agent to do besides stick a sign in the yard, and how much commission is that really worth, hence Redfin.

While this may be great news for the struggling agents who list fewer than 6 homes a year, (an agent who might want to consider the Redfin gig as I understand it) It is terrible news for the successful real estate agents and brokers who have taken advantage of technology and the internet to further grow their business by doing a better job of selling their clients listings and building a steady stream of qualified buyers.

Think about it, the best buyer magnet in the business is an MLS broker reciprocity IDX solution. If I am a home buyer on the internet, what is the only thing that is important to me when I stumble upon your site through Google or some other method? Listings!! If you spend all the time and effort to build a nice site and drive me their only to show me your current two or three listings, I’ll be off your site in less than 30 seconds. Smart agents know this and incorporate IDX search solutions into their site. The better listing agents know how and where to place their listings on the internet to provide ever increasing exposure to their clients homes for sale. If the local MLSs start doing all this for you, then how will any agent present themselves as any better or different from any other agent. And if this becomes true, than agents become a simple commodity and the value of their service drops like a lead balloon.

Think about it, if I have a $500,000 house to sell do I want to pay $30,000 in commissions or pay a couple of grand to Pro Source, study nights and weekends, to get my realtor license so I can join the local board and let them to a fantastic job of marketing my home for next to nothing?