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An Insider's Guide to North San Diego County's Coastal Real Estate
Jim Klinge, broker-associate
858-997-3801
klingerealty@gmail.com
Compass
617 Saxony Place, Suite 101
Encinitas, CA 92024
Klinge Realty
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Jim Klinge
Cell/Text: (858) 997-3801
klingerealty@gmail.com
701 Palomar Airport Road, Suite 300
Carlsbad, CA 92011


Posted by on Feb 22, 2019 in Jim's Take on the Market, The Future, Zillow | 8 comments | Print Print

Zillow ‘Moonshot’

Bloomberg has this article on Spence stepping down at Zillow yesterday:

https://www.bloomberg.com/news/articles/2019-02-21/zillow-ceo-rascoff-steps-down-so-barton-can-lead-moonshot-effort

Zillow must believe that flipping homes is their future:

On average, a customer asks Zillow for an offer on their home every five minutes, said Barton, signaling there’s ample consumer demand for a simplified home-selling process.

“It’s like advertising free beer at a college party,” he said.

They’re finding out that flipping isn’t as easy as it looks though.  In addition, realtors aren’t spending like they used to:

In August, the company said that it was taking longer than anticipated to sell the homes it acquires. Three months later, it reported that some advertising customers were pulling their business because they disliked changes to the platform. Shares in the company, which peaked at $65.21 in June, plummeted to a low of $27 in November.

Agents may have told Zillow that they were pulling their business because of changes in the platform, but that won’t be the end of it.  As the number of home sales decline nationally, realtors will slow or stop spending money – starting with the very expensive Zillow ads.

Zillow still says they love realtors, but we’ll see about that.  Once their advertising income declines, and the homes they bought start piling up, it is inevitable that they will think they don’t need agents any more.

The next few years are going to be exciting!

8 Comments

  1. The main reason Zillow could succeed at having a centralized sales center to handle their transactions (and cut out agents) is because of their willingness to advertise.

    Have you noticed how today’s real estate disrupters are telling lies and distortions in their ads? There is no truth in advertising for real estate, and because consumers venture into housing so infrequently, they don’t know any better.

    Zillow could just say you get a better deal going through them directly, and then spend $200 million per year advertising it.

    For that matter, anyone who spends $200 million per year saying anything will get the business.

  2. Consumer: “How do I know I’m getting a deal?”

    Zillow phone rep: “Because we said so!”

  3. Someone yesterday mentioned they think Zillow may acquire EXP? Thoughts on that?

  4. I see Zillguys totally disrupting the housing sector. I don’t see how breaking the housing sector gains them anything. Don’t get me wrong. There’s lots of room for improvement. There is room for disintermediation. There is room for technology derived efficiencies. It’s just unreasonable to expect the Vandals an Visigoths to be those agents of effective change.

  5. Zillow may acquire EXP?

    It would be a big gamble for Zillow to buy any brokerage while selling advertising to realtors of all brands. But for the realtors who are addicted to Zillow leads, they might have to stay with them no matter what Zillow does.

    Would Zillow buy a brokerage as the in-house company and stop advertising other realtors? Even a bigger gamble, but feasible – but that would be a burn-the-bridges-and-take-over-the-world type of move.

    It would be easier for Zillow to buy Compass. We’re smaller, and already expect to IPO soon so a little easier to get an ear with management. But I don’t know why Zillow would want to buy a brokerage unless they want to blow up the real estate world (which may happen anyway).

  6. I don’t see how breaking the housing sector gains them anything.

    Me neither but we might not be thinking big enough.

    If they provided an auction platform that was agent-friendly, they could take over the real estate world.

    It would eliminate the need for 2/3’s of the agents, but we need that cleansing anyway. Agents would be advisers who market the property effectively for 3-4 weeks, and then the Zillow online auction and transaction management does the rest. (they already own dotloop)

  7. Are you thinking that Zillow won’t abandon agents as advertisers?

    Zillow is anticipating a major shift in its operations and the U.S. real estate industry writ-large.

    Zillow executives said during the company’s fourth-quarter earnings call on Thursday that they expect its Zillow Offers direct-to-consumer, online homebuying and re-selling program to become a revenue giant within five years, dwarfing its current top revenue stream, Premier Agent, its online paid advertising program for real estate agents.

    In the next three to five years, Zillow plans to purchase an average of 5,000 homes per month for all cash from people around the country, and the company’s Homes division that oversees Zillow Offers will bring in expected annualized revenue of about $20 billion.

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