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Journal

Effects of Zillow/Trulia Merger

The folks at Inman News asked people in the business how they thought the ZT merger would affect brokers and agents:

http://www.inman.com/2014/08/01/the-bottom-line-of-the-zillow-trulia-deal-for-brokers-and-agents/

I was one of the agents invited – here are my thoughts:

Realtor.com should be the pre-eminent real estate website on the planet, but instead it just got ran over by Zillow-Trulia.  The people at Move, Inc. and the N.A.R. leadership have failed you miserably, but it is too late now.

Get over it.

What does the merger mean?  It means that Godzillow will be doing more to drive consumers to their websites.  Transparency will increase, and consumers, armed with more knowledge, will be empowered to make better decisions.

At least that’s what the consumers will think.

Have you noticed how consumers can recite the comps off the top of their head now?  Can you do that?  You better hope so, because consumers will expect their agent to know more than they do.

The agents who stay ahead of consumers by immersing themselves in their craft should enjoy a healthy business for years to come.

Other things the merger will cause, and agents should embrace:

1. Agent Rankings – Zillow already allows each agent to list their past sales, and testimonials from past clients.  It is inevitable that they or someone will create a place for consumers to check on individual agents.  Don’t like it?  Increase your production and you will like it more.

2.  Big Real Estate Corporations To Partner with Zillow-Trulia - It will be easier and more cost-effective for the big franchisors to ride on the Z-T coattails, than to fight it.  Their ‘strategic partnerships’ will solidify the legitimacy of Zillow-Trulia in the consumer’s mind.  Realtor.com should join the Zillow-Trulia team while we still have leverage!

3.  Accurate Enough - Agents need to quit bashing Zillow with the ‘wildly inaccurate’ claims.  They are much closer than they used to be, and Zillow is accurate with their other vital information, like the nearby listings and comps, schools, maps, mortgage payments, etc.  The consumers take a zestimate with a grain of salt, and are tired of hearing agents harp on it so much.

4. Transparency – The merger is just the beginning.  Other outsiders are taking direct aim at realtors, hoping to create a fancy internet website to replace us.  Everything about the properties, realtors, and how we do business will be under scrutiny – get used to it.

The merger is just another press release.  The bottom line is that Zillow-Trulia is another place for agents to farm for prospects.  Agents can either get leads from your listings (which are still advertised for free) or they can choose to pay for advertising packages.  Or you can ignore Zillow-Trulia, but at least know that the consumers love their websites.

Agents should acknowledge the existence and benefits of Zillow-Trulia, and keep providing better and more powerful information – that is what consumers want and need.  Realtors who work harder and smarter will keep providing the critical part of the equation – expert help in the moment of need.

Posted by on Aug 1, 2014 in Jim's Take on the Market | 1 comment

Working the Plateau

SD trend

Buyers and sellers are aware that the market has been cooling off, though if you go by the soundbites, nobody seems to know why.

From Dr. Shiller this week:

“The market has been very strong since 2012. It’s up 27 percent since March of 2012. It’s been a huge boom,” Shiller said. “The question is what would end that boom? It might continue. This might be a little downward blip and it might continue going up, but you know, I kind of think it’s not going to go up a lot more—maybe 10 percent more—before a correction.”

Shiller said it’s clear something is worrying consumers, and he suggested that perhaps rising geopolitical tensions around the world may be to blame.

“It seems like optimism about housing is weakening,” he said. “Maybe the internationals, maybe all this talk about Ukraine has people rattled. You know, I’ve felt that in the past, that international news affects the housing market. I don’t have proof of that, but something is weighing on the consumers right now.”Meantime, a lack of credit has been a “festering problem” for the housing market, but “inevitable since had a banking crisis,” he said. Credit availability is “not going to correct soon.”

We’ve seen in recent years what motivates buyers to jump – rising prices and rising rates. But it looks like both prices and rates are going to be rangebound for the rest of the year, which will cause more head scratching.

The pundits view real estate like the stock market, and their focus is solely on the demand side – you never hear anybody question whether the home sellers are too optimistic.

It trickles down to the street too, where sellers and inexperienced agents sit on over-priced listings, and wonder what happened to the buyers. It doesn’t occur to them that they can fix their own troubles.

This is where a major break-through could happen if Zillow/Trulia – or anyone else with a national voice – could properly educate the marketplace.

If people embraced the mantra, “There’s Nothing Price Won’t Fix”, at least sellers and listing agents would be in reality. Currently they live in Fantasyland, thinking that they just need to wait longer.

Waiting did work over the last two years as the prices kept rising – eventually they caught up with those sellers who started too high.

But in a flat or slowly rising market, there’s no pressure on the buyers to jump. The chances of a lucky sale are greatly diminished because the long-sitters are only proving that their price is wrong – and it emboldens the buyers to be patient. Sellers can literally cause their own downturn.

The environment changes greatly when a market tops out. Buyers feel like they have waited this long, there’s not much more to lose by being patient now.

t-shirt

Posted by on Jul 31, 2014 in Jim's Take on the Market, Listing Agent Practices, Why You Should List With Jim | 4 comments

SD Case-Shiller, May 2014

SD Case-Shiller

The month-over-month change in our local Case-Shiller Index was positive in May, which is no surprise. It’s reflecting decisions made in February and March, which was about 5% ago.

But the M-O-M numbers are sliding downward quickly, and could be flat or negative as soon as next month.

Buyers will expect a break on price - will sellers give it to them? Probably not, and the market will probably hit stall speed for the rest of the year.

These are the Case-Shiller Index NSA changes below for San Diego:

Month
M-O-M
Y-O-Y
Jan ’13
-1.0%
+9.8%
Feb ’13
+1.0%
+10.2%
March ’13
+2.0%
+12.1%
April ’13
+2.8%
+14.7%
May ’13
+3.2%
+17.3%
June ’13
+2.8%
+19.3%
July ’13
+2.0%
+20.4%
August ’13
+1.8%
+21.5%
September ’13
+0.9%
+20.9%
October ’13
+0.3%
+19.7%
November ’13
+0.0%
+18.7%
December ’13
-0.1%
+18.0%
January ’14
+0.6%
+19.4%
February ’14
+1.0%
+19.9%
March ’14
+1.3%
+18.9%
April ’14
+0.8%
+15.3%
May ’14
+0.5%
+12.4%

Posted by on Jul 29, 2014 in Jim's Take on the Market, Same-House Sales | 3 comments

Dismantling the Cabal, Part 3

zillia

Zillow and Trulia went and got married over the weekend.

The idea of them becoming a brokerage is another topic, and they would be swinging for the fences there – it’s probably not going to happen, at least not in the short-term.

But their marriage does set up the Big Showdown:

Consumers, Top Producers, and Transparency

                     vs.

NAR, Big RE Corporations, Low-Producing Realtors and the Status Quo

The Big Showdown has been brewing for years, and Zillow/Trulia will have to pick a lane.  They are trying to sell the marriage as a mutual benefit for all, but it’s not.  One side wins, and one side loses.

The fight centers around educating the consumer.

The Status Quo (the cabal) likes to keep consumers in the dark.  Zillow/Trulia slipped in when no one was looking and grabbed our listings, produced a better website with more information, and went on a spending spree of TV advertising over the last couple of years.  They provided better transparency of our listings then realtors were willing to provide themselves, and based on results, the consumers dig it.

But having the listings out in the open isn’t enough to dismantle the cabal.

The RE Cabal, defined: The group of entities that thrives on low-producing realtors.  The National Association of Realtors and local associations collect the same dues whether an agent sells a house or not.  The big corporate franchisors enjoy more-favorable commission splits from new, inexperienced, and lower-producing agents, and if they hire them by the thousands, they can make a good living.  The top producers demand 80% or 90% (or more) of their commissions, and even though their volume is higher, the small percentages and lack of control doesn’t sit well with the corporate bosses.

What happens now?

Zillow has already been forming partnerships with the bigger brokerages; here is an example from last month:

http://investors.zillow.com/releasedetail.cfm?ReleaseID=856350

SEATTLE, June 24, 2014 /PRNewswire/ — Zillow, Inc. (NASDAQ: Z), the leading real estate and home-related marketplace, and Douglas Elliman Real Estate, one of the largest real estate brokerages in the nation and New York City’s largest residential brokerage, today announced they have entered into a new strategic marketing partnership.

Other big corporate franchisors will likely plead with Zillow for a similar ‘strategic partnership’.

If Zillow takes their money, won’t they be indebted to the Status Quo?  The Status Quo hopes so, because it will slow down or stop Zillow from continuing to expose the transparency needed to break the cabal.

If Zillow takes the high road, and is beholden to no one, then they would be free to educate the consumer on the intimate details of buying and selling homes.  The Status Quo doesn’t want that – they prefer it to be mysterious so consumers end up with the agents on bad commission splits.  Literally, the Status Quo prefers you to be served by those who are least qualified to help you.

More transparency would include agent-ranking and demonstrations on why consumers should work with a top-producing agent.  You pay the same or similar commission rate, you deserve to get the best help available.

Posted by on Jul 28, 2014 in Jim's Take on the Market, The Future | 12 comments

They Are Excited

Because of your importance as a Premier Agent, I wanted you to be among the first to learn we have just announced that Zillow has entered into a definitive agreement to acquire Trulia. You can read the full press release here.

I’m really excited about this opportunity, but I am sure the news will lead to a number of questions. The most important thing I can stress is that this combination of companies sets the stage for us to offer even more real estate tools and services to empower consumers, and thus has the ability to drive even more business your way.

We expect to maintain both the Zillow and Trulia consumer brands, as both will continue to offer buyers and sellers access to vital information about homes and real estate, providing an important bridge to local agents such as yourself. Both companies will continue to develop and deliver advertising and software solutions that help real estate professionals grow their business.

This acquisition requires shareholder and regulatory approval, which might take several months. We will provide additional details as they become available. For now, it’s business as usual for both companies. Our daily focus and strong commitment to Zillow Premier Agents remain unchanged and of the utmost importance to our entire team.

Regards,

Spencer Rascoff
Zillow CEO

As a valued Trulia customer, I wanted to reach out personally to let you know that we have just announced that Trulia has entered into a definitive agreement to be acquired by Zillow.  You can read the details in the complete press release here: ir.trulia.com.

This will be a new and exciting chapter for all of us. The combination of the two companies sets the stage for us to accelerate innovation and to provide more valuable tools and services to consumers and professionals.

Trulia and Zillow will continue to operate as separate and distinct brands once the transaction closes. We will continue to offer buyers, sellers, homeowners and renters access to vital information about homes and real estate for free and provide advertising and software that help you grow your business.

As additional details about the acquisition become available, we will make sure to let you know. For now, it’s business as usual at Trulia. Our focus and commitment to connecting you with consumers and helping you close more transactions remains the top priority of our entire team.

Regards,
Pete Flint
Trulia CEO

Posted by on Jul 28, 2014 in The Future | 7 comments

Kayla’s Korner

2014-07-27 11.35.32

With all the merger hubbub, let’s keep an eye on the Zillow stats.

No MLS input yet of this house - just a Zillow ad plus open house signs were used to publicize my listing in South Carlsbad today.

I inputted the Zillow data and photos on Friday at 6:30pm.

Here are their counts of the number of views on Zillow:

Fri 11:10pm – 40 views

Sat 6:45am – 63 views

Sun 7:30am – 222 views

Sun 7:00pm – 335 views

There probably aren’t many agents in that count either.

We had over 50 people attend the open house, and four mentioned that they saw it on Zillow – and there were probably more.  Zillow could be a deterrent in this case, because it shows that the house was just purchased in March for less.  But they still came.

There are plenty of lessons to be learned from open house!

Posted by on Jul 27, 2014 in About Kayla, Bubbleinfo TV, One-Story | 5 comments

Dismantling the Cabal, Part Two

zillia

If the Zillow purchase of Trulia comes together, and Zillow wants to further their dominance without creating a standard brokerage, how could they do it?

There are 17,488 dues-paying agents who are members of the MLS in San Diego County.  There are at least another 5,000 assistants, admin people, supervisors, managers, escrow and title people, inspectors, appraisers, etc.

Let’s round it off and say there are 23,000 real estate people in San Diego.

Last month there were 3,111 closed sales of all residential types in the MLS.

Do we need 23,000 people to close 3,111 sales?

No, and the inefficiencies in the real estate selling business are everywhere you look, and most are related to inexperience – realtors don’t sell enough to be really efficient at it.

This is where Zillow could politely commandeer the industry.

In Part One we saw how the agent-rating feature would help to weed out those who don’t sell much.  Zillow would partner with the higher-producing agents and sell them advertising.  It will work great for all, and if that’s as far as it goes then it’ll be better than it is today.

Kill Shot 2

But what if Zillow wants total dominance?  Here’s how to do it.

Hire the best 100-200 of the 23,000 people involved with selling SD real estate every day, and set up the Zillow Sales Desk.

Those on the front lines would be experienced realtors who have closed hundreds of sales in the last few years.  They would be taking inquiries from 7am to 11pm, and the rest of the staff will do ‘transaction coordinating’; which gets the sales to the finish line.

The Zillow Sales Desk could be positioned as a help desk for realtors and consumers alike – a place to get answers, and put deals together.  A non-threatening place to fill in the holes skipped over by the high-producing agents (the do-it-yourselfers, and low-cost properties).

Today’s realtors accept that you don’t need a realtor to buy or sell.  We offer convenience, and we’re the only place you can get good help.

The Zillow Sales Desk would provide an alternative place to get good help.  If the Sales Desk charges flat-fees and/or fee+small percentage, it would be even more attractive.

After a couple of years of providing great help, the Zillow Sales Desk could grow into the best alternative for the money.

In Australia, there are no buyer agents, and the transactional brokers get around 2%.  If the market here goes the same way, then the agents could just hand over the buyer and seller to the Zillow Sales Desk for completion.

The general public doesn’t realize the difficulties of closing sales – it’s part of the mysterious cabal.  But once there is a competent solution to the back end, all buyers have to do is find the right house, and they will have somewhere to go to get it done.

Having great agents handling the initial inquiries is the key.  When the buyer finds the right house, they want to get quality help to clinch the deal.

It would bring a predictable solution to the equation, which is also part of the existing cabal – consumers don’t know what to expect from the other parties involved, and are hesitant about how to proceed.

Call the Zillow Sales Desk to get good help!

It’s a long shot, and I don’t think they will do it because the profit vs. hassle is questionable.  But if Zillow’s goal is domination, then this idea gets them on the path without being a regular brokerage.

Posted by on Jul 26, 2014 in Jim's Take on the Market, The Future | 9 comments