More on Zillow taking over the real estate world – an excerpt:
Zillow is simultaneously taking on traditional real estate agents, media companies and publishers of housing data — and it’s threatening all of them in the process.
Not a bad tactic when you’re trying to corner a market.
“Zillow saw this opportunity, about five years ago, to fill what we perceived to be a massive void in academia, government and in the media,” says Spencer Rascoff, the company’s 37-year-old chief executive. “Nobody was providing objective, unbiased data and analysis about what was happening in the real estate and mortgage industries. The people that were providing it represented trade associations with agendas and were advancing particular policy prescriptions for their constituents.”
When Rascoff says “trade associations with agendas,” he means the National Association of Realtors, where the mention of the word “Zillow” makes people recoil in distaste (the Association told its membership that it didn’t take part in a White House online forum in August during which Rascoff interviewed the president on housing because Zillow was a “popular housing entertainment website” and the interview was “not a serious public policy discussion”). While many real estate agents have adapted to leverage Zillow and other listings sites to their advantage, Zillow has also given homebuyers lots of information they used to have to get from professionals, which makes it more difficult for agents to add value.
Zillow’s numbers are different. Rather than just measure what’s selling, their team of over a dozen economists, statisticians, and other analysts pulls in local property databases to value all homes, which owners can then update themselves with attributes like a renovation or a new garage. That creates what’s called a “hedonic” index, which is more difficult to compute but also a better reflection of the entire market. Zillow also prides itself on telling people when the market looks bad, like it did before the real estate bubble popped and as it kept sliding.
“You looked at other industry professionals, and they would tell you the bottom’s right around the corner, things are going to get better. And month after month after month, we were the only ones saying home values are bad and they’re going to get worse,” Humphries says. “Our business only works if people trust us to be telling them the unbiased truth. We don’t want to tell them now’s a good time to buy and sell, because we believe that now can’t be a good time to be doing both.”
With the “massive void”, anyone can step up to the microphone and be the expert. Zillow is doing a great job at filling the void – and good for them.
Where will they go from here?
It wouldn’t take much more for them to try to take out realtors altogether.
There’s a lot to dislike about zillow but the only reason a vacuum was created is because the NAR tried too hard for too long to keep the information asymmetry they exploited.
Rumor has it you can get fined for fuzzy unreadable pans past a yard sign in a video.
Ha, yes and when they seem like targeted enforcements it shows where the focus is – playing a small game.
Zillow won’t have any rules except transparency, the great equalizer.
Zillow has the benefit of revising their calls and “what we said: as better info rolls in.
They aren’t at the messy end of the stick where the buying decision is made. Nor are they a part of the messy black magic process of closing deals.
Zillow stepped into the void and starting churning out data. A novel mash-up which kicks out a number on EVERY house but it’s worth about what it costs for their users.
Zillow is going to have a hard time monetizing their assets because, in the end, they do very little different than other AVMs. They aren’t even the source for their data. Their differentiation is that they can do it cheaply enough to give it away.
Hats off to them, they have a market cap of $3B with TTM revenues of $150M and an accumulated deficit (losses) of -$85M.
Zillow won’t have any rules except transparency, the great equalizer.
I’ve already detected instances of what can only be explained as content editing for pay. Unfavorable datums just drop from the page.
I also absolutely hate bad square footage assertions and they are amongst the worst.
In many respects zillow is just kelly blue book with more zeros.
Agreed, and similarly KBB is the authority by default – there’s nobody else stppeing up to the plate.
Zillow has a wide-open playing field.
As they keep pushing these high-profile “housing summits” and big-time TV advertising, they will become the real estate authority just because there is no competition.
Nobody in the industry wants to take the lead – not NAR, nor any of the big franchisers.
It keeps the door open for Zillow to create the future as they see fit. And just like Redfin isn’t the best alternative, just because they offer an alternative they are getting attention.
Here is how it might turn out:
http://youtu.be/CswLUbXUgAk
This wouldn’t be the best alternative for the consumer, but with the lack of other options, it is inevitable that it will be brought to the game by someone.
The pessimist in me will just go ahead and presume that NAR will flex its political lobbying muscles and have congress enact new legislation that will make it more difficult for Zillow to operate and make money.
Monopolies never adapt to competition in time to maintain position.
seems like the only thing the mls has going it the database of information on home sales.
You can get online and pretty much find the same information these days.
Brokers need to start advertising their listings elsewhere.
Jim, do you know any brokers who have chosen not to advertise on mls but go other routes? Seems like you could advertise in a lot of different places besides the mls.