Do you enjoy sitting on the sofa ordering items from Amazon instead of heading out into the real world? That level of convenience is now heading its way into the world of real estate. The nation’s number-one real estate site, Zillow.com, is making some huge changes.
Zillow started as a website where people could list their home for sale as either an alternative to listing with an agent, or as an added place for exposure. The site also provided fairly inaccurate “zestimates” of what your home was worth – using a computer algorithm based on recent sales in the area and some basic information on your home’s size and room count.
Zillow recently hired a new CEO that plans to transform the way you traditionally buy and sell a home to a lot like how you now book travel with Expedia.com on the web. Maybe that’s because their new CEO ran Expedia for years, and is looking to do to real estate agents what Expedia did to travel agents. In case you don’t know or realized, travel agents are virtually non-existent.
You will soon see massive amounts of advertising by Zillow offering to buy your home “instantly”. And it sure is instantly. With just a few questions answered, Zillow will make you an offer. No agent, no open houses, no waiting. Zillow already is buying over 5,000 homes every month. They want to increase that figure to 20,000 as quickly as possible.
And just like that, Zillow’s site will soon eliminate the need for a real estate agent and the MLS system to list your home. Zillow gets millions of views each month by prospective buyers. As they cut out the real estate agent they are branding the “middle-man”, the public will get the impression of obtaining a better deal by “going direct”.
What makes this story a Greek tragedy for those in the real estate industry, is that without their help, Zillow would never have been able to be in a position to eliminate them. A few years ago Zillow was given the data feed to all the MLS data in the country. This data is owned by the real estate agents. They mistakenly believed that by giving this data away, it would create greater exposure for their listings. Once they gave their data to Zillow, traffic to Zillow’s site became greater than that of their own website Realtor.com. Real Estate agents then realized that in order to capture the crowd surfing the web to buy a home, they needed to advertise on Zillow’s site. Zillow became a website with all their data from the MLS, and were now getting real estate agents to spend money on Zillow’s site with their listing information. If they cut off the MLS feed, and stopped advertising, Zillow would have nothing – no data, and no advertising revenue. But instead, how successful has Zillow become? Last year they made 1.3 Billion dollars. They now feel that have sufficient market awareness and size to eliminate the very group they owe their success to.
But the question remains – do you the consumer want to buy and sell a home this way?
I do hope the answer is no. Buying and selling a home is VERY different than booking travel. As someone who used to book with a travel agent and now uses sites like Expedia, Booking.com, and TripAdvisor.com, I know the ultimate burden of success for my vacation falls on me. I do the research as to where I want to go, the various hotels in the area, and most important, I check several sites to see who is offering the best deal.
In the case with the Zillow Instant Offer, will the consumer selling their home have the knowledge to know if they are getting a reasonable offer from Zillow? As a buyer, will they know enough about the home’s location, neighborhood, schools, shopping, and other factors that go into where one desires to live, to make an informed decision on buying that home?
My concern is that the mentality of today’s Amazon consumer is that they can order something, and if they are unhappy with their choice, they can ship it back. It doesn’t work that way when you buy real estate. Will today’s millennial generation, the next big population segment to enter into the home buying phase of their lives, do the necessary research on their own to make informed decisions?
I would love to hear from you on this topic. My weekly newsletter is distributed to thousands of consumers, along with several thousand licensed real estate agents here in Hawaii. Reply back with your comments. It will be interesting to see the perspective from both sides.