Zillow.com’s entry into the for-sale property search market met with metered optimism from industry participants who say that the announcement follows a trend in providing more online information to consumers.
The new features at Zillow are “a natural migration pattern,” said Ed Krafchow, president of Prudential CA/NV/TX Realty, and represent a changing industry that is becoming increasingly open. “I believe that in the future the market will be much further open to the public, and that doesn’t preclude Realtors from being involved in transactions — they may be much more important, at the end of the day.”
Krafchow noted that his company’s Web site features links to Zillow valuation tools. “We actively use it and cooperate with it,” he said.
The new for-sale property features at Zillow should not pose any kind of impediment for the industry, he said. “It’s an entrepreneurial world. Wherever the customer feels best served they’re going to go to that.” The job of the industry is to cater to the consumers, he added.
Adapting to change is a mantra for the industry, and while this change can be troubling for the industry at times, “We need to be attentive to what the consumer actually wants. We want to place the listing in the most places it can be, with the permission of the consumers. We’re here to sell houses. It doesn’t matter if it’s Zillow or Move.com — it’s all for the consumer. We have to be consumer-centric.”
Zillow and other industry innovators may pose a wake-up call for MLSs, he said, as they may seek to “respond and change their approach and alter their rules” to become more relevant. And Krafchow said the industry must not be too hasty in judging Zillow.
“Today’s friends can be tomorrow’s foes and tomorrow’s friends and can be today’s foes. I don’t view (Zillow) as friend or foe. I see them as offering a service,” he said, that could serve as a useful tool for consumers. “I think it’s foolish to think about them in any other way.”
Zillow is creating “another free advertising opportunity,” said Greg Sterling, a media analyst with Sterling Market Intelligence, noting that craiglist.org and other sites also offer individuals the ability to post information about for-sale properties on the Internet. “That’s a continuation of a trend — it’s not in and of itself going to have an impact. It could have an incremental impact, perhaps, if it’s incredibly successful.”
The rise of for-sale real estate information on online sites poses a continuing threat to traditional advertising media such as newspapers, he said. And Zillow could potentially lead to increasing pressure on multiple listing services that maintain real estate databases for subscribing real estate professionals.
“To the extent that there are many alternatives where people can put listings, it does put pressure on the MLS to justify its fees and to add value,” he said. “The idea of adding listings (on Zillow) does fill a hole and fill a value proposition for consumers.”
Sterling also said he expects that real estate professionals will choose to utilize Zillow to market properties, as it is a fairly high-profile site and “Realtors are fairly entrepreneurial types. What would be the reason not to get additional exposure?” The site has already been successful in drawing online traffic, he said.
Google, Yahoo, and MSN are among the big online players that are also “in a bit of a struggle for consumer attention and traffic,” and all of these sites are offering real estate information as they compete for a share of the total online audience, Sterling said.
The competition to put listings information online has led to a lot of sites offering a lot of information — but not necessarily the same information about for-sale properties. “It’s a paradox,” Sterling said. “You’re going to be forced to go to multiple sites. Nobody has a comprehensive database. The more competitors you have in the space, the more problematic it becomes — how do Realtors or agents know where to put those listings? The Internet makes a lot of information available. It also creates a problem of too much information — information overload.”
Colby Sambrotto, chief operating officer for ForSaleByOwner.com, said it’s understandable that Zillow will allow both for-sale-by-owner property information and agent-listed property information. “I’m surprised it look them as long,” he said. “It seemed to us that was probably the direction they were going to head in when the revenue model came out. I can’t say I’m surprised. It’s not something we’re particularly worried about. There have always been giants we compete against in this industry.”
Sambrotto added that he expects Zillow to receive “some fairly warm response from the agent community.”
Ira Serkes, an agent for RE/MAX Executive in Berkeley, Calif., said that he would consider marketing his listings on Zillow for added exposure, though he said he would evaluate whether advertising at the site could potentially steer prospective clients interested in his listed properties to competitors’ sites. Zillow officials have said that there could potentially be competitors’ ads displayed alongside property listings information, much like you would see competitors’ ads displayed on the same page in a newspaper.
“I would expect that some brokerage companies will be delighted and others will ask their agents not to put their listings on Zillow,” Serkes said. They may wonder, he said, “What’s coming down the pike? Why is Zillow doing this? What is Zillow’s business model?”
Zillow’s valuation estimates, or “zestimates,” are the subject of a complaint filed by a national group that charges that Zillow may have unintentionally misled consumers about the actual value of their homes because accuracy ranges in its automated valuations. Serkes, too, said he has concerns that some buyers or sellers may rely on these zestimates.
Besides the ability to market for-sale properties, Zillow also announced another feature that allows homeowners to test the waters for a home sale by posting a “Make Me Move” price and additional information for their home. Serkes said, “I think that’s a really creative use and I applaud them for that.”
Joanne Kennedy, chief operating officer of Coldwell Banker Hunt Kennedy in New York, said that Zillow will be one more place to market properties. “Our philosophy is, ‘The more places you can put your listings the better for the consumer. The more the merrier.’ ”
As with other sites, Kennedy said that Zillow is looking for “free content to build traffic,” which can translate to more ad revenue. Kennedy said she is not concerned about the co-mingling of FSBO property information and agent property information at the site “I don’t think we’re going to be disintermediated by the Internet, because we’re a face-to-face, person-to-person, home-to-home business.”
“The fact that there are FSBO listings side by side doesn’t bother me one bit. I would absolutely enter my listings,” said Ardell Della Loggia, a Realtor with Sound Realty in Kirkland, Wash. Della Loggia said she suspects some brokers may take issue with this aspect of the new Zillow offering, though she hopes that will not be the case.
“In the long run what’s going to happen is individual agents will support it to the point where the public is going to ask their agent to put it in. Once the owner asks for that free advertising the agent will not have any good excuse to say, ‘No,’ to the owner,” she said. “My hope is that agents will do what is good for sellers and upload their properties.”
While some real estate professionals are critical about the accuracy of Zillow’s estimates, Della Loggia said its common for buyers and sellers to have pre-conceived notions about how much their property is worth, and it doesn’t always synch with actual market conditions. “Actually I’d rather have it come from Zillow than the neighbor down the street,” she said.
Pete Flint, CEO for Trulia.com, a real estate search site that contains information on about 1 million for-sale properties, said Zillow’s latest offering makes it clear that “there is no one single model that fits everything.”
There is a range of property-search sites from craigslist.org to Realogy and everything in between, he said. The field of online property-search “is certainly competitive — there’s no doubt about it. Real estate valuations and for-sale listings are natural best sellers. It’s really difficult to say how it’s all going to play out.”
He added, “From the consumer’s perspective there’s going to be an increasing amount of noise,” as the field is crowded with so many Web sites. “I think it’s going to get worse before it’s going to get better. There are a lot of companies vying for attention.”
And that’s not all bad, he said. “First of all, there is not going to be one single site that fulfills all consumer needs for real estate — it’s exactly the same way as within other industries.”
