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As Zillow inches toward the center of the real estate transaction, founder and CEO Rich Barton is certain of one thing: the real estate agent is not going away.
In a wide-ranging interview with Inman founder Brad Inman Wednesday at Inman Connect in Las Vegas, the recently reinstalled CEO discussed the company’s latest adjustments to its Zestimate tool, its homebuying and selling operation, Zillow Offers, and why he believes real estate agents will never be cut out of the transaction.
“[Consumers] don’t know about all that administrative stuff that happens and slows them down and angers them, confuses them. It’s expensive and they don’t know why,” Barton said during a conversation with Inman founder Brad Inman at Inman Connect in Las Vegas during Wednesday’s general session. “They absolutely want and need an advisor. I am 100 percent certain that will continue.”
Rich Barton
Many in the industry, nonetheless, have expressed concern that Zillow is positioning itself as a well-funded competitor to the traditional agent – after all, the company owns a broker license in most states due to regulatory requirements – but Barton doesn’t see a future in which agents who partner with Zillow will no longer be an integral part of the experience.
When Barton resumed the day-to-day management of Zillow as chief executive earlier this year, he realized immediately that the company he co-founded was no longer “a disruptor.”
“Returning to this job, I actually realized now that we are the incumbent,” Barton said. “We are part of this industry and we, in fact, are facing our own set of disruption challenges, which has provoked us into a period of an incredible renaissance of creativity.”
It’s been a year of transformation for Zillow as it moves rapidly into the home buying and selling space. Zillow Offers is now live in more than a dozen markets, but that doesn’t mean the company is distancing itself from what allowed it to rise into the $10 billion market cap tech giant it is today.
“We are in a transition and it’s an interesting one that is quite exciting,” Barton said. “You characterized it as a dawn of a new era of real estate and I talked about real estate 2.0. That’s exactly what I feel. Nothing is going to happen overnight. Zillow is a media company and going to continue to be a media company.”
“We are not pivoting,” Barton added. “We’re expanding. We are not getting rid of the old.”
The changes to Zillow’s digital advertising model include the “Best of Zillow” enhancements, meaning Zillow wants to only be in business with agents who are evaluated well by consumers. It also includes success fee pricing – or a referral fee versus upfront lead buying costs.
Consumer surveys led to the change. The surveys found that approximately half of Premier Agent advertisers showed up to the first meeting with a consumer who contacted them through Zillow.
Zillow’s business includes Zillow Offers, a growth area where Barton sees a lot of opportunity for innovation.
For example, the company has learned that owning empty homes can benefit agents. It’s more convenient because they don’t have to do as much juggling around occupants’ and clients’ schedules when they take their clients to shop for homes.
Barton said that its Zillow Offers business isn’t trying to gain control of and hoard the real estate investment inventory.
“We’re not trying to do that at all,” Barton said. “In fact, quite the opposite. What we’re trying to do is provide liquidity to a market place that is frozen.”
Barton said the real estate industry is the only asset class – maybe other than high art – where only five percent of the assets turn over each year. He envisions an industry where there’s much more turnover, and it’s easier for people to move, which is something that they want.
Barton said that Zillow’s goal is to make the real estate marketplace frictionless for homeowners.
“The transaction is the fulcrum point around which all of these painful, expensive long ancillary adjacent products hang,” Barton said. “If we can put ourselves in a position where on behalf of consumers we are making all that garbage transparent, seamless and joyful, people will be happy, they will transact.”
With the acquisition of Mortgage Lenders of America, Zillow wants the mortgage to be a part of that too. He compared it to Uber having a built-in payment system.
The recent changes to the Zestimate to improve accuracy also fit into Zillow’s goals of streamlining the transaction process and create a more liquid market place.
“When we created the Zestimate, the dream was to make the real estate market place behave more like other market places that we interact with, in our lives, one of the canonical examples is the stock market,” Barton said.
“For most Americans, the biggest asset that they have is the equity in their home,” Barton added. “The reality is the value of that does change every day. We give consumers insight into what that value was and plot it like the history of the stock.”
Barton spoke mostly about Zillow’s recent expansion and where it would like to take the industry. However, Inman also took the opportunity to criticize one part of the search experience. Specifically, he took aim at the confusion over Premier Agent advertisers versus the listing agent on properties.
Inman relayed an anecdote about trying to view a property, only to realize halfway through the experience that the person he was talking to wasn’t the listing agent.
“For a company that says it’s consumer-friendly, that’s kind of bullshit isn’t it?” Inman asked.
“There are good customer service experiences and there are bad ones,” Barton responded. “We’re doing a whole bunch of stuff to make sure our consumers have a fantastic customer experience, like Best of Zillow and customer satisfaction ratings. Making sure people don’t click on things erroneously is another one, and we’re working hard on that.”
