Posted by: Dean Dominguez, Instructor
Updated: August 9, 2017
To the seasoned, well-affiliated real estate agents with hundreds of clients in their pipeline, the Zillow/Trulia merger is just another business move being made between publicly traded companies. Successful real estate agents move with the currents and stay afloat in rapidly changing times like these; they possess timeless and fundamental skills in customer service, follow up, and local expertise that keep them constantly in the mind’s eye of their client base. Even veteran real estate agents need to adjust to the changes; no one is immune to the ever-changing frontier.
However, for the newer real estate agents of the industry, the merger could mean something different. In this article, we look at the possible consequences of the merger in relation to the real estate market and discuss what new agents can do to make sound choices in advertising. We conclude by discussing Zillow/Trulia’s business model to determine whether real estate agents are still in control of their own marketing efforts.
The Main Concern
Let us start with the main concern: Some say the merger could result in price-fixing between Zillow and Trulia that could increase the cost of advertising to the real estate agent, which could then be passed on to the consumer.
Responses to the Main Concern
In response to this concern, it is very possible that advertising prices could rise as a consequence of the merger. However, price-fixing may not be involved because Zillow and Trulia continue to remain as separate companies. The difference in the benefits they offer real estate agents will vary their pricing, so price-fixing is possible, but unlikely. Despite the merger, real estate agents are still in full control of what advertising choices best suit them. In other words, we need to value the real estate agent's autonomy here.
The second part of this concern is that these costs will be passed on to the consumer. However, I find this to be unlikely. Any ethical real estate agent will not pass advertising costs to the client, simply because it is not the right thing to do. It also does not create a good environment for repeat business.
By taking advertising costs and masking it as another fee, real estate agents put themselves in red flag territory. This extra fee would need to be explained on the final HUD and Good Faith Estimate. No reasonable explanation can be given because, in my personal opinion, no ethical real estate agent would pass this fee on to the consumer.
Is the Advertising Fee Overpriced?
Are real estate agents getting squeezed by online real estate advertisers trying to make a quick buck? I think it is okay to have a healthy skepticism about the merger, and their advertising solutions sold at a premium may not be the shoe that fits all. But, we cannot avoid the fact that traffic for these sites accounts for about 48% of all site traffic for real estate searches on the web. That kind of site traffic is valuable, and real estate agents can pay for value that yields them more business.
Advertising in one year can also provide repeat business and word of mouth in another year. If we consider these sources of business and expand the time horizon, the advertising becomes more and more attractive.
Before we move on, let me say this: I am not defending price increases of Zillow/Trulia, but I do believe they have a valuable product that real estate agents can use. Some real estate agents pay for advertising online, only to have the company tell them proudly that 300 “qualified visitors” looked at their profile, but not a single one sent an email or a phone call. When something does not work, it is time to get out. But if something works, it is time to use it.
What Should New Real Estate Agents Do?
New real estate agents need to make a decision to purchase advertising from Zillow/Trulia or not, even if it will be at a premium. New agents should have 6 months of reserves in their bank accounts. Every penny counts. Performing an all-out advertising campaign on Zillow/Trulia could be costly, but it could be the push one needs to become the go-to agent of that particular service area.
New real estate agents need to be well-versed in projecting future earnings. It’s possible that no commissions will come during months 0 through 4, but maybe there will be a great payday in month 5 that will make the advertising worth it. In those first few months of uncertainty, experimentation is a must. New real estate agents need to handle and cope with the pressure of being in the red for a few months, while still staying positive and getting rewarded later.
Going Low Tech…Returning to the Fundamentals
For those who will not dabble in Zillow/Trulia's methods to capture potential homebuyers, and for those who want their 6 months of reserves to be stretched even further, there is no shame in going low-tech and high-touch. "Walking the farm," or passing out fliers and knocking on doors in one's service area could be valuable as part of the marketing mix, with free sunshine and exercise included with every outing. Those belonging to church groups or volunteer groups can flourish by helping friends who might want to buy and sell in real estate. There is more than one way to grow your network and acquire and market your first listings.
Who Gave Zillow/Trulia Our Listings? We Did
When reviewing Zillow/Trulia’s merger and its consequences, we recall the not-so-discussed origin of the success of their business model: us. At the bottom of every MLS input sheet, we place checks in boxes that ask us if we want the full address of our listing to appear on the Internet. To many real estate agents, it is a no-brainer to check all these boxes. We care about the listing getting maximum exposure on all media platforms—including the Internet. Excluding the listing from Zillow/Trulia calls into question whether we are servicing the listing properly and acting in the best interests of our client.
In short, we are indebted to these websites for giving real estate agents more outlets to market the listing, and these websites are indebted to us for feeding them listings, which gives them exceptional site traffic.
Conclusion: Everybody Wins, and We are Still in Control
Our clients’ desire to receive maximum exposure on their listing in order to get the maximum sale price, as well as Zillow/Trulia’s promise to “empower consumers with information and tools to make smart decisions about homes, real estate and mortgages” , are consistent with one another. Our relationship with Zillow/Trulia is not parasitic, but symbiotic. And even after the dust has settled after the merger, we real estate agents are still in full control of our marketing efforts, whether they are offline, online, or both. In the end, we are still in control of the marketing mix in a world where Zillow and Trulia have merged.