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Will Zillow Destroy Real Estate Agents? - YouTube
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will zillow destroy the real estate
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agent as we know it today
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yes but hold on a second let me explain
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what's up everyone neil here with
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another video for those of you who don't
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know
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i talk all thing business marketing and
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real estate and today we're going to get
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into a controversial topic which is
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zillow
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and it's domination of the real estate
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industry now zillow was founded back in
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2006
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as just a site where you could go up and
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look up your home valuation
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it continued to grow and grow and evolve
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and from 2010 to 2019
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the ceo was spencer raskoff now their
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business model over this time period
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was to continue to get the traffic so
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they would continue to have people come
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to the site
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to look up the value of their home to
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learn about real estate to browse real
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estate
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they would take all that data and then
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they would sell the leads to real estate
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agents and to mortgage lenders
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and they would sell ads on the website
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right so over that decade
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they built their business by selling
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data selling leads right and they
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continue to brand themselves over that
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period as the number one
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place to go for all things real estate
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if you look at the traffic to zillow
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and then the other sites it's not even
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close like zillow dominates the online
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space it's the number one consumer real
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estate website
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in the united states and is growing
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worldwide now as well so if you think
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about it
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i don't think they were branding
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themselves over a decade running these
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ads like
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let zillow help you find your home and
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you know zillow's the trusted place to
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go
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and let us help you right i don't think
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they did all that for nothing
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so what they did it for was to
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eventually one day become the place
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where you could transact real estate
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right that was their goal from the very
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beginning
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now they couldn't do that because the
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marketplace wasn't ready for that
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because the marketplace
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is very traditional in real estate it is
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probably one of the oldest
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uh most antiquated industries as far as
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tech goes
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you know very slow to adopt new things
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very old school and
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they fight to keep it that way right i
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mean the national association of
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realtors
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and all these trade groups want to keep
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it the way it is they don't want these
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huge changes right
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so zillow had partnered with the real
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estate industry and that's how they
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continue to grow over this time period
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over that time period they also gained
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access to all of the mls systems
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throughout the country
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so that way when a listing was put on
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the market
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it could be syndicated through zillow
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and put on their website as well right
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each local market has its own mls
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multiple listing service
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and that's their stronghold on the real
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estate market you can't put a home into
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the mls
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unless you're a licensed realtor and a
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member of that mls
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right so they took that data and they
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gave it to zillow
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and then zillow would give them data
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give them leads
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sell them information right so there was
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a partnership over that time period in
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2019
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the zillow board and spencer raskoff
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decided to
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part ways i think he was fired because
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they weren't growing fast enough they
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weren't getting to their eventual goal
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but he resigned right rich barton comes
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in to take over
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now rich barton is much more aggressive
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he wants to come in there
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and have zillow reimagine real estate
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that's their
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uh slogan i should say right so what
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happens is
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he comes in and he wants to accelerate
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the timeline
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he wants consumers to come to zillow
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find a home they like
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click on it get information look at it
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and buy it
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using zillow then he wants zillow title
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company zillow closing services to
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handle
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the title in escrow then he wants zillow
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home loans to handle the mortgage
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then they're probably going to introduce
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insurance and other services along the
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way as well right he wants it to be a
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one-stop
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shop a seamless experience for the
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consumer
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okay now for selling he wants people to
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go there and say hey
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i want to sell my house you can click
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here to sell it to zillow
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or if you don't like that valuation you
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could click here and zillow
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will give you one of their partners so
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what happened when rich barton took over
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is they switched their model to focusing
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more on going direct to consumer
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now in certain markets they're testing
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zillow offers where you could go on the
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site sell your home a zillow
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they're overpaying for the properties
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and people will complain and say hey
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these guys are losing money it's true
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they're losing a little bit of money on
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each real estate sale
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but you don't understand the bigger
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picture here which is that they're
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trying to build a strong reputation
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for zillow being a great place to sell
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your home so they might even overpay
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for a year or two going forward but that
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way they built this really strong
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network
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of people across the country that said
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hey i sold my home to zillow and i had a
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great experience
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like if they underpaid and tried to flip
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these houses for a big profit
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that would shoot themselves in the foot
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because then they would get a bunch of
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people that
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come to know zillow as a place that
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would
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undercut them or underpay for their
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property right so
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they're trying to build the zillow opera
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business on the buyers side
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consumers are coming there looking at
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property and they're like click here i
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want to look at this house or i need a
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real estate agent i want to look at
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these properties right
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i want to buy a house so what they're
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doing with that
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is instead of selling those leads
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they're going to
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partner with agents in each market this
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is called zillow flex
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okay now zillow flex is basically saying
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hey
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instead of selling you leads we're going
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to pick the best agents in each market
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so previously zillow would just sell
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leads to any old agent
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right and then if you want to pay you
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could buy leads
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now what they're saying is hey you're
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not getting these leads unless you are
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one of our best partners
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that means that you have excellent
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customer service you follow up quickly
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and you close you have a good conversion
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ratio right so they're going to work
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with the best asian partners
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across the country and those agent
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partners are going to get the leads for
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free
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they're just going to give them to them
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when the deal closes they're going to
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take
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a referral fee this referral fee revenue
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from zillow flex
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dwarfs the previous revenue that they
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would get from selling leads
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it's not even close so it's a huge shift
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they're going to make more money from
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the data that they already have
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and it's just going to accelerate their
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revenue growth a full disclosure guys i
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am an investor in zillow so i'm just
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giving my opinion but i just want to
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disclose that i do have a position in
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the zillow stock i've owned it for a few
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years now
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in 2020 9.6
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billion consumers went to the zillow
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website
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they had 9.6 billion site visits that's
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up about 1.5 billion from 2019 and it's
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just
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on this trajectory that keeps going up
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it is just insane the amount of people
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that are coming to that website it
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really accelerated during the pandemic
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and it's continued to grow and grow and
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grow in their most recent earnings
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results the
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ceo rich barton said we are building a
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seamless transaction for customers
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to meet the desire for technology
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enabled
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renting buying selling and financing
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he's saying customers are coming to
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zillow just wanting to make a move
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they either want to sell or they want to
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buy and they want zillow to just be a
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seamless easy experience
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and if you look at consumer data trends
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millennials all these people that are
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going to sites like zillow
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they want ease of use right they click a
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button and they want to make an
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appointment they click a button they
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want to get a house they click a button
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they want to sell a house right
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and we all know that that's not the way
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it works there's a lot of intricacies
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there's a lot of complexity with the
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process but they don't want to advertise
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all that on zillow they just want to
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make it very easy so the customer comes
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there
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and they want to kind of shield them
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from this messy process and just make it
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appear very easy to the consumer some
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people might say that's misleading
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but that's what they're advertising and
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it clearly works
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because this is what the customer wants
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now in that same earnings release
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the ceo went on to say customers are
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simultaneously showing a hunger
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for this kind of integrated seamless
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experience that zillow can now provide
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and then he goes on to give an example
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of a teacher who used the process from
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end to end
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they sold their home they found a home
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they bought it zillow closing handled
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the title
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a zillow agent handled the sell and the
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buy
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and zillow home loans handled the
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mortgage right so he's showing this like
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end-to-end experience
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that was completely easy for the client
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and the client gave them a five-star
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review
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and you know everything was rosy right
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so he uses this as like
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the poster child for what he thinks is
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going to happen in years to come
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now what he said at the end of the uh
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announcement really kind of stuck with
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me okay
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now check this out he says we are
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connecting services together for our
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customers
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and using our low cost of customer
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acquisition across multiple products
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we're going to compete against an
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industry of largely
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single point solution providers with
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high
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customer acquisition costs we now have
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the building blocks in place
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and our story ahead will be about solid
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execution
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and scale as we strive to improve the
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digital experience
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for the whole industry here's what he's
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saying low acquisition
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costs they have the traffic they have
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the data they have the shopping data
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they know what people are going to do
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based on what they're
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looking at they have all this data
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they've collected it for
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15 years now okay people come to the
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site without them even asking them to
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come to the site it's just
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known as the place to go for real estate
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right now if you're a single solution
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provider
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you have high acquisition costs because
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you have to pay sites like
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zillow redfin realtor.com or you have to
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buy these leads or you have to run ads
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to acquire a customer and then you have
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to nurture that customer for
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months and months until they're ready to
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buy or you have to nurture that customer
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until they're ready to sell right
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so they're saying that these single
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solution providers are great
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but they're not going to be able to
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compete with us because we get all the
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traffic
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just for being zillow we don't have to
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do anything we just have to sit here
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and provide a great experience that
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people are going to come to us and then
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now all
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you do is execute right so he's saying
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they have a huge advantage so are they
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going to put realtors
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lenders and title companies out of
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business yes
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but not all right they're going to put a
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certain type of agent out of business
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so there's a certain type of agent
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that's stuck in 1997
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or 1988 and they haven't changed the way
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they've done business
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and they say that real estate doesn't
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need to evolve that this is the way it's
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always been done and this is the way i'm
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going to continue to do business
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and that's okay right it's worked but
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now all of a sudden
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as the market gets tighter and the
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digital trends continue to accelerate
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those type of agents are just going to
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see their business decline for the agent
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that's innovating that's providing a
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great customer experience
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that's staying in contact with their
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clients online that's
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doing some digital marketing they're
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going to be fine because
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they'll be a choice among many right so
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the customer is going to
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start to view zillow as a choice a place
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to sell my home
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a place to buy a home place to get a
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mortgage all that stuff right
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but consumer choices are just that it's
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just one choice of many
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they may choose to go with a local agent
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but they have to know about that agent
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first
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so that's the thing that i talk about
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all the time is you're gonna need to be
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known
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if you're in the real estate industry if
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you're in the mortgage industry the
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attention is number one
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there's all this stuff going on behind
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the scenes we provide a better
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loan than what zillow home loans
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provides we provide a better
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experience and we sell your home for
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more than what zillow is going to sell
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your home for right
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but that stuff doesn't matter if they
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got the client first
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so what you have to do is you need to
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meet the customer where they're at
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so if they're on social if they're on
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youtube we need to be there too right
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so that way we're known as one of these
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choices and we can explain the
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difference between working with us
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or working with them that way the
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customer can decide right
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so i just think those kinds of people
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those types of teams
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those types of brokerages that are
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continuing to evolve and innovate
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they're going to continue to do well
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maybe even
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take market share and then these other
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agents stuck in the past
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are slowly going to go away now one
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thing that's kind of weird about real
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estate
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is people don't seem to give up their
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license so they remain licensed even if
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their business is declining they keep
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their license around so
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i don't think you'll really see like
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people go away completely but you're
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gonna see their business decline that's
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for sure
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[Music]
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