What Will Zillow Do?

Dear Rich Barton … haha. Just kidding. (Rich Barton is CEO and one one of the founders of Zillow)

I already wrote Mr. Barton an embarrassing letter a couple years ago about how to position Zillow better for consumers. I’m pretty sure that went nowhere. Besides- who do I even think I am, anyway?1

But I’m genuinely curious. Now that real estate commissions have been de-coupled, what will Zillow do?

Will they take this opportunity to become the listing aggregator, shifting back to a “platform” company?

Will they de-couple from the NAR?

Arguably, Zillow has more to gain from these changes than any other company.

With their technology, they could become a one-stop shop. Eventually, people could list their own homes on Zillow and it would be easy: auto-pulling from assessor sites, more specific estimation/pricing software, AI, and streamlined state-specific documents/forms. Essentially, listing agent tools could become homeowner tools. Zillow has the power to replace the MLS and, in some cases, replace listing agents. For more on what this process could look like, see my article on re-framing the agent.

I believe real estate agents are still necessary and important. And despite their bad rep, many of them work really hard for their commissions.

Personality and work ethic aside, who does the most work and who is most likely to become redundant- listing agents or buyer agents??

Financial Samurai recently wrote a post about the new NAR changes and his take was that listing agents do most of the work.

I disagree with his stance. Like- What?? How do listing agents do most of the work?

I actually believe the opposite- I think that many listing agents already outsource most of their work. Some (not all) listing agents out there hardly do more than snap a few photos with their iphone, post to the MLS and wait for offers to come in. The market has been so hot, what incentive have they had to do more? And I bet that type of listing behavior is even more prevalent in the states that disallow dual agency (I think dual agency should be allowed).

Many of his points under the ‘listing agent work’ are actually completed by the buyer agent unless the listing agent is a dual agent… such as facilitating the sale of the property, communicating with potential buyers, making sure buyers are qualified, and overseeing home inspections. Additionally, home staging is outsourced, comp analysis is sometimes outsourced, and where I live, listing agents don’t usually arrange and oversee home repairs (but they do sometimes give bad advice like -you need to redo this “dated” but nice kitchen before you can sell- inflating their own commission and overall home prices even further).

Meanwhile, buyer agents are out there on the ground- giving the tours, writing up offers, hand-holding/consoling, helping with financing, arranging inspections, arranging escrows, maintaining communication and meeting buyer deadlines, and all the other most time-consuming parts of the sale process. (Again, I expand on this more in my post on re-framing the agent). I’m very serious- go ask 100 agents if they’d rather be the listing agent or the buyer agent and see what they tell you…

I know the entire business of real estate can differ vastly, depending on your location- so maybe that’s just my own localized experience. But I doubt it?

I think Zillow is going to make some big disrupting moves here soon, somewhat on the lines of disruption within the ‘listing’ side. They could capitalize on all this by creating a new and better MLS while simultaneously streamlining the process through better tech and agent organization tools and checklists. If they wanted, Zillow could roll out a sister-platform/new tab for agents which would bring in new revenue from subscription fees. And that’s probably just the beginning.

There is potential for the process to be better for everyone.

But what’s the doomsday scenario (if there is one)?

In that world, Opendoor and other “ibuyer” platforms grow and become more prevalent.

The first reason this would be bad is because “ibuyer” platforms are risky for our overall economy (Remember when Zillow lost almost a billion dollars ibuying, when the market was in their favor?).

Secondly, they primarily sell to large corporate buyers and institutional investors which pushes up home prices even further and accelerates the “REIT” investment trend. This isn’t good for anyone but Wall Street. Sorry- there is no convincing me that institutions should own single family homes. I’m not on board. Even if ibuyers do sell to regular folks, their goal will always be profit maximization. The ibuyer business model is also ripe for dishonesty, fraud, and other bad behavior. As a whole- zero upside for the consumer… but lots of upside for corporations. Yuck.

I’m pretty optimistic though that this won’t happen. The ball is in Zillow’s court. And for that matter, Redfin’s.

I’ll be watching both companies closely. I’ve written a lot less about Redfin because I am not as familiar with them as a company. They don’t exist where I live (although I hear they’re expanding into Chicago and maybe other Midwestern areas). I wouldn’t be surprised if Redfin pulls a rabbit out of their hat. These are crazy times-

The race is on…

My biggest hope- maybe all these changes will show that dual agency is a great thing.

I’ve said it before; I’ll say it again:

Real estate agents are mediators. Two agents is too many cooks in the kitchen.

I have tons more to say about the industry changes headed our way, but for now, I’m most curious:

What will Zillow do?

(Rich Barton, if I say your name three times, can I Candyman my way to your attention? :/ okay okay bad joke, sorry.)

Thanks for reading,

HouseRat Zero

  1. Remember that insane bowling video… “Who do you think you are, I am?”… have you seen it?

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