jonwashburn: Travel Industry destroyers now leading the Real Estate industry

Did you just fall off the turnip truck? haha.

Seriously, I think this is in the back of everyone's mind but no one can put their finger on the killer app these guys will need to pull off a similar coup. You don't get the kind of VC these guys are getting without something more up your sleeve than monetization through advertising.

Jonathan,

I call people like this 'leeches'...they 'prey' on the industry and 'mine' its resources, allthewhile hardly ever giving back or being considerate of the human factor in all of this...it's one big monopoly game for all the marbles, then pack up the board and go home...having 'pimped' the industry and the hard workers in it!!! JMHO, Thanks,   Fran

Hmmm - they all deny it but as Bob says who know what they really doing behind the scenes.

Jon - I actually wrote about this a while back on Notorious ROB (http://robhahn.wordpress.com/2008/02/22/squidzipper-trulia-and-homedepot-future-tense/) 

Basically, whether Zillow or Trulia wants to or not, there's going to be a Home Depot effect taking place as these guys get more successful.

Thing is, the exact same analysis applies to ActiveRain or to Localism or Move.com/Realtor.  It's an inevitable impact of what happens when you replace the initial point of contact with something else.

For that matter, in reality, this is also what happens with any of the major realty brands: Re/Max, C21, etc.  I'm not really surprised that it's happening on the Internet.

-rsh

Just for my 2 cents, it isn't just Realtors that are getting the effect. As more and more people use the internet, less personal contact will take place. As an example, just look at our neighborhoods. How many of your neighbors do you know? How many did your parents know? We all have to work toward local, local, local.

No it doesn't bother me.  Buying an airline ticket is hardly similar to buying a home.  They all want a piece of the real estate economics.  So far, they haven't figured out that selling real estate is grunt work. 

I'm not aware that the real estate commissions are ready to roll over for them either. 

They just make our jobs harder because they try to convince the consumer that they can buy and sell their home safely, effeciently and profitably without an agent. 

Here, put your home for sale on this web site for $30.  You won't need an agent.

Never worked in the past, doesn't work now and isn't going to work for the forseeable future.

Computer literate agents see them as a stepping stones for increased exposure, but what most don't see is the danger behind not paying attention to who is compiling the listing information and what they are doing with it. Trulia has no mechanism to ensure that the listings even belong to the agents/firms/entities who post it. I had to deal with that problem and re-list three of my contracts while contacting the web company that scraped the information from Realtor.com... Picture (a) knowing the owner, (b) having the contract but (c) fighting with some idiot who believed it was okay to swipe my photographs and advertise MY listing to redirect traffic from my firm to THEIR website. Some people really believe they are doing you a favor when they advertise your listing. I don't think it is a favor to redirect my traffic from my firm or personal site. I must say, it turned into a comedy of errors and apologies plus was a very interesting process getting it all sorted out because other websites automatically followed their lead and I had to contact/monitor 35 different sites who collected and advertised the wrong Realtor information... As if we, as Realtors, don't have enough to do... (LOL)

Sometimes I wonder if one of these guys isn't attempting to position themselves to be a nationwide MLS-type provider? Seriously, that's where we need to be, instead of all the fragmented and overly protective local MLS entities...

Hi Jon,

Congratulations to you and staff for 100,000.  I think people can buy airline seats or travel on a computer.  The only thing they will do on houses from a website is reject them.

Real Estate will always need people to show and guide people in buying.

Thanks.

All the best!

Rich,

They would be crazy not to have that in their business plan. 

Jon, Where have you been? We have been discussing this issue for as long as I've been in the Rain.

The thing that I find humorous is that anyone can jump into the fray and take a shot at improving the model... and companies are getting beat out every day trying to find ways to alter the revenue stream.  Maybe one day people will figure out that it takes a certain amount of money from a sale to keep the business afloat. 

Bring it on I'm ready for them and as we get more information on line buyers and sellers will still need guidance interpreting it.

I see a HUGE problem with this, and to date I have heard nothing good about either Zillow or Truilia! 

As agents, our INFORMATION is our power.  I think RE is a very localized "product", and protecting our information and keeping it local is not only important to us, but also our clients. 

Jonathan...

I don't see a problem with it. The Buying and Selling of Real Estate needs the human touch. It always has. I find it difficult to envision a Consumer trying to negotiate a contract with a computer program. I do not agree that the info is our power. Our real power lies within our hearts. Our ability to sell ourselves and our product is no match for a computer that doesn't have the heart or balls bravado it takes to get the job done. For 15 years I've watched entity after entity attempt to position themselves between us and the Consumer. I've never overly concerned myself with it. The day they find a way to give a computer program AI I'll be concerned and maybe just maybe...Let out a grunt :)

TLW...ROAR!

Wow, John, you must have been sleeping under a rock to have missed the chatter about this when Zillow launched in '06. Your fears are misguided. Lenn is right; "Buying an airline ticket is hardly similar to buying a home" and Rich Barton said as much when he presented his lessons learned at the Inman conference a year ago. But there's an even more stark difference between Expedia and Zillow; Expedia is a retailer whereas Zillow is a media business (like a newspaper) and so RE pro's are Zillow's partners and customers. I hope that clears that up!

Jon,

What gives? You know perfectly well that Zillow's business model is all about EMPOWERING agents and that there is no secret plan to disintermediate them. It's disappointing that you chose to say otherwise. You're better than that. Why would you muckrake like this, when you know the truth? You and I have talked about this many times.

Here's a post that I wrote explaining how travel and real estate are VERY different industries. Here's what I wrote, back in November 2007:

"Since much of the founding Zillow team helped create Expedia or Hotwire, we sometimes get unfairly slammed in the real estate community for allegedly trying to make Zillow "the Expedia for Real Estate", the implication being that Zillow will somehow disintermediate real estate agents, who will go the way of travel agents. Nothing could be further from the truth. Real estate transactions, unlike travel transactions, will always be professionally-assisted. There is a critical role for an agent (and sometimes a lawyer, and an inspector, and a mortgage broker, and an appraiser, etc etc) in a real estate transaction.

Zillow has no interest in diminishing the role of the agent. Quite the opposite: we're all about helping agents gain customers by providing them free (and sometimes paid) tools to look smart and attract clients. But wait a minute you might ask, doesn't the Zestimate cut the agent out of the loop? After all, determining a home's value is one of the primary roles of a realtor and now Zillow is doing that for customers directly? No no no no no! The Zestimate is just a starting point, a conversation starter. No consumer should EVER take the Zestimate completely on face value. I strongly advise consumers to take the great free information that Zillow provides and supplement it with information from a great realtor.

There is and always will be a critical role for a professional intermediary in the buying and selling of real estate. And that's a good thing. Travel is completely different. For 99% of the dozens of trips that I take each year, I'd prefer to book it myself. Case in point: I bought my airline ticket, my hotel room and my rental car for next week's trip to Orlando without using a travel agent. Travel ain't real estate, and it never will be (nor should be)."

to the best of my knowledge, none of the founders of these companies come from the real estate industry, so there is no long term commitment to it.  They are primarily technologists who saw an opportunity in the real estate space to build a company that can then be made profitable and then sold.  This should be clear based on the high VC investments in both.   The end game for both is a sale. Not that there is anything wrong with that. Trulia is closer to profitability and may be the first to cash out.  All just my opinion.

Muckrake? Now there's a term you don't run into every day. I think I read that somewhere in Bunyan's "Pilgrim's Progress." I don't think Jonathan meant any ill will by posing the question. It's a concern that surfaces regularly, and you guys have responded very succinctly, as usual. That's one thing I will definitely commend you guys on,...your ability to personally address such concerns sp swiftly across the board. So seriously, what are the chances of Zillow or Trulia becoming the de facto nationwide MLS?

Fran & Pam:  I think it's harsh to say that either company is a 'leech' or that they offer 'nothing good.' While both have encountered resistance from the rank & file, both have offered solid tools to benefit our business, many of them at no charge.

Thanks Rich, you're most kind ...

The MLS serves a lot of different purposes and it is much much more than just a listings database. IMO, the primary function of the MLS is to manage the trading relationship between brokers and that's a very valuable and necessary function but Zillow's audience is primarily a consumer audience and so we don't plan to control the conversations between cooperating brokers.

David: I very much appreciated hearing your comments throughout the RE Barcamp and the Inman Connect. Can you PLEASE control the conversations between cooperating brokers. The current communication isn't very effective!...

Hi Jon!

Great seeing you and the AR team again at Inman. Your penthouse party was perfect.

Saw this earlier and have been meaning to jump in.....but have been so swamped.

In my opinion, for us, this is a non-issue. Trulia completely recognizes the value of real estate agents and brokers - NO QUESTION about this. Trulia provides a venue where consumers and agents can connect.

Rudy

Social Media Guru at Trulia

Unlike many real estate agents, I think Zillow and Trulia bring a lot of useful information to consumers if we look past the online valuation models. And in the long run I'm not worried about either site, because "In 24 months Localism will have more traffic than Trulia and Zillow combined."

Bob, I am thinking about doing a post projecting how many impressions it would take to warrant a $100M+ valuation under a media model with an average CPM rate of $10.

Fran, I don't think they prey on the industry.  Worse can you could could consider them would be like Trojan horses, building up power by using real estate agents listings, under the guise of empower them until they have the ability to enact real change in the real estate business model.

Bill, I think Bob wish he knew what the long term plan was.  I really do not think anyone does.  Most of the new businesses sense that there is an opportunity to revolutionize the industry, they just don't know yet how.

Rob, You're right, except that you know what you're getting with the ActiveRain leadership team.  Pretty much everyone on our team comes from a real estate sales or brokerage background.  We are wholeheartedly committed to the success and prosperity of the real estate practitioner.

Fred, I agree with you 100%. It is a huge shame that we have lost sense of our local communities.  It is my vision that Localism.com will go a long ways to resurrecting the local community.

Lenn, The guys leading these businesses are brilliant and I have learned early on never to underestimate your competition.

Tann, Crazy story.  So are you saying that additional exposure for your listing is not always in your clients best interest?

Rich, I wonder how a nationwide MLS could be structured to be of most benefit to the consumer? I personally would love a real estate agent controlled national MLS. But if a single for profit entity controlled it, it would be terrible for all involved.

Kevin, The real estate agents' role will be diminished in the future.  Over the phone today Brian Brady told me of a speech given by Gary Keller a few years ago where he foretold of the changing roles of real estate professionals from being "functionary to fiduciary".  That sums up perfectly what I believe will happen too.

Mana, You know what? I have stayed out of this conversation because there was a healthy debate and respect around these companies.  I haven't heard anyone talking about it for a while now, but we cannot completely let our guards down.

Lane, Amen brother.  Real estate sales is a very tough business. 

Terry, Let's take what you are saying a step further.  As more information comes online, especially content written by the real estate professional, the consumer will become more able to learn of the value of real estate professionals.

Pam, I agree with you that this could be a huge problem.  But I have to disagree about nothing good being said about Trulia or Zillow.  Both are companies run by good guys. I have had conversations with pretty the entire management staff of both companies and have only positive thoughts about them.  Even so they are fierce business competitors and the real estate industry is the battlefield of the day. We need to keep that in mind.

TLW, I believe that our power lies in our hearts and minds.  The consumer will always need an advocate (heart), and the real estate agents great knowledge of their local market will not be replaced by computer simulations.  The good news, like you implied, is that the day computers have advanced AI then they will do all the work for the humans anyways, so being unemployed will be status quo.

David, When Zillow launched in 06' I led the charge for real estate agents to embrace it.  Every one of the agents who worked at my brokerage company were encouraged to use Zestimates when doing a listing presentation to win a listing.  But that was a different time.  The old guard real estate company leaders were not as asleep at the wheel.  It seems that Zillow and perhaps Trulia are both just around the corner from being easily the most powerful companies in the real estate industry.  I am not sure most people realize that.

Spencer, I didn't say anything about Zillow having a secret plan to disintermediate real estate agents in this post.  I just quoted an interview where Rich Barton insinuated as much. I believe that right now Zillow needs the real estate professionals participation to be successful, but what happens when Zillow doesn't need the agent as much.  If over the next couple years Zillow gains the ability to displace the real estate practitioner would you do it?

Joe, "none of the founders of these companies come from the real estate industry, so there is no long term commitment to it"  That is EXACTLY what I have been trying to say.  Real estate just looked like the easiest target to go after. You are also right that there is nothing fundamentally wrong with what they are doing. 

Rich, I had to look muckrake up in the wikipedia. Turns out that Spencer was paying me a compliment. Who knew?

"Although the term muckraking might appear to have a negative connotation to it, muckrakers have often served the public interest by uncovering crime, corruption, waste, fraud and abuse in both the public and private sectors."

It doesn't seem like Trulia is going for the national MLS play, at least as how you are thinking it. Zillow may be, and when they achieve it it will be very powerful as they are building it from the ground up. FSBO's and all.

Rudy, Great seeing you too!!! I've been meaning to respond to comments earlier but I too have been swamped.

I believe that Trulia recognizes the value of real estate agents, but then again how could they dispute it?

All I am saying is that Trulia is run by industry outsiders and that real estate practitioners should be conscious of who they are empowering.

John, Sadly Localism will be more of a generic consumer play and even though it will have more traffic than Trulia or Zillow, it won't be as influential as either of them in the real estate industry.

Jonathan: The problem we have now is that listing data nationwide is so fragmented among various MLS groups. Even here in our market, we still have a couple 'hold-outs' and not all the listing data is available. And let's face it, most MLS groups are not known for pushing the technology envelope. Their response to agent needs and issues tends to be slow and archaic.

But take our own NWMLS, and the various IDX feeds distributed amongst various users. There are so many fields in the listing input sheet that never get translated over through the IDX. And that's great info that could be of benefit to the consumer. The real problem is that vital listing information isn't making it's way to the consumer and it's not being packaged consistently or uniformly in a way that gives value to consumers.

If I was an RE Leader, I would create a corporate Listing Input and Marketing program that would take all the usual 'required' data that would serve a multiplicity of purposes:

1. It would create much of the data for your office Listing file.
2. Transfer all required listing data to to the local MLS office.
3. Import all the data for creating listing flyers, both hard copy and virtual.
4. Tranfer all the data to multiple listing aggregation sites.
5. Create a .pdf file to e-mail to loan officers and title/escrow agents.
6. Create a Marketing Event Calendar to keep the Listing Agent on task, and communicating/sharing events with Sellers.

I'm sure there's more you could envision this program could do, but just imagine all the time that would be saved for the agent?

Hey Jonathan,

As you said on your personal blog, you put this out in "a sensationalist manner" to draw attention to the lack of innovation from within the industry. This I agree with. The innovation in this case appears to be happening on the fringes of the Industry, as is so often in the case. I think you know that Trulia is not in any way trying to dis-intermediate the real estate Industry.

I felt from our prior conversations that we have both chosen our jobs and start-ups as we believe that the real estate Industry and consumers deserve better. Period. In today's marketplace with so many agents and brokers struggling with their businesses, with so many home owners struggling with decline house prices and so much market confusion, bills and new technology, we as leaders of real estate technology companies should focus all our attention on a simple mission: to help make this industry a better for consumers, agents and brokers. I think we would all agree, we've got enough to get on with...

Pete

Good topic!  So, you're going to give them a run for their money? 

Jon, you wrote: "If over the next couple years Zillow gains the ability to displace the real estate practitioner would you do it?"

I think I answered that question above when I quoted from my November 2007 post: "There is and always will be a critical role for a professional intermediary in the buying and selling of real estate. And that's a good thing."

So, again: No, Zillow will not displace real estate practitioners.

Like your company, ours is a media company which makes money on advertising not by being a brokerage or agent. Agents and brokers are our friends. I'll keep saying this over and over and over again because it's true; no matter how many times people try to indict Zillow because of our past experience at Expedia, Zillow (unlike Expedia) is not an ecommerce company. Our company is not competitive with agents or brokers. We send a lot of clients to agents and brokers, and a TON of traffic to their websites. Zillow is no more likely to put real estate agents out of business than webmd.com is likely to put doctors out of business.

And rereading it just now, I guess I owe you an apology for being a little harsh in my first comment above, but dude, the reason that my prior comment was a little feisty is that you know all of this already!! We've talked about it a million times, and I know that you've seen me write this on my blog also. Anyway, it's all good. This is what blogging and social media is all about, right? Healthy debate and discussion. Gnite.

At the risk of sounding silly, what I'd really like to know is how to get a piece of the Venture Capital pie :-)  And I think Rich and Pete are experts at that.  I wonder if they would coach others?

Jonathan,

Great post!  There's going to be a shift, not now, not soon, but in the future.  What will we do about it?  My kids probably won't want a Realtor with the state of the industry.

There's no barrier to entry in the Real Estate field so many consumers are more knowledgeable than the agents.

Always good to keep in mind where people are coming from. 

Trulia feels like the friend who has something to hide, like they're sleeping w/ your girlfriend or something.

At least Zillow is openly hostile on many of its pages to agents.

Joshua,

Please show me any example in which "Zillow is openly hostile on many of its pages to agents." That's patently false. I'm really sorry that you feel that way.

- Spencer from Zillow