My vote goes to two companies, Zillow and Trulia. To be more precise, I believe that revolution started shortly after dot.com collapse (2001?). There were new efforts undertaken by a number of dot com companies, but other than spectacular collapse of a few over funded start ups, there is not much that can be attributed to the period before 2001. But the end of dot com era caused a tremendous influx of talented people, including large numbers of developers to real estate. Over last several years we are witnessing development of new technologies and process automation. Progressive MLSs embraced new capabilities, but there was no urgency in doing so, until recently.
A year ago Zillow launched its service, followed soon by Trulia. Zillow and Trulia are very different companies. Zillow’s focus is on providing appraisals and its revenue comes from advertising. However, they cannot justify the huge investment to their investors ($60M), unless they will come with additional revenue sources. We don’t know what they are, but names of founders are almost a guarantee that they have something “lurking” in their sleeves. Trulia is focusing on buying and selling and client education. The company has quickly become a second visible “shining star” of the current real estate revolution. But the main contribution of Zillow and Trulia is their ability to bring urgency to adopt innovations and look for new solutions in our community. MLS, who could care less about what individual clients might want (sorry for a possible exaggeration, as some MLS are better than others) compete to adopt changes and satisfy clients’ demands now. You can find more on that subject in my recent post
I mentioned there about the demand for a one-stop shop for residential properties, thus is a tremendous market for Trulia and others to capture, but also about changes in responsiveness of MLSs.
There is a concern among our community about a possibility that companies such as Trulia will eliminate or diminish the need for agents or that they will cause an erosion of commissions. We realized that clients need more different types of solutions than we were able to provide in the past. Zillow and Trulia showed that there is a tremendous untapped market out there and realtors (for variety of reasons – but this is a separate subject) were not able to tap to it.
But does it mean that those agents are going to be replaced entirely by on-line solutions? MOST DEFINITELY NOT. There are a lot of needs Trulia and Zillow will not be able to satisfy. There are plenty of great agents and brokers out there who provide unparalleled service. Zillow and Trulia are visible symbols of a current revolution, but the revolution itself started a few years earlier, as I mentioned before. It started, because real estate was falling behind in its ability of accepting innovations and responding to new needs of clients (why it happened – is a subject for another blog). The revolution was able to “catch fire” because of the influx of new talent and new blood. But it is just the beginning. A few years from now we will see a different real estate world. How is it going to look like? No-one really knows. But I believe that it will be a world full of great agents, brokers, “Zillows”, “Trulias”, and other innovators. Good agents and brokers will become better agents and brokers. Possibly we will be down to 100 MLSs (out of 900 today) and major brokers might be forced to lower the cost of their operations, but most importantly, the influx of competition will help us to provide better service for our clients. We will be offering new services far beyond listing and closing. This way or another – it will benefit clients! There is a plenty of room for more innovations. We just see a tip of an iceberg as many changes we are observing still have not changed the fundamental brokerage model there is on existence for quite a while. Will the model change? Will commissions go down? Again, these are subjects for other posts.