Who Started the Real Estate Revolution?

By
Real Estate Broker/Owner with Cimpler Real Estate, Inc. CA BRE# 01330941

 

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

One-stop shop in real estate

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.

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William Johnson
RE/MAX Associates - La Jolla, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE

This was a very good and insightful posting. I just added you as an Associate. That is supposed to be some sort of reward by someone who thinks you write good posts, at least that is what I think it means. There seems to be no one place for you to go to ask these questions or perhaps you already recognised that. :)

Jun 30, 2007 10:45 PM #1
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Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

Trulia and Zillow have certainly contributed to the "real estate revolution", and some leading edge real estate companies have, as well, such as RE/MAX International.  I've found this revoution to be a mixed blessing because it (theoretically) makes an agent's job so much easier when our clients can rule out properties online, rather than requiring us to drive them around.  On the other hand, so many consumers DON'T eliminate properties. - they just add on.. and on... and on...  In the old days, I would show buyers 5 homes that best meet their criteria, based on the options available, and they would usually buy one of them - now they INSIST on looking in 5 counties, and maybe 20+ homes.  Yet they end up with one of the 5 that I would have picked, based upon my experience.  In the end, that experience is the value that agents provide to a real estate transaction, and consumers still need that to protect their interests when they actually make a buying decision.

Jun 30, 2007 11:52 PM #2
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Todd Murphy
Fitts Agency - Tuscaloosa, AL

If anyone thinks that Zillow and Trulia got in this game to raise revenue through advertising they are fooling themselves.  These guys want a piece of the trillion dollar real estate commission market.

The good news is that technology will never replace people in the real estate business.  The bad news (for some real estate companies) is that commissions will come down.

Jul 01, 2007 01:16 AM #3
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Paul Moye
Benchmark Realty - Franklin, TN
Broker, GRI, SRES
I have t agree with Louis, Zillow has not done anything new. Even less in my opinion. They took on the role of so called real esatte experts in the valuation market and have yet to get it right. Nievity is what they are hoping for so they can get $$$$ in their pockets until a new original idea really makes a change
Jul 01, 2007 02:01 AM #4
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Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

William, thank you very much. I really appreciate it.

Margaret, I see your point.  I think it is part of "client empowerment and education". Clients will as they should learn more about real estate. At the same time they are finding out more information certainly doesn't help them to make a choice. And this is part of our information age. We as agents have to guide clients and I think that educated clients will create many more market opportunities.

Todd, someone made simple calculations showing that the advertising revenue is not enough to create sufficient return on $60 M VC investment in Zillow.  There are to many big players involve there to assume that advertising is it. 

Jul 01, 2007 06:25 AM #5
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Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Louis, I really appreciate your feedback. Home Gain is a good company and provides good services. You are evolving and improving your products and certainly are an important player at the market place. However, in life timing and right PR is sometimes everything. Zillow's interview for Money magazine launched the company. I don't believe it was incidental. Where they lucky? Yes of course. Beyond being very good you need to be lucky and have perfect timing. Public responded well, not only because their product is "flashy", but because there was unfulfilled need and simmering uneasiness of public, that if they ask for something, they would have to deal for ever with sometimes pesky agents. In short, there was a need and they provided a solution. Are they better than many other ambitious start ups out there? Certainly not, but a good product plus smart promotion plus perfect timing equals SUCCESS

 

Jul 01, 2007 06:38 AM #6
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Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value

Paul, you don't have to be most innovative to be financially successful. Just look at Microsoft. Zillow might not have the most original and innovative product, but certainly they have market visibility. In the Internet age, visibility and number of clients is everything. Either they will come up with a new revenue generating service or someone buys them up. It took You Tube a slightly over one year to get acquired. Did they come up with a new technology? Not, they just packaged it well.

Jul 01, 2007 06:46 AM #7
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Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value
Please to see that might post got featured in the Zillow discussion group! This is my first one. Thanks.
Jul 09, 2007 09:05 PM #8
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Stuart McIntosh
homSALE - Madison, WI

I am also part of a company looking to help connect users with home listings and real estate information, www.homsale.com. We know that in order to be successful that we had to partner with Realtors and find a way to provide value to them as well. We have a base of Realtors that provide feedback to us and how we can make their lives easier. I do see that market moving to tighter commissions which will make it important to be as efficient as possible. That is why we are indexing all listings in WI and MN and are moving to others states as we speak. By being a central source for listings, consumers and Realtors can efficiently find listings of interest.

Jul 13, 2007 06:30 PM #9
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Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value
Thank you for your input Stuart.
Jul 13, 2007 07:47 PM #10
Anonymous
Roger from Trulia

All, thanks for the original post and interesting conversation. I do want to point out that Trulia launched our service shortly before Zillow did in September, 2005, and not after.

I feel there's plenty of room for services like homegain, Zillow and Trulia on the Web, and that real estate professionals are an invaluable part of any real estate transaction. Trulia is not out to replace agents: we are here to help consumers make better R.E. decisions and connecting them with professionals. 

I also want to thank Artur and all the other activerain-ers who also come to Trulia Voices http://www.trulia.com/voices/ to help consumers navigate the real estate market. Your contributions are outstanding and a real asset to real estate buyers and sellers.

 Thanks!

Aug 11, 2007 08:08 AM #11
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Artur Urbanski
Cimpler Real Estate, Inc. - Burlingame, CA
Helping property owners to maximize property value
Roger, you welcome and thank you for your comments. Both Trulia and Zillow are adding value to customers and they are making it very clear that they like it. If I could offer a comment, I would like to suggest to create additional categories to Trula Voice. For example, one - general to allow anyone to make a statement, post a real estate question, etc. Of course all posting should follow guidelines. Another one - would be primary for professionals to allow them to discuss professional issues - something of a "mini" Active Rain. This category could be viewed and commented by clients as well, but would deal with issues f prime interest to professionals (i.e. marketing methods, best websites, etc.).  You have a lot of understandable interest from professionals, but is a little chaotic at the moment.  Feel free to contact me directly if you want more specific input.
Aug 11, 2007 10:03 AM #12
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