The Zillow-Trulia merger was a big announcement in the real estate world this past week, but is it really going to change anything for agents or consumers? To answer this question, we need to answer two other questions first: What is the role of a Realtor® in a real estate transaction? and What do real estate websites like Zillow and Trulia provide?
First, let me say that I don’t think the merger will have a significant effect on the way people buy and sell houses. Zillow and Trulia have dominated consumer online searches for homes and other real estate data for years. Both have been largely supported through fees that agents pay for exposure and buyer or seller leads. And that is sure to continue. But neither company has been doing well recently. In the first quarter of this year, Trulia lost $13.3 million while Zillow lost $16.9 million.
The merger of these two companies will reduce operating expenses and the cost of acquiring customers to help keep them afloat, but, to reverse the money losing trend, they will need to be innovative. They may do things like having more display ads on their websites, but more significantly, it is likely that there will somehow get involved with real estate transactions. They may charge fees in the form of commissions or fees for services that are involved in transactions like home owner insurance, title, escrow, contractors, staging and so forth. But even if they get more involved in real estate transactions, there will always be a need for Realtors®.
What Realtors® provide is something you can’t get from a website: a Realtor®’s knowledge and awareness of what is happening in the local market, their expertise in handling legal documents that could save you from a lawsuit and thousands in additional expenses, the relationships they have with other agents that get your listing more exposure and vendors that smooth the transaction, all their marketing efforts, and doing all the legwork to make sure your transaction closes on time. But there’s more . . .
The single most important reason that Realtors® will remain necessary and critical to the real estate transaction is their ability to represent you. A licensed real estate agent under an agency agreement is bound by law to a fiduciary relationship. They must act in your best interest. They can stay objective because they are not as emotionally involved in the sale as you are. They can negotiate on your behalf and prevent bad blood between the buyer and seller that could kill the deal. They can help keep you focused on what is important, rather than the little aspects of the transaction that may become frustrating. And they can give you the best chance of closing the sale.
All of this is why it is so important that you have an agent that represents you—and only you. Dual agency, the practice of agents representing both the buyer and the seller in a real estate transaction, is common. It’s great for agents because they can collect commissions from both sides of the transaction. But it’s not good for you. It’s like an attorney that goes into court representing both the plaintiff and defendant. How can one person be a fiduciary and negotiate fairly for opposing sides? They can’t.
Zillow and Trulia may provide important real estate information for consumers and even find ways to be more involved in the transaction, but they will never provide the personal service that your Realtor® does, especially if your agent works solely on your behalf!
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