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Zillow: Travel Agents v Realtors

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Managing Real Estate Broker with San Diego Previews Real Estate CA BRE# 01101958

I truly don't mean to beat a dead zebra, but comparisons between Zillow and the travel industry keep bubbling up.

 Lonnie Delacava commented on this issue saying, in part:

I don’t suspect that Barton and Zillow have any more respect for Realtors than they did for travel agents based on these comments from Zillow CEO Richard Barton in the New York Times:

"…is it rational to pay Realtors what they are paid?" He says he thinks they are overpaid…
http://www.nytimes.com/2006/02/08/business/08real.html?ex=1297054800&en=5892d422b169a166&ei=5090

What a slap in the face to Realtors. They won’t even mention Realtors on their website and they’ve publicly stated that, “Realtors are overpaid.” Why would any Realtor support Zillow? Baffling to say the least!

This reminds me of the famous “Trojan Horse” story where they come in peace bearing gifts at first… Then in the middle of the night, when they least expect it… the kingdom is slaughtered.

I just don't think we can compare the travel industry with real estate sales. And if the folks at Zillow feel they are in similar territory, that would be a mistake.

With travel agents I never saw:

1)Extensive disclosures regarding the transaction, the hotels and the transportation.

2)Financing that involved up to 30 years.

3)Agents repeatedly showing various accommodations--even if it meant working after hours or on weekends.

4)Taking required continuing education.

5)Carrying errors and omissions insurance (does Zillow do that?)

6) Paying most of or all their own expenses.

7)Representing clients in what is probably the largest investment of their lives.

Hmmm...I wonder if Realtor.com might consider advertising on Z's site???

 

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Toby Boyce
C.G. Boyce Real Estate Co. - Delaware, OH
MBA, Delaware Ohio

All of those are great points Roberta.

However, I think the biggest difference between RE agents and travel agents is that we -- or the good ones -- provide more than just information. We are a service to the consumer and we have to make sure and sell that to them.

I'm not a supporter of Zillow, but feel that eventually there will be a program that can provide a "reasonable" market analysis for the consumer, and the agents that don't adapt before then, will find themselves in trouble.

Oct 28, 2006 11:18 AM
Teri Isner
Keller Williams Realty at the Lakes - Orlando, FL
GRI, CRS, CIPS

Roberta,

Any of these Z type sites can say what they may.  A realtor is truly needed to interpret the information just like  doctors you wouldn't go to a foot surgeon for brain surgery.

Oct 28, 2006 12:27 PM
Roberta Murphy
San Diego Previews Real Estate - Carlsbad, CA
Carlsbad Real Estate and Homes

Toby: Many of us are already offering online home valuations, but that still doesn't take the place of onsite observations and valuations.

Teri: ...or people coming to Realtors for airline tickets!

Oct 28, 2006 12:37 PM
Anonymous
Lonnie Delacava
I like that. You wouldn’t have a foot surgeon do brain surgery. I agree. You definitely need the right, licensed and highly trained surgeon to do a surgery. But technically, I don’t really need a Realtor to sell my home.

Of course, everyone is right. Zillow and the like will never truly replace the Realtor like Expedia did to travel agents.  Real estate is much too complex.  But maybe (consciously or not, although their comments indicate that they know exactly what they are doing) what they are trying to do is lower the value of a Realtor.  This works 2 ways.

1. They claim to offer accurate information normally provided by a Realtor.
2. By offering this seemingly “accurate” information, Zillow now reaches this consumer first.

You see, before, a homeowner would have gone straight to a Realtor for this information.  Now the homeowner is going to an Internet company in search of this information. This is not just another chink being taken out of the Realtor value armor.  People need to think down the road, not just about the current seemingly friendly version of Zillow.  Zillow is now pulling in millions of consumers before they ever make contact with a Realtor, and thus control that consumer and inevitably what real estate agent that consumer may use. Or maybe it’s worse - that you don’t even need a “full service” real estate agent.  Zillow has a plan for the future to evolve and if I had to guess, I bet Realtors would be concerned if they knew what it was.
 
Think of it this way, why would you need a Realtor (today’s definition of a Realtor) if Zillow knows exactly what a home is worth?  You don’t need a Realtor to negotiate if you know the value. FSBOs suddenly become much more empowered. Real estate becomes a commodity.  Zillow isn’t there yet, but to think that they can’t potentially become very powerful and gain a lot of control over consumers and how and when they buy or sell a home is being somewhat naïve.  Maybe I’m just being overly concerned. Maybe Zillow and the like is no threat at all.  Maybe their intentions are altruistic.  Maybe down the road they couldn’t possibly lower the value and thus the fees of Realtors – Because even though that is what they have stated, that’s not really what they want to do.  Am I missing something here? Is no one on this board not concerned that Barton stated that Realtors are paid too much?

When launching Zillow, Barton says Realtors are paid too much.  That pretty much tells me that this guy doesn’t have a whole lot of respect for Realtors and has specifically created a website for the very purpose of lowering the value and thus the fees of Realtors.

Yet knowing this information and the history of the guys who run this company, a lot of folks still see Zillow as a friend here to just provide an extra tool.  That’s all, nothing more. Awe shucks, there is no threat.

Maybe I’m just dense and I should go wander off into the information superhighway…

Oct 28, 2006 03:11 PM
#4
Toby Boyce
C.G. Boyce Real Estate Co. - Delaware, OH
MBA, Delaware Ohio

I think Lonnie has hit the nail on the head. They think Realtors are paid too much, which means that if they can "prove it" then there is money in it for them.

Very similar to the travel agent. "X" Travel doesn't get the mark-up, now its going to Orbitz or whatever. So, these Zillowites are looking to take a "piece" of the Real Estate pie -- and knowing how Microsoft works - they don't want a small piece.

Do we need to be concerned? Yes. Of course.

We are so caught up in the onsite observations that are needed to create a fair market value. But really, is that what's needed? Of course, you need to know that "x" has been done to take care of a home. But I don't think Kelly's Blue Book is a big difference from Zillow. If a ranch was built in 2000 with "x" bedrooms and "y" baths in "z" zipcode. Then it is going to be worth between "R" and "G". It isn't this easy, but the concept is.

Of course, they will never "completely" replace real estate agents -- they don't want to. They just want to turn us into alternative agents and take that extra 2-3% that we used to have and line their pockets. 

Oct 28, 2006 04:31 PM
Roberta Murphy
San Diego Previews Real Estate - Carlsbad, CA
Carlsbad Real Estate and Homes

Lonnie: You are not dense, and the information superhighway has becone an information speedway.

I think Dalton's recent outburst was more than grandstanding. I think he was sounding an alarm for Realtors. At the risk of sounding like an alarmist, I would suggest that:

1. Realtors and the NAR explore that the commonly-used names "Multiple Listing Service" and "MLS" be renamed and rebranded into new copyrighted and protected terms and names.

2. States and their Departments of Real Estate enact both educational prerequisites and reforms and require minimal levels of professional service be performed on behalf of clients. 

3. At the risk of losing my own popular "Instant Home Valuation" tool, I suggest that online home valuations are not much different than online diagnoses of medical ailments. In the latter case, wouldn't it seem plausible that the diagnosis include a stern warning to visit a MEDICAL PROFESSIONAL instead of a SERVICE PROVIDER?

 

 

 

Oct 28, 2006 04:53 PM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

wow...Zillow seems to be a common blog the last 2 days.... I think this is about the 5th blog on Zillow.

I agree with Teri.... many of these sites are like having an opinion. But with a realtor that actually does their homework at that time.... it's real time info, for the most part.

Oct 29, 2006 03:57 PM
Roberta Murphy
San Diego Previews Real Estate - Carlsbad, CA
Carlsbad Real Estate and Homes

Jeff: There is a lot of discussion about Zillow among many in the real estate field. On one hand, it might be viewed as nothing more than an additional tool for homeowners and home shoppers. On the other, it might be seen as an attempt to do away with real estate professionals--as the founders of Zillow did with the travel agency business.

Zillow is a tool. A hammer is a tool. A hammer does not replace the skilled carpenter. A valuation tool does not replace the skilled and trained Realtor.

Were travel agents and agencies replaced by an online shopping and reservations tool? Many were--especially those who offered limited service (ie shopping rates and making reservations).

Which real estate people/companies could be displaced by the likes of Zillow? Those "service providers" who offer limited service.

Just my opinion!

 

 

Oct 30, 2006 02:49 AM
Mitchell J Hall
Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Roberta,

I'm late to this post but having experience in the travel industry I must say it is a very bad analogy. Zillow would be better off comparing full service real estate brokers to full service stock brokers than to travel agents. Full service stock brokers are more profitable today than ever.

While I have never been a travel agent I worked in travel advertising. I was also involved with a major business publisher that created an online searchable data base of tour packages.

Major differences between travel agents and Realtors.

  1. Travel agents are not licensed by the State.
  2. No required courses or education for travel agents
  3. Travel agents were paid by airlines, hotels & tour operators
  4. Airlines have had finacial problems way before the internet
  5. The travel industry is made up of wholesale operators
  6. Travel agents bought wholesale and sold retail
  7. With or without the internet anyone can book a flight or a hotel room in less than 5 minutes
  8. Buying and selling real estate is a complex process
  9. Most homeowners already know the approximate value of their home  just as they know how many bedrooms it has.
  10. Realtors are paid by sellers a percentage of the sale price.
  11. Broker's commissions are negotiable.
  12. There are tax consequences in real estate transactions
  13. There are legal consequences in real estate transactions 

There will always be people who want to try and sell their own home. To them I say God bless you and good luck.

Nov 04, 2006 05:37 AM
Monika McGillicuddy
Berkshire Hathaway HomeServices Verani Realty - Hampstead, NH
Southern NH & the Seacoast Area

Great topic. I agree with Mitchell, my sister owns her own travel company and often talked about the changes and challenges she was facing. She'd say things like "watch out it will happen to your industry as well" and I'd always respond by pointing out the differences between our industries much the same as Mitchell’s list.  While we are still facing challenges I feel the complexities of our industry will always dictate our involvement and the need for our services.

Nov 05, 2006 07:09 AM
Norm Fisher
Royal LePage Saskatoon Real Estate - Saskatoon, SK
I recently read an article on Inman News titled, "Zillow Humbled" in which Barton admits that "the real estate industry is not the same as the travel business" and that it is not likely that real estate agents will be disintermediated.  Zillow's focus will now turn to trying to generate revenue from agents through advertising, etc. 
Nov 06, 2006 03:02 AM
Jeff Turner
RealSatisfied - Santa Clarita, CA

People shop on the Internet. They buy from a Realtor.

I'm going to keep ringing this bell until it stops ringing. Real Estate is, has been, and always will be about relationships. The real estate transaction is not like a vacation. (He said stating the obvious.) It is the single greatest financial transaction most people will ever have in their lives. In addition, it is a complex sale, requiring specific knowledge of a maze too of details too intricate for any Internet site to comprise. Working through that maze requires trust in someone who knows the way.

Nov 30, 2006 01:19 AM
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