Switching to Zillow's PAW Sites for $10 Bucks.

By
Services for Real Estate Pros with Virtual Pictures Corp. (VPiX)

17 phone calls on this topic came to me just yesterday, and I have maybe 30 more calls to return today on this same topic.

"Bart, do you think me switching from my current website to a Zillow PAW Website is a good idea?"

Short answer: Nope. 

Unless you just woke up from a seven month nap, let me address this one on AR and answer this question for you all so I don't have to put the same answer in another 154 emails as I did yesterday. 

HISTORY: Last year, Zillow acquired a real estate technology firm, "Diverse Solutions," for just over $7 million dollars in a cash plus stock deal. The tiny IDX shop in Irvine, California was pretty happy. They no doubt celebrated, drank champagne, bought new cars and life went on pretty smooth. 

Until a few days ago.

Customers with the exsting $29 to $129.90 Diverse Solutions website flooded Zillow's switchboard asking about the new PAW service price:

  • How can I switch?
  • Should I switch?
  • What do I get?
  • Is it SEO friendly, blah, blah, blah.  

Sources told me that countless agents were left on hold for an eternity, many upset agents were no doubt routed to the sisters of voice mail mercy. 

Like all big companies that gobble up smaller, more agile ones... Zillow took the IDX technology from Diverse Solutions and boiled this down into a mass-marketing, me-too set of Website packages that are surprisingly not that different from what you bought from Advanced Access, eNeighborhoods, or a Pullan Communications Website just but 5 years ago. 

The goal being, 300,000 (or more) real estate agents paying $10 bucks each translates into a nice pile of cash flow for a call center of 7 people and 3 automated servers that cost $508 a month at Rackspace.com

Cost: $32,900 a month. Zillow grosses $303,450 (or more) a month = $270,550 a month. 

Is this a bad thing from an evil empire? Not at all. This is what I would do if I acquired Diverse Solutions. It's simply business 101. You buy up smaller companies and add their technology to your own.  I call it the BORG Technique and it's practiced by every successful company I know. 

Does Zillow really care that you have a state of the website and high page rank on Google? Yes, but not that much.

They are no different than Point 2 Agent, or Dominion Enterprises.

Zillow wants $2 million in cash flow a month from selling you a watered down $10 a month website, sprinked with an iFrame IDX feed. No big deal here. Thanks to Zillow, they will pump hundreds of thousands of more real estate websites into an already over-crowded sea of me-too real estate websites.  It's more white noise for home buyers to sort through. Google will love it because you'll be shelling out thousands of dollars competing for eyeball space with AdWords ads. 

Lots of train wrecks in disappointments are coming. But Zillow and Google will be laughing all the way to the bank. 

80,000 of you will sign up this month, and 40% of you will fire them 30 - 60 days later. It's just how this works. Nobody can afford to give you any kind of live human support for $10 bucks a month.  It's going to cost them over $6 bucks just to maintain the website, pay for electricity, the people to make the server work, etc.  

Terry Pullan, former CEO of Pullan Communications was acquired in 2007 by Dominion Enterprises. Terry told me they received over 100,000 sign ups a month from agents switching from other firms. 45% of them cancelled the next month or failed to pay their bill and were shut off. 

So is Zillow's PAW any better when it comes for natural SEO page ranking on Google? Not at all. 

Because thousands of the same content on the same server, same IP address is not going to do squat for gaining you any SERP ranking on Google.  Their crawler now looks at the class-C block of IP addresses and when it finds the same website pages, on the same server and the same me-too template driven content... Google is not really going to be kind to pushing you up to a natural, page one ranking.

This is not hard to understand why. If you're a REALTOR in San Francisco, and you want to rank for "bay area homes for sale," or "san francisco homes for sale," do the math.  There's 10 natural positions on Google. This is like 10 homes for sale around the lake or with ocean front.  These 10 positions, like homes are going to be hard to get. And last time I checked, beach front or lake front homes are going to be expensive. 

Zillow's PAW Website for $10 bucks will most likely never have a natural page one, #1 ranking on Google. Unless of course you're an agent selling real estate in Wink, Texas. 

The former Google AdSense business manager of 7 years is on our payroll, so we know a few things about how Google is going to crawl and rank your site.

 

Posted by

Bart Wilson | CIO
..................................................................
Virtual Pictures Corp (VPiX®)  
iPhone: (719) 645-9940  |  Skype:  vpix360 

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Rainmaker
1,282,430
Edward & Celia Maddox
The Celtic Connection Realty - Queen Creek, AZ
EXPERIENCE & INTEGRITY - WE TAKE THE HIGH ROAD

Yeah, Zillow is trying to milk the cash out of you.  I never cared for Zillow and the Zestimates anyway.

Jun 06, 2012 01:08 AM #1
Rainmaker
761,113
Doug Dawes
Keller Williams Realty - Topsfield, MA - Georgetown, MA
Your Personal Realtor®

Good write-up. I use Zillow as a tool only. It's not a very good one, imho, and I find their zEstimates to way off. I'd just stick with the free end. There are too many companies out there that milk R.E. agents everyday

Jun 06, 2012 01:12 AM #2
Ambassador
779,562
Doug Rogers
Bayou Properties - Alexandria, LA
Your Alexandria Louisiana Agent

The real money in this industry is not selling homes to individuals, but rather selling "tools" to rookie agents.

Jun 06, 2012 01:27 AM #3
Rainmaker
889,318
Sussie Sutton
UTR Texas Realtors - Pearland, TX
UTR TEXAS Realtors - Rep for buyers and sellers.
Great post. And I have to agree with everyone's comments. Especially the one that said the real money in real-estate is not selling homes but the tools .
Jun 06, 2012 01:34 AM #4
Ambassador
2,770,293
Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Bart - Thanks for a very thorough and informative explanation. It all makes complete sense, and doesn't look much like the neatest thing since sliced bread. I wasn't very interested to begin with, since I'm doing well with AR and my own non-iFrame IDX website anyhow.

Jun 06, 2012 02:59 AM #5
Rainmaker
164,776
Jim Shepherd (360) 229-2235
Berkshire Hathaway Home Services Shelton - Shelton, WA
Find Shelton Homes

Great post on Zillows latest offering.

Jun 06, 2012 05:04 AM #6
Anonymous
Neal

Where do you get your numbers? You're missing an important one - the cost of licensing IDX data.  MLSs charge a vendor anywhere from $30 per broker to $1500 per month to service Realtors in their region.  If you wanted to be active in all 900 MLS, you'll need to spend millions in license fees annually.  Its why mot IDX companies focus on only 100-200 core MLS regions.  You have to factor in those costs before assuming any profit there. Depending on scale those costs can very dramatically but the cost should average around $20 per agent site. From what I can tell, ZillowPress is actually offered at a LOSS, presumably for the goal of creating a fee platform form which they can launch premium upgrade options down the road. 

Whatever they have planned, it must be big.  Otherwise, why turn the DiverseSolutions product into a commodity by offering it for free?

 

Jun 27, 2012 08:00 PM #7
Rainmaker
128,120
Bartley Wilson
Virtual Pictures Corp. (VPiX) - Monument, CO
VR Software and 360° Solutions

Neal,

I think you missed the entire point of the post.

My point of the post was to explain what's happening @ Zillow and why they're doing it. Nothing more.

As a former real estate professional and a real estate consultant (today)... this is simply what I do.  You don't have to agree with me on everything, but my facts are 100% accurate. I can assure you of that. 

Selling 200,000 watered down McWebsite IDX templates is fine for Zillow. That's $2 million a month in cashflow for them. That's where the costs for obtaining RETS feeds from any number of MLS systems will come from. Zillow can now make enough money so a handful of their stake holders can continue making their boat payments.  Gee, I'm so happy for them.

My second point is what GOOD is thing going to do for REALTORs?  The 90% of us that are rank and file agents busting our asses trying to make a living out here while firms like Zillow are eroding the very foundation under our feet by flooding the market with duplicate content, me-too driven crap that's not going to turn into one single sale.

Look at the cheap website. Okay. Now look at Zillow siphoning off leads from the IDX and selling it back to you for a cut of your sales commissions. HomeGain. ZipRealty. Reply.com. HouseValues.  We all hate them. They call us up, they get the buyer with good FICO scores and they get 25% or more of our hard earned commissions.

Singing the praises of Zillow, Trulia or any other firm doing this -- is just a disservice to all of us.  Period. 

The template business model for real estate success has been dead and buried for more than 3 years now.

The sooner you understand this, the faster you'll be on the road to building a better online experience for your customers. 

 

 

 

Jun 28, 2012 02:58 AM #8
Anonymous
Tom

Neal, I think it you who is missng the point.. Most MLS nowdays charge a qtrly fee whether you have one user or 100,000 users... so if you divide the 500 qtrly fee by a thousand users its pretty cheap.

Where do you get your numbers? You're missing an important one - the cost of licensing IDX data.  MLSs charge a vendor anywhere from $30 per broker to $1500 per month to service Realtors in their region

Also I just looked at the scores gives all their agents that are participating.. and in my area we have 3,000 on the Zillow take. Every last one had a 5 star score.. even the ones who had ZERO listings and had never had a listing before.  Now that is doing a dis-service to the public....giving the impression that the agent is hot when they may not even be cold yet.

 

 

 

Mar 10, 2013 11:33 PM #9
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Rainmaker
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Bartley Wilson

VR Software and 360° Solutions
IDX Websites + Virtual Tour Camera Kits
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