It has been reported that Zillow is in advanced acquisition talks with rival Trulia. The current total value of Trulia shares is approximately two billion dollars.
But both sites are dependent on revenue generated by the sale of ads to real estate agents, mortgage brokers, and other ancillary real estate related businesses.
And if I may offer this theory; if an agent that is inclined to advertise on one site he or she is probably also willing to advertise on the other. Because of this overlap, there is not enough of additional revenue potential from a merging of customers to justify such a large purchase. Every dollar that can be sqeezed out of advertising has probably already been fully exploited.
That is, unless the potential goal NOT increased advertising revenue but instead is real estate brokerage. With Trulia out of the way there is nothing to stop Zillow from moving into the brokerage arena unhampered and unmolested.
Zillow’s current television commercials support this hypothesis. They scream brokerage!
But brokers have covered their ears and are chanting “la la la la la” and pretending it isn’t going to happen.
I can give you two billion reasons why I think it will!