Zillow/Trulia – Franchise Killer Qu’est-ce

By
Real Estate Broker/Owner with Wynd Realty

The Zillow Agents are coming.  The Zillow agents are coming.  No, Zillow’s merger with Trulia doesn’t signal their entrance into the brokerage business.   That will mostly likely come later.  However, the merger does signal, “who won”, in the real-life survivor game over the hearts and minds of the real estate consumer.   The public has voted.

The only reason companies like Trulia and Zillow came along in the first place was because the national franchise Brokers failed in capturing the trust and mindset of the buying public.   “Will it be on Zillow?”  If this isn’t the first question asked at every listing presentation, its close.   The consumer is loudly telling us, they LIKE Zillow and Trulia.   Consumers understand them and, better yet, they trust them. 

It is becoming clearer with Zillow’s success the buying public never really bought into the vague high-level marketing cliché’s they were being fed by the national franchises.   Consumers know, “We sell more homes than, anyone”, probably had more to do with the number of franchises sold rather than any actual sales acumen.   For decades, the franchises stressed how their largeness meant more value for the consumer.    But, to the average home seller, unless that “largeness” happened to be on their block, what occurred on a national level has virtually no meaning.

As consumers continue to flock to sites like Zillow and Trulia, agents will need to be where the consumer wants to find them.   But, will agents be able to afford to keep their franchise affiliation, NAR’s required “R”ealtor status AND pay sites like Zillow in any meaningful way?   Perhaps a better question is “why” would they?

To illustrate the financial decisions an agent will make, use the BHGRE Metrobrokers franchise model.   BHGRE Metrobrokers is particularly interesting because they have historically been the most aggressive agent recruiters in our market.   Wherever their boiler room telemarketing group is located they must have Atlanta on speed dial.  (Seriously guys, lighten it up, it’s coming off desperate) 

The BHGRE Metrobrokers website publishes a monthly agent fee of $110.00.   Throw on the yearly NAR/GAR dues and financial nut to the franchise agent is around $150 a month. 

Unlike most of the United States, Atlanta is one of the very few markets where agents can opt to use Transaction Brokers.  Monthly fees with Transaction Brokers vary but virtually all are below $50.00 a month.  Some are even lower than, $10.00 a month.    

Using the BHGRE franchise as a comparable, an agent can spend $150.00 a month with BHGRE and basically be at the starting line anew every month.  Ground zero, over and over again.  Or, an agent can spend $150.00 with a Transaction Broker, AND still have well over a $100.00 a month in ongoing Zillow advertising.    Yes, one approach is marginally more work for the agent, but in the end, whoever puts the agent in the best position to be successful will be the winner.   Agents staying with their franchises will need to accept the fact they are giving advertising head starts to all transaction agents.  And, in a market the size of Atlanta, that will have a significant impact.  

Agents will spend their money with the people and companies they know and trust.   It is pretty easy for an agent to see exactly what they are getting with an affiliated ala carte approach. (Transaction Broker, Zillow)   It is not clear, and never was, exactly what an agent receives for their monthly franchise fees.   For example, only a franchise, Remax, would pay the presumably large fees to hang a huge banner off the side of the Georgia Dome.   But, do local agents really think using their money for Broker marketing like that was in their best interest? 

In short, it will become increasingly difficult for franchise operations to come up with viable scenarios that demonstrate the importance of the franchise to and within the agent’s sales cycle.    To date, and for decades, franchises have poorly demonstrated their importance.   In large part, their failure stems from reality, they really aren’t important.   Ouch!

If Atlanta agents are looking for that preverbal “Fat Lady” moment, consider the universally hated concept of a “Commission Split”.   Transaction Brokers are all flat fee.  Agents faced with a transaction fee of $300-$600 dollars versus a fleecing of 30% of their revenue, will eventually see the light.   There is simply no need for Atlanta agents to ever pay a split again.   If this isn’t the kill shot to the heart of the franchise, then add their names to roaches and Keith Richards as the only survivable entities of a nuclear war.  

The franchise concept is old and dated.  Not really in step with today’s culture and the direction society wants to go.   Sadly for most of the country, agents will be lugging their franchises with them because they don’t have a choice.   Atlanta agents do have choice.  So, join them in helping the industry “Ditch the Franchise”!   Lets end franchise repression and NAR dictatorship in our lifetimes! 

 

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Rainmaker
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Ronald DiLalla
Century 21 Discovery DRE 01813824 - Anaheim, CA
No. Orange Cty Real Estate

Enjoyed your post  and agree that most of the new listing inquire if their home will be on Zillow and Trulia..

Aug 12, 2015 03:50 AM #1
Rainmaker
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Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Jeff - It will be interesting to see how the large franchises do in the future, and what will happen to Zillow/Trulia.

Aug 13, 2015 07:43 AM #2
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Rainmaker
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Jeff Bergstrom

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