California Real Estate — August 2015
Reinventing Real Estate
Digital disruptions in real estate require strategizing, adaptability.
Technology coupled with consumers’ growing reliance on a shifting landscape of online portals has compelled the CALIFORNIA ASSOCIATION OF REALTORS® to convene a special Thought Leadership roundtable on disruptions facing the industry. To offer perspective on this,C. A.R. CEO Joel Singer was joined recently by the following top executives: Zillow’s Curt Beardsley, Vice President of Industry Development; Realtor.com’s Luke Glass, Executive Vice President of Industry Platforms; and Trulia’s Paul Levine, President (formerly Chief Operating Officer).
Importantly, the executives emphasized the profession’s future prospects amidst the acceleration of audience demand for consumer-friendly real estate information on the Internet. It would seem the growth of Zillow, Trulia, and Realtor.com shows no signs of stopping, particularly in light of recent mergers. Addressing how the viability of REALTORS® will be challenged— remain intact—led the panel to proffer that the role of successful REALTORS® will probably change less as elements of the industry evolve. Furthermore, the panel suggested those REALTORS® who are already successful will continue to do well since they have the habits in place to adapt and maintain a strong level of productivity.
Singer emphasized this point by stating: “We have a strong belief that the individual REALTOR®, that REALTOR® who has local market knowledge combined with tech knowledge, and then has created their own brand with the individual consumer, is going to be a long-term survivor. But that doesn’t mean the industry isn’t going to look radically different in 10 years. But, of course, I’ve been saying this now for 35 years.”
As for how the industry could look different and the various concerns stirring debate about shifts in economics and power, Singer prodded each executive to share his insights on the industry’s fears of disruption and the value proposition of the portals.
The Fear of Disruption
while each portal’s leader made reassuring statements that they have no interest in becoming brokers and disrupting the industry, Singer pointed out that their position with consumers is indeed another form of disruption. The Internet has created a new dynamic, as consumers go to the portals first rather than to a local REALTOR®.
Glass was quick to caution that disruption does not equal extinction, and that the major source of fear is not that brokers, agents, or MLSs will disappear, but that a shift in economics will create a level of uncertainty about who is perceived as creating the most value for the consumer. Any change in economics could affect the number of REALTORS® in the business. A lack of clarity about what the future holds has led many to feel threatened, according to Glass.
To explain the view of why many real estate professionals feel threatened by the big portals, Levine postulated that strong reactions evident throughout the industry are driven by the Internet’s empowerment of consumers. This has forced many professionals to deliver the hard work of being true service providers, and Levine pointed to an example of disruption that he experienced first-hand in the financial services industry when he worked for E-Trade Financial Corporation. Just as old ways of relying on a financial advisor have significantly diminished, with these portals, listings are no longer a core part of the toolkit for a REALTOR®—something that foments resentment with respect to a changing value proposition.
Beardsley drew on a musical chairs analogy to describe fears of disruption that the portals have provoked across the industry, in which these sites have changed who has a seat at the table for transactions. Many professionals are struggling to see how they fit into this new world. In the past, he noted, if you knew your neighbor was a REALTOR®, then he or she would likely be the consumer’s agent. However, with options online, the consumer can easily connect with someone who may have better credentials. “We’re shifting the chairs of who gets at the table, and I think that [real estate professionals] are afraid that when the whistle blows or the music stops, they’re not going to have a chair,” Beardsley stated.
Beardsley dismissed the notion that the portals are actually incentivized to disrupt the classic way that real estate works in North America. “We like what works. Our business models actually work quite well in the [current] environment,” he said. Rather, he explained, there are other entities that are far more disruptive to the industry whereas the portals are “not really trying to undermine the fundamentals of the way that real estate gets transacted” because “we’re just taking away the advertising dollars that are going into inefficient methods.”
Levine added that paying for the services of one of the portals should not disrupt the economics of a REALTOR®, and, when examining the average dollars spent per agent, the amount has not “changed meaningfully.”
Adding further context to the economic realities of available real estate, Singer noted that there are real causes for concern. Specifically, despite all the technology, the number of sides per agent “is actually substantially less today than it was at the turn of the millennium.” While the value of those sides has gone up, there are still fewer overall, on top of the fact that median incomes for REALTORS® are stagnant to down.
These trends should be equally worrisome to the portals. It means less discretionary advertising spending. “In theory, technology should be making them more efficient, more effective, and able to handle more simultaneous transactions,” Glass responded. As a potential cause, Beardsley pointed to there being a greater number of agents. “If you’re spreading fewer transactions over a bigger base, or you’re spreading the transactions over a bigger base of people, that means they’re making less and less. It should indicate that you’re potentially going to get less and less professional service,” he asserted.
To address the aforementioned challenges, Singer also asked the panelists to review how their platforms can increase productivity and bring practical value to real estate practitioners.
The Value Proposition to REALTORS®
As the leading online marketplace for home buyers, sellers, renters, and real estate professionals, these portals have changed not only how REALTORS® strategize and conduct their business, but also how they redefine their value proposition. Conversely, Zillow, Trulia, and Realtor.com must also cultivate their value proposition to the REALTOR® community, and Singer acknowledged that he would be remiss not to force the panelists to consider not only how they view themselves but also how the industry views their business operations and value proposition.
Singer added that his question was driven by persistent concerns he has heard within the industry about the motivations of the online portals and how well REALTORS® are serviced by their presence. Singer directed the panelists to assess why many real estate professionals are skeptical of the return-on-investment (ROI) potential of the online portals, despite the fact that numbers indicate the Internet provides much more meaningful lead generation in comparison to antiquated and costly newspaper advertisements.
The panelists proceeded to address whether these views have merit or if they need to do a better job of showcasing the discrepancy between criticism of the portals and outcomes in which REALTORS® have greatly expanded their businesses. Glass noted that a significant challenge is getting brokers and agents in the industry to understand that Realtor.com is merely an advertising outlet. As such, he argued it provides an umbrella-level playing field for the entire industry in which it represents the brand. He posited that all three platforms are strongly focused on positive ROI for customers—REALTORS®—and that in particular, “[Realtor.com] tries to create the equation that data accuracy plus a good customer experience equals the highest quality leads.”
To encourage greater understanding of the portals’ goals, the responsibility falls on the shoulders of the platforms, according to Levine, but he added that it is frustrating that misconceptions persist despite numbers that are highly favorable to the industry. For example, in 2006, Levine said $5 billion was spent just on newspaper classified advertising in the real estate category, and he compared that amount to the sum of the three companies’ revenue, which is less than a billion dollars. Levine stated, “We feel proud of having brought efficiency, empowering consumers, and taking costs out of the system.”
Beardsley acknowledged that Zillow is a bit of a lightning rod in the industry, yet more than 100,000 agents rely on it to successfully run their businesses. He suggested that some controversy likely stems from the fact that many of the industry’s most successful agents are doing well because they have built their brand through traffic, leads, and exposure from Zillow, Trulia, or Realtor.com. This means the portals have made it possible to achieve success without being closely affiliated with a brand.
Singer stated that there is still a high level of dissatisfaction across the industry from those not getting a strong return on any money invested in the portals’ services, and those brokerages and franchises continue to feel threatened, particularly after Zillow’s acquisition of Trulia. While debate continues about which entities are facing the greatest threat of marginalization, the panel once again emphasized that consumers will still look to local experts with strong service when they buy and sell property. This led to the panel’s final remarks on the longevity of the REALTOR® profession amid changes in technology.
Regarding such change, the recent acquisitions and mergers heighten the contrast (and competition) between new business forces and the more established history of organized real estate. Amid these transitions, REALTORS® will have to ensure the marketplace makes them indispensable to real estate transactions. The executives suggested they can do so by being consumer-centric service providers whose performance is enhanced by technology offerings available now and in the future.
The roundtable also revealed consensus among all panelists that public perception of who brings the most value to the consumer was a significant factor that couldn’t be ignored in the years ahead. Perception’s ability to shape the future dynamics of real estate—for better or worse—means the industry must proactively expect and address change.
Jeannette Brown is a Communications Specialist for the CALIFORNIA ASSOCIATION OF REALTORS®. She can be reached at jeannetteb@car.org.
Zillow Group, Inc. Emerges After Zillow- Trulia Merger
In case you hadn’t already heard, some of the biggest news in the real estate industry recently received an official stamp of approval from the Federal Trade Commission, thereby sealing the deal on Zillow’s acquisition of its closest rival. As a result, Zillow and Trulia have officially merged into the new mega portal Zillow Group, Inc., leaving many in the industry to wonder what’s next for its dominant online presence and how agents will be impacted. While Zillow and Trulia combined have millions in unique visitors, thereby representing a huge portion of the home buying audience, the new Zillow Group will likely have to focus on its rather small share of online advertising spending, as there is certainly room for growth.So as Zillow Group looks to grow its clout in the real estate lead generation, advertising and software business, real estate professionals can perhaps expect a robust presence from the portal’s sales teams as well as various product packages.
There has been speculation as to how Zillow’s plans to absorb Trulia will affect business for brokers and agents, such as advertising options. The advertising model on Trulia will dissolve and users will find that Zillow Group ads will be sold as they were previously on Zillow, i. e., on an impression-based model that spans both mobile and Web. As for other plans for Zillow Group, Zestimates, the much-maligned automated home valuations, will now be updated immediately when homeowners input edits. Zillow Group is in the process of unifying listing aggregation resources and creating one listing database that Zillow and Trulia will share for greater efficiency.By sharing resources and not competing for the same customers/consumers, Zillow is expected to save $100 million.However, it is questionable these savings will be fully realized.
That being said, the two portals also insist that in many ways they will still act as competitors against one another as a way to drive innovation and maintain their distinct brands. Another competitor for Zillow Group is News Corp. and its Move and realtor.com properties, and it remains to be seen how the two competitors will lure consumers with major marketing efforts in 2015.
News Corp. Enters the Fray with Realtor.com Acquisition
News Corp., the new owner of realtor.com operator Move Inc., came out swinging in a new portal landscape shaped by acquisitions and consolidation.For instance, upon hearing of the official completion of the Zillow-Trulia merger, the newly acquired subsidiary of News Corp. published a press release stating, “Zillow’s year of the merge will be realtor.com®’s year of the surge.” News Corp. proceeded to remove the listing feed supplied by syndication platform ListHub (a subsidiary of realtor.com), which means Zillow Group is under more pressure to secure listings directly from multiple listing services and brokerages.
Speaking of those listings, realtor.com does have a structural advantage in that it receives MLS data directly for the highest level of accuracy.
Rupert Murdoch, the leader of News Corp., has touted realtor.com’s close relationships with the NATIONAL ASSOCIATION OF REALTORS®, the REALTOR® community, and the accuracy of its listings as motivating factors for News Corp.’s purchase of the Move Inc. entity. The media mogul has made it clear that he plans to revamp realtor.com by enhancing its ease of use for agents, and pursuing major marketing efforts, which will involve promoting realtor.com across News Corp.’s sprawling network of media properties.The media platforms now available to realtor.com as a subsidiary of News Corp. may allow the portal to compete more strongly for web traffic. Move’s senior vice president of industry relations, Russ Cofano, has also hinted at changes coming to the way realtor.com displays listings.
Technology coupled with consumers’ growing reliance on a shifting landscape of online portals has compelled the CALIFORNIA ASSOCIATION OF REALTORS® to convene a special Thought Leadership roundtable on disruptions facing the industry. To offer perspective on this,C. A.R. CEO Joel Singer was joined recently by the following top executives: Zillow’s Curt Beardsley, Vice President of Industry Development; Realtor.com’s Luke Glass, Executive Vice President of Industry Platforms; and Trulia’s Paul Levine, President (formerly Chief Operating Officer).
Importantly, the executives emphasized the profession’s future prospects amidst the acceleration of audience demand for consumer-friendly real estate information on the Internet. It would seem the growth of Zillow, Trulia, and Realtor.com shows no signs of stopping, particularly in light of recent mergers. Addressing how the viability of REALTORS® will be challenged— remain intact—led the panel to proffer that the role of successful REALTORS® will probably change less as elements of the industry evolve. Furthermore, the panel suggested those REALTORS® who are already successful will continue to do well since they have the habits in place to adapt and maintain a strong level of productivity.
Singer emphasized this point by stating: “We have a strong belief that the individual REALTOR®, that REALTOR® who has local market knowledge combined with tech knowledge, and then has created their own brand with the individual consumer, is going to be a long-term survivor. But that doesn’t mean the industry isn’t going to look radically different in 10 years. But, of course, I’ve been saying this now for 35 years.”
As for how the industry could look different and the various concerns stirring debate about shifts in economics and power, Singer prodded each executive to share his insights on the industry’s fears of disruption and the value proposition of the portals.
The Fear of Disruption
while each portal’s leader made reassuring statements that they have no interest in becoming brokers and disrupting the industry, Singer pointed out that their position with consumers is indeed another form of disruption. The Internet has created a new dynamic, as consumers go to the portals first rather than to a local REALTOR®.
Glass was quick to caution that disruption does not equal extinction, and that the major source of fear is not that brokers, agents, or MLSs will disappear, but that a shift in economics will create a level of uncertainty about who is perceived as creating the most value for the consumer. Any change in economics could affect the number of REALTORS® in the business. A lack of clarity about what the future holds has led many to feel threatened, according to Glass.
To explain the view of why many real estate professionals feel threatened by the big portals, Levine postulated that strong reactions evident throughout the industry are driven by the Internet’s empowerment of consumers. This has forced many professionals to deliver the hard work of being true service providers, and Levine pointed to an example of disruption that he experienced first-hand in the financial services industry when he worked for E-Trade Financial Corporation. Just as old ways of relying on a financial advisor have significantly diminished, with these portals, listings are no longer a core part of the toolkit for a REALTOR®—something that foments resentment with respect to a changing value proposition.
Beardsley drew on a musical chairs analogy to describe fears of disruption that the portals have provoked across the industry, in which these sites have changed who has a seat at the table for transactions. Many professionals are struggling to see how they fit into this new world. In the past, he noted, if you knew your neighbor was a REALTOR®, then he or she would likely be the consumer’s agent. However, with options online, the consumer can easily connect with someone who may have better credentials. “We’re shifting the chairs of who gets at the table, and I think that [real estate professionals] are afraid that when the whistle blows or the music stops, they’re not going to have a chair,” Beardsley stated.
Beardsley dismissed the notion that the portals are actually incentivized to disrupt the classic way that real estate works in North America. “We like what works. Our business models actually work quite well in the [current] environment,” he said. Rather, he explained, there are other entities that are far more disruptive to the industry whereas the portals are “not really trying to undermine the fundamentals of the way that real estate gets transacted” because “we’re just taking away the advertising dollars that are going into inefficient methods.”
Levine added that paying for the services of one of the portals should not disrupt the economics of a REALTOR®, and, when examining the average dollars spent per agent, the amount has not “changed meaningfully.”
Adding further context to the economic realities of available real estate, Singer noted that there are real causes for concern. Specifically, despite all the technology, the number of sides per agent “is actually substantially less today than it was at the turn of the millennium.” While the value of those sides has gone up, there are still fewer overall, on top of the fact that median incomes for REALTORS® are stagnant to down.
These trends should be equally worrisome to the portals. It means less discretionary advertising spending. “In theory, technology should be making them more efficient, more effective, and able to handle more simultaneous transactions,” Glass responded. As a potential cause, Beardsley pointed to there being a greater number of agents. “If you’re spreading fewer transactions over a bigger base, or you’re spreading the transactions over a bigger base of people, that means they’re making less and less. It should indicate that you’re potentially going to get less and less professional service,” he asserted.
To address the aforementioned challenges, Singer also asked the panelists to review how their platforms can increase productivity and bring practical value to real estate practitioners.
The Value Proposition to REALTORS®
As the leading online marketplace for home buyers, sellers, renters, and real estate professionals, these portals have changed not only how REALTORS® strategize and conduct their business, but also how they redefine their value proposition. Conversely, Zillow, Trulia, and Realtor.com must also cultivate their value proposition to the REALTOR® community, and Singer acknowledged that he would be remiss not to force the panelists to consider not only how they view themselves but also how the industry views their business operations and value proposition.
Singer added that his question was driven by persistent concerns he has heard within the industry about the motivations of the online portals and how well REALTORS® are serviced by their presence. Singer directed the panelists to assess why many real estate professionals are skeptical of the return-on-investment (ROI) potential of the online portals, despite the fact that numbers indicate the Internet provides much more meaningful lead generation in comparison to antiquated and costly newspaper advertisements.
The panelists proceeded to address whether these views have merit or if they need to do a better job of showcasing the discrepancy between criticism of the portals and outcomes in which REALTORS® have greatly expanded their businesses. Glass noted that a significant challenge is getting brokers and agents in the industry to understand that Realtor.com is merely an advertising outlet. As such, he argued it provides an umbrella-level playing field for the entire industry in which it represents the brand. He posited that all three platforms are strongly focused on positive ROI for customers—REALTORS®—and that in particular, “[Realtor.com] tries to create the equation that data accuracy plus a good customer experience equals the highest quality leads.”
To encourage greater understanding of the portals’ goals, the responsibility falls on the shoulders of the platforms, according to Levine, but he added that it is frustrating that misconceptions persist despite numbers that are highly favorable to the industry. For example, in 2006, Levine said $5 billion was spent just on newspaper classified advertising in the real estate category, and he compared that amount to the sum of the three companies’ revenue, which is less than a billion dollars. Levine stated, “We feel proud of having brought efficiency, empowering consumers, and taking costs out of the system.”
Beardsley acknowledged that Zillow is a bit of a lightning rod in the industry, yet more than 100,000 agents rely on it to successfully run their businesses. He suggested that some controversy likely stems from the fact that many of the industry’s most successful agents are doing well because they have built their brand through traffic, leads, and exposure from Zillow, Trulia, or Realtor.com. This means the portals have made it possible to achieve success without being closely affiliated with a brand.
Singer stated that there is still a high level of dissatisfaction across the industry from those not getting a strong return on any money invested in the portals’ services, and those brokerages and franchises continue to feel threatened, particularly after Zillow’s acquisition of Trulia. While debate continues about which entities are facing the greatest threat of marginalization, the panel once again emphasized that consumers will still look to local experts with strong service when they buy and sell property. This led to the panel’s final remarks on the longevity of the REALTOR® profession amid changes in technology.
Regarding such change, the recent acquisitions and mergers heighten the contrast (and competition) between new business forces and the more established history of organized real estate. Amid these transitions, REALTORS® will have to ensure the marketplace makes them indispensable to real estate transactions. The executives suggested they can do so by being consumer-centric service providers whose performance is enhanced by technology offerings available now and in the future.
The roundtable also revealed consensus among all panelists that public perception of who brings the most value to the consumer was a significant factor that couldn’t be ignored in the years ahead. Perception’s ability to shape the future dynamics of real estate—for better or worse—means the industry must proactively expect and address change.
Jeannette Brown is a Communications Specialist for the CALIFORNIA ASSOCIATION OF REALTORS®. She can be reached at jeannetteb@car.org.
Zillow Group, Inc. Emerges After Zillow- Trulia Merger
In case you hadn’t already heard, some of the biggest news in the real estate industry recently received an official stamp of approval from the Federal Trade Commission, thereby sealing the deal on Zillow’s acquisition of its closest rival. As a result, Zillow and Trulia have officially merged into the new mega portal Zillow Group, Inc., leaving many in the industry to wonder what’s next for its dominant online presence and how agents will be impacted. While Zillow and Trulia combined have millions in unique visitors, thereby representing a huge portion of the home buying audience, the new Zillow Group will likely have to focus on its rather small share of online advertising spending, as there is certainly room for growth.So as Zillow Group looks to grow its clout in the real estate lead generation, advertising and software business, real estate professionals can perhaps expect a robust presence from the portal’s sales teams as well as various product packages.
There has been speculation as to how Zillow’s plans to absorb Trulia will affect business for brokers and agents, such as advertising options. The advertising model on Trulia will dissolve and users will find that Zillow Group ads will be sold as they were previously on Zillow, i. e., on an impression-based model that spans both mobile and Web. As for other plans for Zillow Group, Zestimates, the much-maligned automated home valuations, will now be updated immediately when homeowners input edits. Zillow Group is in the process of unifying listing aggregation resources and creating one listing database that Zillow and Trulia will share for greater efficiency.By sharing resources and not competing for the same customers/consumers, Zillow is expected to save $100 million.However, it is questionable these savings will be fully realized.
That being said, the two portals also insist that in many ways they will still act as competitors against one another as a way to drive innovation and maintain their distinct brands. Another competitor for Zillow Group is News Corp. and its Move and realtor.com properties, and it remains to be seen how the two competitors will lure consumers with major marketing efforts in 2015.
News Corp. Enters the Fray with Realtor.com Acquisition
News Corp., the new owner of realtor.com operator Move Inc., came out swinging in a new portal landscape shaped by acquisitions and consolidation.For instance, upon hearing of the official completion of the Zillow-Trulia merger, the newly acquired subsidiary of News Corp. published a press release stating, “Zillow’s year of the merge will be realtor.com®’s year of the surge.” News Corp. proceeded to remove the listing feed supplied by syndication platform ListHub (a subsidiary of realtor.com), which means Zillow Group is under more pressure to secure listings directly from multiple listing services and brokerages.
Speaking of those listings, realtor.com does have a structural advantage in that it receives MLS data directly for the highest level of accuracy.
Rupert Murdoch, the leader of News Corp., has touted realtor.com’s close relationships with the NATIONAL ASSOCIATION OF REALTORS®, the REALTOR® community, and the accuracy of its listings as motivating factors for News Corp.’s purchase of the Move Inc. entity. The media mogul has made it clear that he plans to revamp realtor.com by enhancing its ease of use for agents, and pursuing major marketing efforts, which will involve promoting realtor.com across News Corp.’s sprawling network of media properties.The media platforms now available to realtor.com as a subsidiary of News Corp. may allow the portal to compete more strongly for web traffic. Move’s senior vice president of industry relations, Russ Cofano, has also hinted at changes coming to the way realtor.com displays listings.
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