When Zillow rolled out a new CRM tool for real estate agents on Friday, it hit a nerve with brokers who are already offended by big aggregators’ controversial tactics to get in between them and their customers. Now it looks like Zillow is also trying to get in between them and their agents.
Zillow describes Agent Hub as a key step in moving Zillow beyond advertising with a suite of tools and services giving agents a central hub for marketing and managing their businesses and becoming more productive. Agent Hub is said to provide agents with analytics dashboards to monitor listing and agent profile metrics, as well as marketing and social media training and industry news updates.
All this prompted industry observers such as Geekwire to suggest that Zillow’s agent strategy is targeted at competing with Market Leader and other industry outsiders that are aggressively pursuing the billions spent annually by real estate professionals on marketing and advertising.
But there’s more going on here than competition between two companies in the same space. In this battle, it’s real estate brokerages who are in the crosshairs of Zillow’s ongoing expansion plan.
Understanding why that’s the case requires understanding how the Internet has changed consumer buying habits. Once upon a time, agents were the source of clients for brokerages. But now, consumers have direct access to MLS listings and they’re spending weeks or months shopping for homes on the web without help from agents.
Today, agents have to pay Zillow and other third parties to help them find these online buyers. And these savvy third parties are investing big bucks in developing a range of CRM, lead management and other support services that are easy for agents to access and free or low-cost to use. (Zillow’s plan, the company disclosed this week, also includes opening a new California office and adding 100 employees to its sales force to promote the Agent Hub offering.)
Here’s an interesting comparison. If you look at some advertising by brokers trying to attract agents, and at what these industry outsiders like Market Leader are marketing to agents, you’ll see some interesting similarities:
The broker’s message in the above ad — about providing the “best tools, training, support and lead generation” to agents — has been borrowed by third party companies like Market Leader. Its brochure ware says it offers agents “integrated websites, contact management, a marketing center, and lead generation services that generate a steady stream of prospects plus provides the systems and training for converting those prospects into clients.”
The only difference in the services is that these third party players aren’t restricted by all the rules and regulations that a brokerage must adhere to.
With Agent Hub, Zillow is helping to undermine brokers’ value to agents and eclipsing their role by providing services directly to agents – services that traditionally have been provided by brokers. Like Market Leader, they’re taking money out of brokers’ pockets, undermining agents’ loyalty to brokers, and basically competing for the low hanging fruit – agent marketing dollars.
This week, the Washington Post warned consumers to do their homework on real estate portals such as Zillow, Trulia and Realtor.com because information on the sites can be “inaccurate or misleading.”
Those “mysterious” estimates of home values are often incorrect. And outdated listings leave buyers frustrated when homes they thought were available are actually sold. They can leave sellers angry when price reductions aren’t reported quickly, the Post story said.
The story is significant because finally, the consumer press is recognizing what brokerages have known for years. The Zestimate can be wildly inaccurate, thus confusing consumers more than helping them. Zillow lacks reliability because it cannot take into account any form of property renovations, condition of properties and upgrades such as landscaping, roofing, new appliances, etc.
A study by University of Texas at San Antonio found that 40 percent of Zillow’s “Zestimates” were overvalued by 10 percent compared to the actual sales prices.
Listing aggregators, in their quest to sell advertising, leave potential buyers baffled about who the listing agent is. But a non-listing agent doesn’t have the same financial incentives to help a seller. Meanwhile, buyers are unknowingly dragged into a fight for business by agents who know little or nothing about the property they asked about.
All this isn’t good for consumers or brokers. As VHT CEO Alex Zoghlin noted in a recent white paper, Friend or Foe?: The Battle with 3rd Party Aggregators, it’s just a play for more revenue by the fast-growing aggregators.
Real estate heavy-hitters talk tech in Orlando
In late March, VHT took a trip to sunny Orlando to participate in the annual conference hosted by Leading Real Estate Companies of the World, one of the most highly respected groups of brokers in the United States. The network is comprised of independent real estate brokerages from across the nation and has a membership roster that reads like the “Who’s Who” of real estate, with 15 of the top 25 real estate companies in the U.S.
The event brought together some of the premier names in real estate to trade insights and talk about the dynamic industry landscape – including nearly 1,000 top real estate brokers, managers, relocation professionals and industry experts from the U.S. and over a dozen countries around the world.
It was no surprise that technology, digital marketing and listing aggregators were hot topics.
It was VHT’s eighth year at the conference and this year, VHT Chairman Brian Balduf was invited to speak at a session on lead management, while VHT CEO Alex Zoghlin shared his perspective on how the broker-agent value proposition has been impacted by the Internet and changing home buyer behavior.
As the industry begins to bounce back from its economic woes, brokers are recognizing just how much technology has changed how home buyers behave, how they search for properties, the kind of information sources they utilize, and ultimately who they choose to represent them. We know that consumers start the buying process on the web rather than by contacting a real estate professional. But who’s responsible for finding these online buyers and capturing their business? Agents or brokers?
We believe it’s time for brokers to rethink both their marketing priorities and their value proposition to agents. Brokers need to reassert themselves on the Internet and aim their marketing resources at capturing these online consumers early in the buying process, before competitors do. They must refocus their value proposition to lead-hungry agents by providing them with plenty of potential buyers so they can close more sales.
The more prospective clients a brokerage can bring to its sales agents, the less money they’ll spend buying leads from third parties, the more transactions the company will close, the more clients it will have and more loyal its agents will be. Read more about this in VHT’s white paper entitled How the New Buyer Lifecycle is Impacting the Broker-Agent Relationship.
Speaking of white papers and the Orlando conference, here’s how a recent article from the WAV Group summarized brokers’ message during a session about listing syndication: brokers are offended by tactics of many online publishers. Two brokers who quit sharing their listings report that publishers reacted by mailing postcards to sellers with active listings, urging them to ask their agent or broker to reconsider. According to the WAV Group article, Fixing Online Advertising Woes, online publishers “have proven they are willing to act in ways that are far below out industry’s standards of ethics.”
Stay tuned as the conversation continues.