Mix Zillow’s amazing capacity to quietly market itself and its new feature (list your home on Zillow, FSBO or FSBAgent) and you have a great new service for driving traffic… to your annoying neighbor’s house. List their house at 25% below Zillow’s estimated value and invite people to come by to see the place anytime after 8 on weekdays. You could alternately ‘claim’ their house and hold it until they decide to sell, at which point you get to choose the price, at least on Zillow. To be fair, listing someone’s house has always been possible on Craigslist, but you never had to send in proof of ownership to be able to reclaim your house from them.
More seriously, I’ve been expecting Zillow to launch a service like this for quite a while, but frankly I thought it would take them a little bit longer to get their act together and figure out exactly how it would work.
A few thoughts:
1. Zilllow is making it a pain to bulk upload listings, which gives FSBOs exactly the same capacity to list as the biggest companies. They’re doing this for two reasons: Individuals are more likely to list (and look at ads and puruse the site) if their agent doesn’t say “we automatically list so you don’t have to worry” AND because it makes it harder for competitors to get the same information. If they allowed bulk submit, third party websites would do most of the work posting listings to all the free listings sites on the web. (So Greg, I disagree with you here) Expect an API for listing if people aren’t listing in high numbers (see number 3).
2. Many consumers already believed that Zillow had houses for sale, so this revelation won’t surprise the real estate-casual public.
3. Zillow has the best shot at getting the chicken or the egg (you need one to get the other). Most non-MLS sites (Trulia, Propsmart, ForSaleByOwner, etc.) have had the nasty problem of beginning with no listings and no searchers (no chickens or eggs). Each has tried a novel and somewhat successful way of getting searchers or listings – crawling sites for listings, offering free listings, pay-per click ads to lure searchers, etc. None of them seem to have hit the point of no return: the point at which searchers start using the site exclusively, causing any remaining listers to clamor for inclusion. Based on the marketing buzz alone, Zillow may be the first to hit this point. Once (if?) they hit some critical number (70%? 80%? 90% of listings?), the tide will turn and nearly all holdouts will list themselves. They can always include an API to increase inclusion, but I think they’d rather have agents and consumers list manually and add more information to their Zillow listings.
4. Zillow almost has enough buzz to get the holy grail of online real estate listings – actual people listing their own homes en masse and actual searchers using a non-MLS based site. Uninformed home buyers will probably use it to search for homes until they realize that, at least in the short run, Zillow doesn’t have a bunch of the houses that are for sale.
5. Many local MLS systems will probably fall by the wayside as the primary places that agents and consumers go to search for houses. This is because most of them have too many rules and regulations for using their data, which binds the hands of innovators.
6. Is ‘Make Me Move’ basically a slow motion auction with no end date? You state a “buy it now” price and wait for bidders to inch up to that price? It seems like a surefire way to see get a bunch of homes, but you never know if you’ll find that gem in the rough. It certainly won’t work for commodity-like homes in suburban developments or condos unless the “buy it now” price is really close to the market price.
7. Agents, you’re kidding yourself if you believe that Zillow isn’t going to make your life harder. When anyone can list their home on the web without paying $500 to some brokerage, it’s time to offer real services or get out of the game. Also, if people know someone who has successfully done a FSBO, it’ll seem a lot easier for them to do the same.
Agents and brokers of the future, you’re also kidding yourself if you believe that Zillow is responsible for shrinking commissions (they’re coming) and a changing industry because it’s not: Zillow is just the product of the web’s relentless market and information opening power. We are leaving the time of the agent-leads-consumer model in the real estate industry and we are entering the time of the agent-coaches-consumer model. More on how I hope to participate in this change in the coming weeks and months.
Update: I suspect Zillow will allow for bulk uploads in the future no matter what, but it makes sense to take things like this slowly. They will need to be especially vigilant to keep out listing spammers who could use an API to upload dozens of false homes.
I go out for a few drinks, come in late, think I’m going to settle down for the evening and look what happens….
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Galen, you’ve hit the nail on the head with your chicken and egg analogy. That’s the same problem Google Base, Trulia, and everybody else has. Even though Base is 100X faster than our local MLS, people still prefer to search there because it has the bulk of the listings. My prediction is that the usual forward-thinking large brokerages (Prudential, eg.) will have their listings on Zillow in short order, but the others will do what they’ve done with Base and Trulia: refuse to cooperate and hope consumers never discover it.
Ultimately, the other brokerages will post on Zillow only if their consumers insist on it. But, of all the attempts to make this work, Zillow’s has the best chance of succeeding.
Hi Galen, it’s David from Zillow. Very interesting post but you were joking about being an @$$ to the neighbors, right 😉 Seriously, I like the controls we’ve put in place to moderate potentially malicious behavior on the site but we also have a healthy paranoia about such scenario’s and will be watching user activity closely. Once an owner has claimed their home, they have control over and are notified of changes to its posting status. Claimed homes are a great control system for detecting malicious behavior.
I challenge your assumption that sellers posting their own homes for sale = fsbo’s. It’s late, so please excuse me cutting and pasting from another blog where I just discussed this …
_Posting your house for sale on Zillow is the equivalent of telling your neighbors that you’re selling — it’s just smart — and it’s been happening for years but it doesn’t preclude you from needing a Realtor to represent you in your sale. As you know, selling a house is a team effort and you already find that sellers are getting involved in promoting their own homes on websites like craigslist — so, allowing owners to market their properties is unrelated to fsbo’s other than that fsbo’s will also find this tool useful (which is obviously in the interests of the buyers searching for all homes.) Additionally, an owner who posts their own home for sale on Zillow is given the option to provide their listing agents contact details for prospective buyers._
Galen… I made the same points in #5 and #7 of your post yesterday in an MLS leadership meeting. I’ll just say that neither point was well received by the other leaders. While my argument gained no other support, it is at least on record (again).
David G, I like my neighbors, so I would not post their homes. I also I doubt that the few occasions where this will happen will be a significant drag on the experience at Zillow, but surely people will do this, right? Craigslist also has great controls, but people air out their dirty laundry there too.
As for sellers posting their own homes for sale being the same as FSBOs, I agree that it’s not. But it’s one fewer thing that sellers need an agent for. I think the 5-10 years from now real estate world will not be a traditional FSBO world, but it definitely won’t look like it does today. It’ll be sort of a hybrid model. Is there a possibility that it will be a FSBO world where you hire professionals for very specific tasks? Maybe, but not a high chance in my mind.
If you ever do find a real problem or prank on craigslist, please email me the link. I’ll follow through.
Craig (weary, pursuing spamvertisers)
Great analysis Galen. As both you and Greg point out Zillow’s move has just made it that much harder for the other listing aggregators to compete. I think you’ll see many fall by the wayside and perhaps only Trulia stick around in distant second place.
Zillow is becoming the colossus that many envisioned – though not necessarily in a bad way. What we’re seeing here is the nascence of a truly national MLS – I for one, can’t wait.
Anyone else make the “Pearl Harbor Day” connection yet? 😉
Galen, you may recall our conversation some time ago about creating a web site that gathered all FSBO data from the many FSBO web sites and posted it in one location, thus offering a true alternative to the MLS (i.e. a forum where large numbers of buyers and sellers could exchange information without agreeing to pay a 3+% commission to agents). I agree, I like Zillow’s chances of reaching “critical mass” in this regard. As for Zillow making the lives of agents more difficult, you neglect to mention the most important point of all: Not only can sellers save the $500 on a flat fee MLS listing, they also save on the 2-3% they would otherwise have to offer a buyer’s agent. Thus, unlike the flat fee MLS model, which only undercuts one half of an agent’s business model, Zillow and its ilk threaten to blow up the entire agent-based system. Pearl Harbor Day, indeed.
Galen,
With this revelation, I think that as time goes on, people will utilize Zillow as one of their top tier considerations in marketing their home. As more and more successful stories circulate regarding home sales, the more powerful the pull may be. I tend to agree with you that it may be one fewer thing that consumers need (listing agent) IF this starts to gain traction–and that’s a big IF.
The idea of consumers choosing specific tasks related to the transaction is very real. Our office does close for sale by owner transactions and in all cases one of the parties (buyer or seller) contacted escrow to close the transaction.
If placing a home on Zillow results in a sale without a traditional listing agent involved, I wonder how consumers on both sides of the transaction will treat the 3% listing savings for a seller–more flexibility in negotiation or…?
Interesting times. John L Scott placed sold information on their website to try to neutralize Zillow and now that Zillow is open for listing data, both traditional listings and FSBO’s side by side, how will the real estate firms react–let FSBO’s into the NWMLS or on their own sites?
Craig (Newmark), I used Cragslist as an example only because I know how vigilant you are about keeping scammers out (yet they still get in sometimes!).
Craig (Blackmon), I am 1) glad we didn’t invest a lot of time and money into that now (phew!) and 2) you have picked a great niche to prepare for the piecemeal-transaction future.
Tim, I agree – that’s a big if or at least a big when. I wouldn’t recommend searching for a home exclusively on Zillow now or probably at any time in the next year – you would be missing a bunch of homes that are for sale! Zillow has done an admirable job of branding, but lots of people still haven’t heard of them.
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It looks like Zillow has the potential to become the AutoTrader of RE listings – anyone can post a perpetual ad at an outrageous price hoping someone will come by and want to purchase their baby for as much as it’s worth in their heart. Likewise, up to 50% of the autotrader listings don’t even exist. The “sale inventory” numbers that Zillow provides could grossly overstate the numper of properties available for sale if it becomes choked with non-serious sellers and phantom homes.
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Seems like everyone is pretty excited about the new Zillow features, but just wanted to make a few comments that no one else seems to be making… (as a sidenote, I love Zillow, use it several times a week and often include the Zestimates when sending listings to clients and friends, so I’m not trying to bash em)
Condos and townhomes – Zillow, from my experience, hasn’t been that great about placing condos and townhomes on a map, let alone valuing them. One guy down the street from me already listed his townhome listed on Zillow for $439K, Zillow says it’s worth $380K. And on the flipside of that, there are these condos in Federal Way (called Liberty Lake) that should be worth around $69K to $79K each… Zillow has them valued at $120K and up. Except for one that was completely gutted and remodeled, the 1-bedrooms there have NEVER sold at that price. Not even close.
Builders / New Constructions – I currently work with 2 builders on the Eastside. Neither are large enough to have their own “team” or “office” of agents, and both would rather pay me a reduced commission rather than listing homes themselves and dealing directly with buyers. Neither have that much web knowledge. Also, none of the homes they are currently building are on Zillow.
Newer Homes – The home I currently live in (built 11/05) and my last condo are still not up on Zillow. My current home is a bunch of trees still. Even if I wanted to sell FSBO, I couldn’t on Zillow.
So as an agent who mostly sells newer construction, condos, and townhomes, I’m stuck using the ol’ MLS and Craigslist (which by the way I hate to do anymore ever since Asset Realty started flooding the site). I’m curious to see how Zillow will address these issues in the future.
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