Thanks for the post and the commentary. I do think the Zillow / Seattle PI announcement is another important milestone in Zillow’s history. We started the company less than 4 years ago, and already we’re among the top 3 real estate sites nationwide with 8.8 million unique visitors and traffic growth of around 70% year-over-year. More importantly to RCG readers, Zillow is now likely the largest real estate site in Seattle or Washington state (although it’s very hard to get reliable information on that) — in Aug09, Zillow had 518,958 visitors in Seattle, up 57% year-over year (source: Omniture Analytics, our internal data provider). The PI partnership helps grow our reach in the Seattle area by putting Zillow in front of their many online readers. For the PI, the partnership is beneficial because they now have a top-notch real estate search experience, one which they could never create on their own.

Regarding the comments about Zillow not having NWMLS membership, let me clarify — yes, it’s true that Zillow no longer is a member of NWMLS nor do we have an NWMLS feed. We used to be members of NWMLS but dropped out a few months ago. We never used the NWMLS feed for anything though — NWMLS listings were never on Zillow. The reason we joined NWMLS in the first place was because we viewed it as sort of a Chamber of Commerce for our industry — something that a good corporate citizen should be a part of. Perhaps we were naive in that decision, made 4 years ago back when we were real estate rookies. It turned out that our membership in the NWMLS caused a lot of suspicion on the part of brokers and agents, and stoked fears that Zillow had some master plan to be a discount brokerage (a la Redfin). So the NWMLS membership was causing us much more harm than good, and we dropped out.
We do currently receive listings from about 200 MLSs nationwide (though we’re not Members of any of them), but NWMLS is not one of those which sends us (or ever sent us) listings.

Despite not having NWMLS listings, we still have most of the listings in the area thanks to listings feeds from most major brokerages (e.g., CBBain, RE/MAX NW, Pru, etc). You can see how many listings we have in a given area by just doing a search on the site.

Thanks everyone for your interest in Zillow, and if I can ever be of assistance, please don’t hesitate to email me (spencer at zillow dot com).

I think this is true. I think the internet is a fabulous advertising method – lots of pictures, lots of data, but the truth is, it’s got a lot of garbage and clutter. I really get the daily emails from Trulia and Zillow to see what is going on, but I don’t open them, since the first paragraph tells me they are still following the People Magazine niche for real estate.

Face to face, competent advice. Far too many people bought real estate between 2004 – 2008 without competent advice.

Referral fees? I never did like the non-real estate referrals (like Costco etc), and won’t take them. Relocation companies haven’t been discussed — but I also feel that those fees, which often are 30 – 50% of the agent’s commission, mean the consumer client is NOT getting the best agents.

Sure – today many competent agents might be willing to work for 30 – 50% ‘off’ … but not in the long run, and certainly not for an ‘opportunity’ to work the high pressure relocation buyers. Relocation seller listings IMHO are actually pretty easy to work, but relo buyers? They need lots of time, lots of handholding, and very competent advice – not discounted advice.

One day soon, I hope that the relocating consumer examines their relocation package and asks some important questions.

Jim: Consumers do not grasp the concept or value of ‘full inventory’. Zillow knows this and understands partial inventory doesn’t effect their traffic. By not being a member of any MLS system, Zillow doesn’t have to dumb down functionality of their website to meet MLS rules. They can display whatever they want and don’t have to deal with all the hassles of multiple MLS integration rules.

While its possible that Zillow gets into the referral business, its highly unlikely. Its actually more likely that Zillow will offer templated agent websites with basic CRM functionality and/or blogs with display advertising…in effect creating thousands of mini zillow sites. This is an extension of their profile page program and inline with their primary strategy. Agents drive traffic to their own sites (which are simply zillow microsites) and Zillow collects display advertising revenue (similar to Facebook)

Zillow is keenly aware that it is far more cost effective to work with the agent population and as a group they drive more traffic then Zillow could ever hope to do through traditional marketing efforts.

So to answer Jim’s question. Is Zillow the competition? Not any more than it has always been. Is concern about Zillow charging referral fees warranted? Not in the foreseeable future.

I have a post on hold where one of my non RE friends stopped in an Open House and there were SIX booths of Avon, selling handbags and kitchen equipment, etc…She said no one asked anyone how much they liked the condo…they all wanted to sell make up and accessories

I took a pic of her “goodie” bag full of free lipstick samples and brochures, but never got the post up. She said you couldn’t even step out on to the “deck perfect for entertaining” because the Avon Lady’s booth was blocking the door.

It’s a weird world out there. In the last recession I remember agents trying to sell other agents things they had inside their jackets and out of the trunk of their car. Anything to make a buck

So much of the discussion regarding on-line property searches (my dog is better than your dog debates) focus on the front-end of the process. Certainly, buyers and sellers can do research about home values, neighborhoods, school districts, etc. via the new technology. That’s fine and dandy. In fact, this “democratization” of information is, in my mind, a good thing. It has already helped reduce the cost to consumers in the overall process. However, this is where the benefits end and the “actual costs” begin.

Consumers (and the new-wave business models) fail to recognize that there’s only so much fat that can be trimmed from the cost of purchasing and selling real estate. The high commissions that so many object to are comprised of a myriad of systems: brokerage fees, agent education, licensing, legal fees, agent experience, marketing costs, and one of the largest costs that most forget about: the cost of failure (i.e. when transactions fail to close there are HUGE costs that are accrued within the system). As in any complicated/costly transaction, getting to the store and shopping is the easy part. Actually sitting down at the negotiating table is going to cost you.

I know of very few agents who have successfully run their businesses based on website referrals or on meeting people on-line. It’s similar to the success rate that the unemployed have with on line job-finding services. Ultimately, smart agents and smart consumers will find each other in the good old-fashioned way (if you don’t know what that is……………..get out of the business).

Good point. I suppose it’s a tough world out there and (some) agents will try anything to get attached to a buyer to fetch a commission. Of course, the people hitting the “button” probably hit more than one, so now they will have multiple apsos yapping at the heels.

But now that you point this out, I’ve seen plenty of broker sites (at least on Hawaii) that strip the name of the listing agent/broker off the properties to try and get you to call them instead. If you did not know better, you would think it was their listing. I would use google and eventually find the actual listing broker.

I don’t go to open houses anymore, in great part because of the lurking agents that follow you around and pepper you with questions about “what are you looking for”, “are you working with someone” etc. Sometimes I could not concentrate on the house I was in because of the noise (like those little flies that goes straight for your ears in the summer time).

I’m not sure the buyer thinks about the agent at all when they hit that button. Often they think the button is like an IM to the listing agent, who is going to come and open the door for them to see it. Most are surprised when it is not the listing agent who shows up at the door.

“Oh what a tangled web we weave…”

In a nut shell, yes. But only if the business owner, agent, passes on some of that savings. Say an agent is making $7,500 per on average off $15,000. They can open up their own brokerage, give the client $5,000, and still make more than at the traditional brokerage ($10,000 vs. $7,500), so it could be a win-win for the agent and their clients.

Same as the scenario of approaching the listing agent direct. When there’s more money on the table, there’s more chance some of it will end up back with the consumer. But it’s not a guarantee…until it becomes a stated business model.

I’m not averse to referral fees that are actually a split between agents who share in the services to the client. But 25% just shooting off the table because someone hit a button or because an agent made a phone call… Let’s at least force it to be disclosed and see how long that hidden practice lives on.

If an agent is willing to pay $3,750 to a site…why not directly to the client? And yet…many “love” referrals and “hate” clients asking them for a dime. I never understood that.