Zillow MLS membership – done

Zillow gossip of the day (already reported by Dustin in the comments): Rumor has it that Zillow is now a member of the NWMLS and they’re aiming to get a license in every state.

You could spin this as the story of a company that promised an MLS-free “revolution” settling on improving the current system, but business-wise, I think it makes sense; going it alone is a much higher risk strategy that could lead to spectacular failure and would definitely be an uphill battle. This means they can have all the listings of brokerage sites, a way better interface, and sell leads and maybe make more of the process.

In my mind, consumer-centric web design is Zillow’s true innovation in the real estate industry. Even the biggest sites still view the internet as a way to snag customers into using their “real” business. No broker or agent site approximates the consumer-centric feel of Amazon.com circa 2000 or Google and Yahoo today, although I think the race is on to get there. I give Zillow a good shot as it looks like they’re first to market with a trully consumer-oriented, national real estate search site.


UPDATE: John Cook of the Seattle PI picked up this story and has some interesting quotes from Zillow vice president Jorrit Van der Meulen, NWMLS Chief Executive Jack Johnson and Redfin Chief Executive Glenn Kelman. Well worth a read.

56 thoughts on “Zillow MLS membership – done

  1. I’m not sure it’s the best decision. The internet, after all, holds the promise of dramatic — not incremental — change. The MLS system perpetuates the usage of real estate agents, as sellers are pressured to list on the MLS in order to effectively market their homes. Once on the MLS, they have to agree to pay the buyer’s agent’s commission. As long as buyer’s get a “free” service, they won’t have any incentive to act differently. Thus, until there is a viable alternative marketplace for buyers and sellers — i.e. a virtual marketplace in which large numbers of buyers and sellers participate — consumers will continue to pay a significant sum for the services of real estate agents. Agents certainly have a place in the system, but they should not retain that place by controlling the exchange of information. Perhaps Zillow’s shortcoming will be someone else’s gain.
    Craig Blackmon
    FSBO Law Blog

  2. > …until there is a viable alternative marketplace for buyers and sellers — i.e. a virtual marketplace in which large numbers of buyers and sellers participate — consumers will continue to pay a significant sum for the services of real estate agents.

    The Internet has created many opportunities for disintermediation, and in order to build a viable marketplace for buyers and sellers, a site needs relevant content. Zillow needs to scale their content quickly and cheaply, and this means they need MLS data. Once Zillow has established itself as THE virtual marketplace for real estate, they can begin changing the rules and offer FSBO listings integrated with MLS listings integrated with “Zillow-exclusive” listings.

    >As long as buyer’s get a “free

  3. Zillow Business Plan: See Microsoft History
    Microsoft History (c. 1995): Embrace, Extend, & Extinguish

    Dorkydad is right. The trick is how do you change the rules? They somehow have to create more value for MLS customers than the MLS does, while at the same time leveraging MLS content until they can do that.

    I don’t know how they could “break the MLS” though, although I’m sure some brokers and the MLS don’t get along and Zillow could use that to it’s advantage. Frankly, I think it is more likely they’ll “play of the rules” and merely become the E-Trade of real estate. (A national discount broker with superior technology).

    Even with a vision less grand, it is still a multi-billion dollar opportunity.

  4. I have to agree with both of you – great example Robbie. The best way for Zillow to “break the MLS” is by working with it first. The stock trading industry is also a great example – Datek embraced the conventional stock exchanges while building their own alternative, then routed the bulk of their trades through their own system as it became more efficient. It’ll be trickier in real estate, but definitely not impossible.

  5. They will have more chance of “breaking the mls” in the areas outside of NWMLS. There are lots of agents who resent having to be members of the Board to get mls access. Ours doesn’t operate that way; but most do.

    There are several cases around the Country on this issue. Lois Hekker had a good one going in Florida, but died in the middle of it. I think there’s one that was successful…the Thompson case?

    The lawyers here may know better. Attorney Barry was filing most of them or associated in some way with them.

  6. Purchasing Real Estate is much more of an emotional decision than booking a vacation. No amount of web 2.0 apps can recreate emotional guidance (yet). Unless Zillow hires buyers agents,
    I’m doubtful their online marketplace can equal that of a deal guide, which is what an agent is when it comes down to brass tax.

  7. Zillow joining mlss for access to listings is not revolutionary news. It’s being done already by Remax. Remax, with members in every mls, will post every MLS lisitng, framed on their site. The consumer will find a listing and call the smiling Remax agent, who may or may not be the listing broker (check the fine print). So they will get a piece of every pie and maybe even the whole magilla. Why does Barton get some sort of “real estate genius” pass because he put out expedia?

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  9. 3 cents, you proved the point. Have you really used Remax’s site? If you had, you would have noticed that it sucks and it’s not consumer friendly or focused. I would have been ashamed to have that site representing my company in 1999, let alone today. Trulia and Zillow beat it hands down.

    Web sites that will succeed in the real estate world will focus on delivering web services consumers. Right now traditional real estate sites are continuing to treat their sites like a side-show.

    I’m guessing Zillow will change course or will radically improve their offering, but this starter offering is better than anything the industry has published on the internet.

  10. Hey Galen,

    How does a real estate company with the best super duper site in town, keep people from “using” their site just to look at property”?

    If the company does what you want. If the company invests time, effort and money giving the consumer what they want. Does the consumer ever then feel obligated to hire an agent at that company to sell their home or buy a house? Do they ever say “thanks guys!!” by actually hiring that company?

    Or do they “use” that company and site to then go to Redfin and say, “now write it up and screw the guys who gave me the opportunity”.

    Why, Galen. Why should they do what you want. Serious question. Tells us why and we will all do it yesterday and in droves.

    Every day people who have hired me to represent them ask me about property they viewed on the sites of other companies. So they spent all the money and I reap the benefits. If the public doesn’t honor the effort…why? Because it’s the future…it’s tech savvy…it’s wasted effort and money 😉

  11. Well the Looky-Loos are welcome to Look and Look at SearchingSeattle.com

    It looks more like the mls than Redfin, but it updates every 15 minutes, so you have up to the minute data! I like the slideshow feature. Just be sure to look at the status, there are only two. Active and Offer STI. Offer STI means sold Subject to Inspection, so you can’t really buy those unless they “fall out”. Once inspection is over they drop off the site, or come back as Active.

    I’m all for free peeks. I hate registration sites…not going there.

    But don’t ask me to spend a skazillion bucks making it tech savvy. If you guys are so keen on doing that for free because it’s cool…Have at it!

    SearchingSeattle.com cost me a measly $200 to set up and $225 a quarter to host…so go ahead. Use the free service with no registration. It’s more up to date than some of the big company, registration required, sites.

    People don’t choose me for my data on the screen, they choose me for the savvy in my head 🙂

  12. Ardell,

    In any sales endeaver, people will often waste the sales consultants time, and turn around and buy the same thing across down because it’s cheaper. Weather you’re selling a DVD player, big screen TV or a big house, it happens everywhere. (it’s probably just more frustrating for a salesperson with bigger ticket items) I’m not sure what one can do about it, other than be honest in your dealings with clients and attempt to build their trust.

    I think technology is like marketing, lower commissions, or even house staging, in that it’s something you can do to stand out from your competitors, but not the only thing. However, technology allows you to serve clients without “wasting” a sales person’s time. After all, if they aren’t going to do business with you, wouldn’t you rather they waste your web server’s time, instead of wasting yours?

    The fact that buyers ask you about property they viewed on the sites of other companies tells me 2 things. 1) They didn’t prefer to use your site and 2) they prefered your service. It’s a difficult question to answer completely until we know why the buyer hired you vs. the company that let them get away.

    Granted better technology will make the tech savvy customers happier, but it’s not the only way to grow your business. I do think it’s probably the most cost effective way, since marketing allows you spent large sums of money w/o getting anything in return. Lower commissions and price wars are something most sales-persons would prefer to avoid. And staging, well that’s a lot of physical work (although I sure most clients appreciate the effort), none of us are getting any younger.

  13. Robbie: “It’s a difficult question to answer completely until we know why the buyer hired you vs. the company that let them get away.”

    Interesting question soon to be answered. I have asked my most current clients, who will close shortly, to do an interview to answer that question.

    The answer may even surprise me! Stay tuned. I don’t think it is fair to ask until it’s over. When I was with Coldwell Banker, they always asked the customer to fill out the survey the day they chose me. That’s how they got the “9 out of 10 customers would choose us again” advertising campaign. I thought that was cheesy. Of course they would choose me again the day they chose me. Duh.

    But would they choose me again after they get over the finish line? That’s the real test. Let’s see when these close.

    As to better sites out there, well the real reason so far they send me listings from other sites, that they can’t find on mine, is because those homes are actually sold. The other site is showing them as if they are for sale, mine is honest. Back to being honest maybe being my shortcoming, Robbie. We had that “argument” before. But just yesterday someone sent me a property that sold 4 days ago and wanted to see it.

    Being dishonest has become the advantage…and that is just a crime and a shame.

  14. Great post you guys….

    I agree Ardell… People have very little loyalty when it comes to where they get their info on the web and how it relates to that info provider.

    The key is developing models that can survive in that turmoil.

  15. I think most of us (posters here) aren’t being creative enough with our thinking. To suggest that people use other free search services, but eventually come to you to do “the deal” is a bad sign. It reminds me of little no-name computer companies that talk about how their customers come to them when they’re dissatisfied with Dell – that means they’re toast if Dell improves their service. It means that if those companies add more “sticky” services like online processing or [insert your “sticky” invention here], they will keep more of those defectors.

    Dustin pointed out to me a while ago that Expedia began the same way – initially “voyeurs” would look at flight cost information or times, then call their travel agent – because booking a flight used to be crazy complicated! After a while, they became accustomed to using the internet to look at flight information and they started buying tickets. Why? Because it was easier and they saved $5.

    The real estate industry is definitely much more complicated, but is it really that different? You go out and get a bunch of information on houses, including cost, valuations, etc, you take a look at some of the houses, then you hire some experts to help you do the deal. Say I move to Nebraska in a year: I would look at the (likely grossly) incorrect price estimates on Zillow, make a list of houses I am interested in (on Zillow?) and, if they recommended an agent to me and provided information about why that agent is great, I would consider using that agent to pick from my shortlist of homes, (especially if I was told I’d get a discount). Is that a totally crazy scenario? And no, it’s not what Windermere or ZipRealty already do: their sites s-u-c-k compared to true consumer-oriented sites like Amazon.com and Google.

  16. But how do you “look” at them Galen? Do you just hope they have an Open House before it is sold? How can you see several without involving an agent or more than one agent?

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  18. to galen re; comment 10

    there was no point i was trying to prove. i was stating the fact that access to mls data is already available and that Zillow is no genius when it comes to joining every mls for data & cited remax as an example. Just because Barton’s name is attached to a site does not make him a genius. I think someone has studied this phenom that people tend to give more credit to someone who has been successful even though they are doing something unrealted to their suceess- sort of a star struckism. I am not Zillow star struck as many are. The product is not novel, its inacccurate in many situations (& you need people to tell you how much its off–that’s a good one), it takes no consideration of rising or falling markets–you would be laughed out of every deal if you carried around a zestimate in the market last year–you would have bought zippow with your zillow. a lot of zillow is overrated in my humble opinion.
    As for website s, i did not say remax was a great site. and no matter how good a site you think you have, it is a proven fact that users will leave the site to look somewhere else. Check out useit.com and see what Jakob Neilsen has to say. He has actually studied web use.

    Anyone who believes they can get everything they need from one real estate site is mistaken. There is a lot more to real estate than listings or internet abacuses.
    ps I still like your posts 🙂

  19. Hello Everyone… I think the real point why Zillow wants access to the MLS is to make their Zillow estimates more accurate. They will be able to take sold listings along with active listings, avg. days on market etc, pendings, etc figure out a more accurate estimate. Once the estimates are accurate… THEN they can begin to advertise “MLS listings” on the site via sponsored agents (ala homepages). Once there is both closed data and active data then you will get both buyers and sellers on the site and really be able to get long term traction.


  20. answer me this jessie–assuming you take the Z as gospel (let’s hope that never comes to pass), why would you advertise your house on zillow for more than the zestimate?

  21. Hello 3 Cents,

    I don’t believe that Z can be 100% gospel because you still have the individual characteristics of the property that cannot be accounted for (view, no view, clean, dirty, run down, etc.)… but with current MLS listing data they will be able to get the estimate much more accurate than currently.

    As for why they would.. “why would you advertise your house on zillow for more than the zestimate?”

    Just like currently, some agents will take over priced listings and advertise them on the MLS with other properties that are priced correctly. They will put them there because there are millions of people viewing the site… increases the chance that you may find someone…. it’s all about exposure. Also, keep in mind, it’s the agents that will put them there voluntarily for exposure…. and if they are good they will be able to justify why the property is worth whatever they are asking above the estimate… that’s what makes a good agent.

    Also, keep in mind that it would depend on the market timing as a whole. If you put an overpriced listing their 1.5 years ago… it would not have mattered… probably would have still sold. Now as the market is cooling it will get more difficult.

    What I see this doing more than anything is making prices much more volatile than before… the peaks and valleys will be much larger and people will eventually price more accurately (according to market conditions).

    Lastly, if you are an agent and your job is trying to sell homes… why wouldn’t you advertise it, if millions of people are looking there?

    Also, regardless of you where you list a property on Z or not buyers will use Z for negotiation…

  22. Thanks Jessie for your thoughful reply.
    While I agree with you that more exposure is what everyone wants (except those with some privacy/security issues), here’s my Z problem:

    I have my house up for sale at 500,000 (let’s say that’s fair market value) and the Zestimate looming in the air says my house is worth 350,000. Now every ZZombie (my term for a Barton brainwashed buyer) will argue my price is too high. And I am faced with trying to convince this brain snatched person that it’s only a machine estimate. I don’t see this as facilitating a deal but creating another obstacle to sale.

    The problem is putting your faith in a machine that sets the price based on the MACHINE’s evaluation of DATA. Remember, everyone who has tried Z has an opinion based on HUMAN evaluation of the Z result. Buyers dont have that and now you arm them with a Z as a negotiating tool. Oh brother. Add an inexperienced broker with the same Z faith and man, let me out of the asylum.

    It would be IMMENSELY BETTER to do what Property Shark does. Just give us the data and let our brains figure it out.

    PS in an up or down market the Z is totally worthless.

  23. 3 cents,

    I checked out the Zillow website and found it quite useful and accurate. I was able to reduce the set of comps to recent sales of homes which were of similar vintage and size to get a customized estimate. It’s the same process I went through 10 years ago when I bought my home, except then I used Excel and photocopies of the multilist data of past deals I had received from my realtor.

  24. Zillow’s data is flawed. Anyone who believes these numbers is a moron. Those running the site, in their rush to get rich, haven’t figured out that publishing data that significantly undervalues people’s is no way to gain customers or credibility. The venture capitalists behind this gig stand to lose their money. I predict the site will go belly up!

  25. First congratulations for this blog you are totally right
    I’m as well a realtor I’m a realtor I don’t know what it really means, there are many people selling real estate without to spend $1000 of dollars in fees every Year.

    Please I need information because I’m sick and tired to pay to every body without getting anything back.

    Realtors Fees

    National Association of Realtors Fees
    State Association of Realtors Fees
    Local Association of Realtors Fees
    MLS Multiple Listing Services Fees
    Goes to take a pee Fees

    Absolutely this cannot not be anymore and something have to change, we can start firing to all of the called directors, of that association we will save just millions on salary, then close the doors of all associations we don’t need then and keep only one Association open in my opinion must be The National Association of Realtors.

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