Realtors who pay @Zillow are dumb
Ok, they’re not dumb, but Zillow CEO Spencer Rascoff is playing the industry for fools.
In this video interview with Jim Cramer (of Mad Money fame) he rebuffs value (for money and stock price value with continued growth) concerns with: “we’re making more impressions. We have lots of impressions to sell to our agent advertisers”.
And it made me think: page impressions do not make a Realtor money. Even converting a Zillow user into a buying client doesn’t make a Real Estate Agent money.
Realtors are a dime a dozen. What makes a Real Estate Agent money is providing a client with a completed transaction.
Listing Agents are the ones who have the power, as they control supply. But Buying Agents are the ones fuelling Zillow’s revenue growth. And they only make money if Zillow can grab listings for Buying Agents to advertise on.
These listings are then held for ransom, with a ‘Claim this listing’ button. And you can bet that feature is abused as much as Zillow is full of stale listings.
Let’s take a step back and look at the company that started all this: Redfin.
Poor Redfin. They were the innovators that just couldn’t execute. Copied by first Zillow, then Trulia, Redfin went down and ressurected itself as a brokerage.
As a brokerage, what is Redfin’s USP? Tech savvy, good customer service, lower fees. All the things that you’d think the public have been asking for.
But Redfin, in the grand scheme of things, is tiny.
Zillow on the other hand isn’t tiny. And it just got bigger with the purchase of Trulia.
Redfin adds value to customers. Zillow is full of dud listings and annoying adverts. Which one do you think makes more money?
And this is why Real Estate Agents are dumb for paying Zillow.
Actually, it gets worse than paying Zillow for buyer leads that most of the time don’t convert into a sale. If Zillow dominates the industry (and it currently does not) then there is no need for Buying Agents. Zillow, if it can present listings of quality that actually are available, will be the Buying Agent. And you better be sure they’ll take at least 40% of the fee by dumb agents desperately scrabbling to survive.
Here’s the Spencer Rascoff vs Jim Cramer video:
