

Zillow Said to Be Seeking to Buy Rival Real-Estate Site Trulia - chrisaycock
http://www.bloomberg.com/news/2014-07-24/zillow-said-to-be-seeking-to-buy-rival-real-estate-site-trulia.html

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j10t
The real estate market is huge and inefficient, a ripe opportunity for
technologists to capitalize on. But I don't understand what Zillow brings to
the table. Do they have any plan beyond their current business model
(advertising)?

As a consumer, I think I should oppose Zillow. They seem to just take public
data, present it nicely, and slather it with advertisements. Real estate
agents play the same heavy-handed role they always have, except now they have
to give some of their profits to Zillow else lose visibility to their
competitors.

I'm more excited about Redfin. Redfin makes shopping for a home closer to the
self-service experience it should be, with agents dealing in higher volume
with lower margins playing a lighter role. Unlike Zillow, Redfin seems to make
that market more efficient, and I think that's the bigger opportunity for
capitalization.

~~~
ssharp
The MLS and agent-based system is the real culprit. Until Zillow and Trulia
came around and really captured attention, that data was accessed on a few
larger sites, like Realtor.com, but also a massive amount of smaller agent
sites.

While Zillow is ultimately doing the same thing, I think they can eventually
position themselves strong enough to start wedging agents out of the process.
One of the huge issues is that the MLS listings are the go-to source for
information. If you want to buy a house that's in MLS, or want to list your
house for sale in MLS, you gotta play ball with agents. Since MLS is such a
dominant marketing tool, they're able to maintain the archaic, but profitable,
agent system. If Zillow, minus the MLS, becomes a strong enough marketplace
for homes, you'll have viable competition to MLS.

There are already flat-fee MLS agents out there, where you control the
commission on the buyer-side and pay a flat fee on the seller-side to get into
the MLS listings. That's a decent hack for sellers right now, but it's still
just a small improvement on a crappy system.

~~~
graham1776
What if a Seller paid a broker (super small fee)just to get on the MLS, but
not handle the ins and outs of the transaction? Is this possible?

~~~
ssharp
This is readily available by a variety of services. Google "flat fee mls" to
see the options.

I sold my house using one of these services in 2011. I saw seller agents
adding zero value outside of MLS, so I just paid what it cost to get on there.
Buyer agents are actually a little more useful to their clients, but
ironically, the seller has to pay them as well. When you do flat fee MLS, you
specify on the MLS contract what % of the sale will go to the seller agent. I
actually don't know if you can write in "0" or "0.5" in that box on the
contract, but I know for sure you don't have to write in the industry standard
3% (standard is 6%, with 3% on the buyer broker/agent and 3% on the seller
broker/agent).

In my experience, we did not need to do anything that required an agent. The
paperwork is mostly prepared by the buyer's loan company and then a title
agency handles the rest. Paperwork like the purchase agreement is basically
boilerplate and I had a lawyer review ours just to be sure.

The lawyer cost me $50. That plus the flat-fee totaled less than $600, saving
me thousands on what I would have payed if I had to send an extra 2.5-3% to
another agent.

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graham1776
As a real estate broker, I think the major problem isn't Zillow, Trulia, or
any other repackager of information. The problem is the MLS. There is still
one source/database of legit listings that is bought into by every other
broker. Other site (ForSaleByOwner, etc) do not appear legit and nobody trusts
a listing put there.

Democratizing the listing information is where disruption needs to happen.
What do you think about me as a broker charging a small fee ($100-$200) to
post your listing to the MLS, managing in/out calls, but letting the Seller
keep the vast majority of the commission and letting a lawyer/broker service
to handle the close/escrow process. Selling a home shouldn't be wasted on 15k
to a broker who doesn't do anything. (Yes I realize CA has some laws that
would make this tricky)

Another idea: How about having homeowners list their properties on a reverse-
bidding listing site, where brokers bid for the listing in exchange for the
lowest commission? Ideas?

~~~
rhc2104
Redfin is the site that has tried harder to disrupt the space, although it
hasn't been as successful.

They still use the traditional model, but with lower commission.

[https://www.redfin.com/sell-a-home/how-you-save](https://www.redfin.com/sell-
a-home/how-you-save)

[http://www.redfin.com/buy-a-home/refund](http://www.redfin.com/buy-a-
home/refund)

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sharkweek
No bias here as I don't have any affiliation with Zillow/Trulia/Redfin but...

I feel like the only real disruptor in this market has been Redfin - the only
one with actual real estate agents.

Zillow and Trulia are, put extremely simply, a map with ads on it. Useful
tool, absolutely, but not going to shake up the real estate industry, which is
undoubtedly a dinosaur.

When you look at a company like Redfin, who is an actual brokerage but with
non commissioned agents, and lower commissions across the board, they're
actually disrupting a market that has been ripe for change for years, and they
now are offering a better service/product at a cheaper price. I'd expect big
things out of them, and expect several brokerages will either change gears to
match them or more competition to pop up here soon.

~~~
jwcooper
I was originally using Trulia to send me emails on new homes in the market,
and it works fairly well. Problem is that the data can be sort of dated fairly
quickly as it doesn't get MLS data immediately (at least in my area). This is
sort of troublesome in markets where a home can be sold in 48 hours from being
listed.

Someone on HN mentioned Redfin, and I tried it out. It's incredibly fast
(guessing 24-48 hours quicker than Trulia) to get emails on new listings as
it's using the MLS data directly. Give it another year, and I feel like the UI
will be on par with Trulia on the desktop.

~~~
chrisgd
I think Trulia and Zillow rely on RE agents to post the information or they
take it from other postings. They view it as a great marketing arm for RE
agents, while agents (some) view it as a cost that isn't worth it.

With this announcement[1], if I am a broker in NY, why would I post to Zillow
if this other agency's listings are always going to be higher than my
listings.

1 - [http://zillow.mediaroom.com/2014-06-24-Zillow-and-Douglas-
El...](http://zillow.mediaroom.com/2014-06-24-Zillow-and-Douglas-Elliman-Real-
Estate-Company-Launch-Strategic-Marketing-Partnership)

------
uptown
If this deal were to go-through, it'd be a massive consolidation of the online
real estate industry. Zillow keeps saying otherwise, but local MLSs are going
away.

~~~
kumarm
And they should go away. Local MLS's are fraud and add very little value to
either buyer or seller collecting 6% of total value.

When I bought the house, My agent spent total of less than ten hours showing
the houses and made 30K with 3% he collects. (He was even absent at final walk
through vacationing)

I believe Real Estate Agents even got a law passed where you can't be a real
estate agent unless you work for someone for year in California. Really? You
can be a doctor and do surgery on Patients on your day 1 as a Doctor but you
apparently being real estate agent requires some unknown skills.

~~~
JPKab
It is a fucking sham!

I'm about to make a big move, and it is absurd that the only value the agents
I'm talking to are (that a user on Reddit can't provide by telling me about
the area) providing is the MLS they have access to.

The 6% commission, you would think, would be a price subject to market forces,
but due to collusion among realtors, its locked in. Why anti-trust isn't
investigating? Lobbying, that's why.

~~~
beamatronic
The commission is subject to market forces. There are a number of agents in my
area (South Bay) that will accept a $5,000 flat fee.

A good agent really shines when you get into "unusual" situations, by
providing you with good advice when the way is not clear. If you buy and sell
houses a few times you will see some of these situations.

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oneweirdtrick
I never thought of Zillow being the bigger company until I compared their
listings to Trulia's. Looks like Zillow has been acquiring other real estate
sites like crazy over the past few years to get to where they are now. Pretty
impressive. However I feel like the Zestimates are still not very accurate.
Not even sure how they get those estimates. Can anyone shed some light on
this?

Also, I wonder how long it will be until Amazon acquires Zillow and 'homes'
will be listed in departments.

~~~
nostromo
Zestimates are worse than random. There seems to be no sanity-checks in the
algo whatsoever.

Check out this Baltimore home. In a single month it's estimate went from $700k
to $300k, then back to over $700k during the worst part of the housing slump,
and back down to $300k during the recovery. lol wut?

[http://weblogs.baltimoresun.com/business/realestate/blog/Zil...](http://weblogs.baltimoresun.com/business/realestate/blog/ZillowChart.jpg)

~~~
brucehart
I did an analysis on the accurate of Zestimates a few years ago. I took sales
data for my county from the previous month (that Zillow had not imported yet)
and compared it to the Zestimates Zillow computed. The mean error was almost
0, but the standard deviation was about 20%. An engineer from Zillow wrote to
me and said my analysis was close to their own internal measurements. Their
algorithms might have improved since then since it sounded like it was
something they were continuously trying to improve.

~~~
Kamic
do you have a link to that analysis?

~~~
brucehart
It was on my old blog which is no longer online. I'll see if I can find the
article in my backups and post it somewhere. I should probably do the analysis
again since my original test was during the end of the housing bubble when
prices were unstable.

------
willholloway
With 10 years experience in the real estate brokerage business I have
witnessed the value of a good agent in the home buying/selling process.

The number of things that can and do go wrong on the eve of a sale, are often
things that a good agent with good vendor/contractor/mortgage relationships
can fix so the deal can close.

With tight lending standards post-2009 an agent with good mortgage broker
relationships can get loans approved that would have otherwise fallen through.
I have seen this a hundred times.

90% of agents are useless middlemen/women that want to collect a few
commissions a year to supplement their income.

A full time, capable agent/broker is like having a good lawyer on your side.

Being a real estate agent/broker is not an easy job. It's extremely
competitive, the margins on a brokerage are often very thin.

It's a demanding 7 day per week job, and putting in a lot of work to get no
payment is an ordinary occurrence.

The MLS and the mandatory broker councils that one must belong to are another
story. I have found them to be petty dictatorships at least 10 years behind
technology wise.

One MLS I have worked with has for over ten years had an internet explorer
only web interface. The MLS API is a giant XML beast that is the most
confusing API I have ever worked with.

The MLS has great value, and the freshness and integrity of the data come at a
large cost. I am not surprised that brokers and associations protect it the
way that they do.

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clairity
even if zillow & trulia merge, none of the potential disruptors in the real
estate listings space (zillow, trulia, redfin, fsbo, etc.) have any real
chance until the MLS system is dismantled... and brokers have a massive
disincentive against that--brokers have exclusive access to property data via
their local MLS before anyone else. the MLS's allow some access to this data
to zillow & trulia, but will never let them have instant & complete info since
it's the MLS's core competitive advantage.

agent commissions will remain at 5-7% as long as the MLS system is in place.
but MLS's are not going away any time soon. even the DOJ looked into breaking
them up via legal action and gave up.

interestingly, new york city does not have a strong MLS presence, but is
basically an oligopoly of 6 major brokers, so the effect is the same.

figure out a way to dismantle the MLS system and you're looking at a >billion
dollar business (just note that zillow & trulia have been trying for ~decade,
so it's not an easy problem).

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blaincate
The way it works is : seller pay 5%-6% of commission to his agent. Seller
agent then posts what the buyer agent will get. Buyer agent will get equal or
more, as he to do more legwork.

now interesting part:

a buyer can negotiate with his agent to get some of the commission a buyer
agent gets in range of 1.5%-2%. But buyer has to work with smaller agents, not
affiliated with big firms : century 21. There is glut of agents, and you can
get the deal. (me and some of my friends have)

needless to say : you have to do lot of legwork : finding house urself, and
just the agent to do the paperwork.

Same goes with seller : he has to give 3% for buyer agent, but for his agent
(seller agent) he can negotiate to 1% - 1.5% (know of that happening too)

while looking for a next house, I just made a aggregator to scrape multiple
sites and let me know when new house is available in bay area.
([http://www.twikstik.com/](http://www.twikstik.com/) : running on appengine)

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loganfrederick
It's relevant to link to Citron Research's scathing report that Zillow is
among the most egregiously overvalued public tech companies, with large
insider selling and video footage from management admitting to its partners
that it does not have profits with which to pay them.

[http://www.citronresearch.com/wp-
content/uploads/2013/09/zil...](http://www.citronresearch.com/wp-
content/uploads/2013/09/zillow-final.pdf)

~~~
EverSF
Keep in mind that Citron Research is known for providing info for short-
sellers. So it's somewhat in their interest to see the stock go down for
companies they review and, in turn, suggest their readers short.

Note: they've recently been doing lots of reviews on Z

~~~
loganfrederick
Largely true, but they've also put out Long reports, namely Blackberry
recently which they highlighted about a year ago and have reiterated their
positive stance, which has played out in the market. I add this not to toot
their own but even out the message that although they're known for their
shorts, that's not all they research and pick.

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harrystone
Good. When I have a problem, I can get a hold of a human at Zillow and they're
nice to work with.

As far as I know Trulia is just a very complicated cron job.

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tspike
I'm currently hunting for a home and the only two sites I've found relevant
are Zillow and Redfin. Can someone explain to me why I'd use Trulia?

~~~
blaincate
which areas are you hunting? i wrote a aggregator for some cities at
[http://twikstik.com](http://twikstik.com), and can add cities for you.

~~~
tspike
I'm looking in Portland, Oregon. Looks like your site is Bay Area-only? Looks
like a fun side project!

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jpfielding
and the most important truth in all of this.... the agent/brokers make peanuts
compared to the mortgage companies.

