Q A Z Z O O . C O M

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As we all know by now the pending merger of Zillow and Trulia was approved early this year. What does the merger mean to the average real estate agent? What can we learn from the past in order to determine the future?

The answer is anyone’s guess so we are taking the time to throw our observations into the hat so that we can all think about them.

First, is that the real estate landscape online has been changing for some time and we have all felt the brunt of it as we are forced to resort more every day to online methods of generating new business. That said we have to look at the goals of Zillow while keeping in mind that goals may be clear but the methods of attaining those goals are not always clear to the decision makers at this moment in time.

Here are some points that everyone knows:

  1. We know that the two largest online advertising platforms just became one.
  2. We know that Zillow started out to replace the real estate agent by putting buyers and sellers together and taking a small piece of each transaction.
  3. We know that both companies were publicly traded.
  4. We know that publicly traded companies have the responsibility to their shareholders to continuously increase the company’s
  5. We know that the founders of Zillow were the founders of Hotwire before they sold.
  6. We know that Hotwire makes a small piece of each transaction.
  7. We know that Zillow and Trulia have been able to monopolize search engine results with an incredible amount of content.

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So what does the future of Zillow look like knowing all the information above?

It looks to us like they are going to face some challenges as they have replaced every newspaper in the country for advertising real estate. One challenge is that there are millions  of agents in the country and they don’t have many options outside of Trulia and Zillow. This means that Zillow will have a couple of options in order to continue growing and increasing their share price, which they are obligated to do.

  1. Break into other verticals (remember Hotwire started with Airline tickets and moved onto hotel rooms and rental cars)
  2. Sell more agents the same Zip Codes (increasing from 12 to 24 or 36)
  3. Become a national brokerage and enlist every agent that is now advertising to become a Zillow real estate agent.
  4. Become a Mortgage company that originates its own loans.

Some of these options should not raise any concern but other options should concern us a bit. There is nothing stopping Zillow from becoming Redfin now that they are owners of most search engine results. The difference with Redfin and Zillow is that Redfin is not publicly traded and was has never tried to monopolize search engine results while Zillow started out to monopolize search  results as its primary goal. Zillow and Trulia have both done a fine job at it and should be admired for it. We should also be prepared for the next steps that Zillow will be required to make in order to continue increasing its revenue.

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