Zillow is no longer just in the real estate search business. They are now getting into the actual real estate sales business.
I don't blame them either. Their main business -- selling leads to REALTORS -- is currently in heavy decline.
In 2016 Zillow lost almost 10% of the agents paying for their lead services, and that was after spending an additional $11M in marketing.
In other words, profits are falling fast, and it appears no amount of additional marketing dollars is capable of turning that around.
However, they still have the ace of spades in their hand. Zillow now reaches 95% of the home buying public. That means virtually everyone who buys a home in the next 12 months will use Zillow at least once. So what's their next move?
Based on recent events, my guess is Zillow is going to start selling homes. Of course a technology company can't just start selling homes... can they?
Not exactly. They'll need your help.
Zillow's Plan Is to Turn Agents into Uber Drivers
Right now, Zillow sells real estate leads to nearly 100K agents across the country. They charge exorbitant prices for poor quality leads.
But since the vast majority of home buyers start their search on Zillow, many of us feel as though we have no choice. Either buy leads from Zillow or simply starve.
(You do have another choice, by the way. I'll get to that in a minute.)
Now that Zillow is opening it's own real estate brand, agents will be presented with a new and more devastating choice.
The old choice was: Buy leads or starve.
The new choice will be: Come work for Zillow or starve.
They'll compete head to head with old legacy brands such as Century 21 and Coldwell Banker and even newer real estate giants like Re/Max and Keller Williams.
But do you think they'll continue sharing leads with agents who work for those brands? Unlikely.
Instead they'll have complete control over the customers. They'll begin recruiting agents from every brokerage across the country to help them service those customers.
But do you think they'll pay as well as your current company? Again, unlikely. They've already given us a number of clues as to what their business model will look like.
They are putting their focus on millennials. There is one millennial technology company that is in the process of replacing an old legacy industry as we speak. Their name is Uber.
What will the Uber-ization of real estate look like? I'll tell you.
Zillow will capture the customer. Zillow will provide search tools for the customer to find their dream home. Zillow will provide all the disclosure forms, contracts, waivers, etc. Zillow will connect them with an online lender. Zillow will arrange for a home inspection.
They'll just need you to show homes. Zillow will turn agents like you into glorified Uber drivers.
Is this your future?
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