Tell Us What You Think: Quick Survey Included Below to Share Your Thoughts About Zillow Starting a Licensed Brokerage
If you look at Zillow's progression over the last several years, from Zillow Offers to Zillow Home Loans and Zillow Closing Services, you might guess that the company's latest news—launching its own brokerage, Zillow Homes, to service its iBuyer segment—is simply the next step in a long-planned strategy.
In 2017, following Zillow's launch of Instant Offers, RISMedia published a survey, asking real estate practitioners if they believed the company's iBuyer program was a shift toward the portal becoming a brokerage. An overwhelming majority, 86.9 percent, said "yes."
Most respondents, over 80 percent, said Zillow Instant Offers would be a negative addition for consumers in the marketplace. This distrustful view may have a lot to do with the uncertainty of what consumers prefer: working with a licensed real estate agent for a more personalized experience or reaching out to an iBuyer and, perhaps, sacrificing customer service and value for a more expedient approach.
According to RISMedia's survey, 10 percent of respondents said consumers would likely sell to an investor versus listing on the open market if given the choice, while almost 30 percent said they would not. Here's where the uncertainty comes in: The majority, 60 percent, said it would depend on the circumstances.
Three years later, we're looking to the industry to provide us with their thoughts on Zillow's latest news. Especially for those who are currently Premier Agents, how will the launch of Zillow Homes change your relationship with the company? And what does this mean for the industry at large?
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When we published our 2017 survey, a Zillow spokesperson told RISMedia that the company had "no intention of becoming a brokerage."
"We have always felt, and will continue to maintain, that agents are a crucial part of the real estate transaction, and our goal is to find ways to continue to integrate them in the transaction process, even as the process continues to grow and evolve," continued their statement.
A central question remains: Is Zillow's goal of integrating agents in the transaction process intact, or have things changed in the last three years?
Zillow's recent announcement states that the company will continue to expand and leverage its Zillow Premier Agents service—with this segment continuing as "the preference of Zillow's customers." But Zillow Group's Chief Industry Development Officer Error Samuelson recently stated that Zillow Homes will not be recruiting agents from other companies, and will, instead, be licensing existing Zillow employees under the Zillow Homes entity.
Have viewpoints changed since we surveyed our readership over three years ago?
A point of contention is Zillow's ability to now join MLSs as well as real estate associations. In Zillow's recent announcement, the company said it has plans to join local real estate associations as well as the National Association of REALTORS® (NAR).
NAR President Vince Malta responds to the news, stating, "there is always room for competition in America's real estate market, which should ultimately only deliver better options and services to consumers."
"Real estate transactions are unique because they are rooted in a Code of Ethics and built on the foundational tenet of cooperation amongst competitors. These ideals have served consumers well for more than a hundred years, and we're confident the values of cooperation, accuracy and transparency will continue to define our industry as we move forward," adds Malta.
Jim Fite, president and CEO of CENTURY 21 Judge Fite Company, believes that while Zillow's licensed agents will pay their dues to local associations, "they will not be involved in giving back to our profession or our communities, in my opinion."
"What comes next?" asks Fite. "Retail: recruiting agents and even having a bigger impact on our business as real estate professionals."
For many brokers, the news is not surprising despite Zillow's previous statements that they would not be transitioning into the brokerage space.
"I'm a little disappointed," says Michele Harrington, broker of record/chief operating officer at FirstTeam® Real Estate. "They touted for so long that they weren't going to be in the brokerage business and had a 'different model.' Having said that, I think they'll find that the brokerage business is a lot less profitable than selling leads to agents, so welcome to the biz and good luck!"
Candace Adams, president and CEO of Berkshire Hathaway HomeServices New England & Westchester, says, "We saw this coming, and it should be no surprise to anyone that Zillow is getting into the brokerage business."
In 2017, Adams told RISMedia that whether it was Zillow's intent or not to become a brokerage, "their actions speak louder than words."
"They have continued to shift their business models and I would expect that to continue," she now says. "Next will, no doubt, be a full brokerage. It will be interesting to see how they blend their historic marketing models with an outright competitive position."
Anthony Lamacchia, broker/owner of Lamacchia Realty in Massachusetts, after a few years of hanging on and believing the company, deciphered Zillow's roadmap, stating he has no doubt the company will eventually become a full-fledged brokerage and compete "with every one of us."
"In about 2018, it began to be clear to me they would, so we bailed out of buying any leads or doing any business with them," says Lamacchia. "I am glad we did so we have no dependence on them. I will say, I feel bad for those who hung on and continued to believe them as I stupidly did for a few years. Anyway, it's capitalism; they have a right to do it. They have some smart people there and I am sure they will do well."
An edge against the concern that Zillow's model could be harmful to brokerage's business is this: enduring agent-consumer relationships.
Christina Pappas, vice president of The Keyes Family of Companies, says that her 90-plus year-old brokerage has seen many models, disruptors and corporations enter the business.
"One thing is certain: our brokers, our agents and our industry continues to evolve and adapt. We also know real estate is a relationship business, and it is impossible to replicate nearly a century of those relationships and a firm's established credibility," says Pappas. "Additionally, 80 percent of the deals closed are from referrals. We believe competition in our space is healthy and makes everyone better. With any new company in our marketplace, we as a brokerage will continue to sharpen our skills to ensure our REALTORS® are able to articulate their value proposition and maintain their position in the center of the transaction."
RE/MAX CEO Adam Contos is of the same school of thought, stating Zillow has simply realized what today's brokers have known for a long time: "The consumer experience is driven by having a skilled agent at the heart of a complicated, ever-evolving transaction."
"But that agent needs to have the skills, knowledge and insight to overcome obstacles that can derail a sale—and those qualities develop through real-life experience. The concept of 'employee agents' has been tested for decades, but most buyers and sellers, voting through their actions, prefer an agent who's much more than an in-house transaction coordinator. Often, it's an agent they know, like, trust and have a relationship with," adds Contos.
This is a developing story. Stay tuned to RISMedia for updates and let us know what your thoughts are by participating in our new survey.