Wednesday, September 24, 2014

Federal Trade Commission needs more info on the Zillow Trulia Merger

The much talked about Zillow Trulia merger awaits FTC's decision.  Many feel, it will depend on how the real estate advertising market is defined.  If online advertising is considered a separate category, then it appears to be a monopoly, inspite of Spencer Raskoff 's claims about the long tail (the fragmented market).  However if all real estate advertising is the entire pie, where online is only a piece of the pie, according the Wall Street Journal article,  then there are no antitrust concerns.

I believe Internet will change the way real estate will be done in future, however HOW is the key question.

Will it do away with the brokerages?  
While the traditional brokerage model may be in jeapordy, the brokerages will have to reinvent themselves using technology.  Redfin is an online company that focuses on technology and also has agents on the ground that bases their model on commission kickbacks to buyers and sellers.  There are other startups that tweak this model and compete on the technology platform or flat fee structure or a la carte services.....   Realogy, the parent company for Coldwell Banker Preferred, is launching its own combined website  (it owns multiple brokerages) consolidating web traffic.  There are talks about Zillow becoming a brokerage as well.  I am anxious to see how this evolves over the years.

Will it do away with the Multiple Listing Services (MLS)?
Data accuracy remains key to success, and it boggles me why there is so much data inaccuracy on Zillow, Trulia and other real state websites, when they feed directly from the MLS?  Theoretically, if consumers start uploading their own data and pictures on these sites, then MLSs can potentially get redundant.  Until then, Zillow will need the information from the local MLSs.

Will it do away with Realtors? 
Yes there will be a shake out and restructuring,  There will be category of tech savvy Realtors who have created a local  network thru value adding services, those will always be successful.  There will be another group of volume based Realtors, who will have a client base thru online advertising or commission kickbacks, who will do well, if they control the business end of things. The third category of "part timers", those relying on friends and family for business and working with traditional brokerages, may be the ones in jeopardy.

There are legal implications for how real estate transaction are done in every state and ofcourse major local considerations to every real state sale.  There is huge competition for the online web traffic and a wide variety of new models being tried by various startups. The chane in this industry is bound to happen slowly.

Moe thoughts on this Zillow Trulia merger.

Next article about what is Zillow's value proposition? Stay tuned.

Bela VoraREALTOR®, 
Coldwell Banker Preferred - Exton Real Estate.
Office: 610 363 6006; Cell: (484) 947 3127
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