Zillow announced the acquisition of Trulia yesterday in a stock exchange deal valued at 3.5 billion dollars. Both websites will continue to operate separately. Together they account for about 48% (not including local websites) of listings web traffic. These two portals are the biggest names in the online real estate market. Combining forces might have some unique implications for those agencies and brokerages that are currently serving both the real estate and vacation rental markets and for those companies that are only serving the real estate market in vacation rental hotspots.
Both of these portals have changed the way that the real estate market operates. Both list houses for sale or rent to the consumer, sometimes with the agent listed alongside the buyer. Agents must pay a monthly fee in order to advertise on both sites. With these two sites coming together, agents will surely have to pay more in fees in order to advertise on either site.
By advertising to the consumer directly, both portals offer information that had previously been the strong hold of traditional real estate brokers is now much more transparent. Homebuyers can move much more rapidly through inventory without the need to initiate contact with the agents, empowering both the seller and buyer to shorten the sales cycle.
Zillow offers sellers a proprietary algorithm called Zestimates to help develop listing price. Trulia has functionality that allow buyers to evaluate local crime rates, schools and other amenities.
There are potential implications for traditional brokerages. It is possible that consumers using either of these sites, especially as the gain momentum and add functionality after merging, will no longer need the assistance of real estate sales people to complete their transactions. Or, they will need them in different ways or for deals that are more complex.
Forward thinking brokerages, especially those in markets where there is a vacation rental industry might want to consider either starting a vacation rental arm of their business or devoting additional time and resources to growing the vacation rental business. The objective is to have ready access to a different revenue stream should this acquisition in fact change the real estate market significantly.
For companies that are focused on property management, it is important to be aware of Zillow’s move into the property management market. In a recent communication they positioned their offering this way:
“Today is a big day for multifamily marketers and the Zillow Rental Network. We are launching Zillow Rent Connect, a performance-focused marketing solution that will transform the way multifamily property management marketers connect with future residents.”
They suggest learning more about this particular suite of products by clicking this link here.
We will be keeping an eye on this and would welcome additional conversations with both prospects and customers to understand their point of view. Share your thoughts in the comments below.