More on Zillow Acquisition of Trulia for $3.5 Billion in Stock, Dwarfing Competitor Realtor.com

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Candy already told you about this incredible, game-changing transaction. Of course, Zillow started out with a low-ball offer of $2 billion in stock, but the deal was sealed at $3.5 billion as Zillow acquired Trulia. This transaction will create a Goliath in a market where a new real estate internet start-up crops up seemingly every day.

Trulia shareholders will be getting compensated quite well, as each Trulia share will convert to .444 of a Zillow Class-A share, according to Business Insider. The acquisition will move Zillow head-and-shoulders above its next-closest competitor, Move Inc.’s Realtor.com. Just check out this chart from Inman News:

Zulia Chart Inman News

There are so many questions to answer! I wonder how the ongoing litigation involving Errol Samuelson’s defection from Realtor.com will affect the deal. And what about all of the duplication in talent? Both firms have excellent economists and analysts, so who will stay on? Will Trulia just become a Zillow brand? And what about mobile apps? Will Trulia be nixed? Or will they launch a new one that has access to all of that data?

One thing is for sure: All that data is going to change the way we do real estate. BubbleInfo.com’s Jim Klinge published a piece in BI about this very thing, and it will surely send shivers down the spine of any Realtor:

Previous attempts by Realtor.com and Redfin to produce an agent-rating or -ranking site was met with vigorous opposition from realtors. Why? Because most realtors don’t want their sales history out in the open.

But the successful and powerful agents stand to benefit greatly — the same ones who can and will pay Zillow the big money for advertising.

It is a natural fit for Zillow to buddy up to the top producers and get them to help promote their new agent-ranking site.

The cabal will be shattered.

The local associations of realtors and the MLS companies who have feasted on having realtors paying dues regardless of production will suffer — and should die off completely if 20% of the realtors are doing 80% of the business. They can’t survive an 80% reduction in dues.

When consumers see that their agent-friend down the street hasn’t sold a house in six months – they will hesitate. The Zillow advertising will encourage you to select one of their top producers instead (the ones paying for advertising).

It should clear out the realtor population within a year or two, and turn upside down the local associations, MLS companies, and the top-heavy big corporations who own real estate franchises.

Seriously, go back and read Klinge’s whole article and see if you don’t start feeling a bit queasy. With more and more consumers looking for agents online, will Zillow’s pay-for-play formula make word-of-mouth irrelevant? And with all of this data in one company’s hands, will regional MLS organizations stop sharing info in order to compete?

What do you think?

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