Here is news coming from the east coast that the State of New York is considering — mind you, just chatting about — regulating online real estate ads placed by agents. The focus is on third party ads such as Zillow’s “Premiere Agent” whereby an agent buys an ad on another agent’s listing. That is, the on line publication/portal,  Zillow or Realtor.com, displays a listing. You would think, or at least I did when I first discovered this process, that only the agent who is actually contractually listing that home would be allowed to advertise next to it, right? I mean, who knows the listing better than the actual listing agent?

Wrong: any licensed agent can buy the spot for lead generation.

I learned of this process when I first started writing about real estate listings at D Magazine. I’d surf the web looking for homes, amazed at how many beauties I could find out there. I’d find one, then move over to see who the listing agent was to call for more information and photo permission, etc.  Nine times out of ten I called someone who was not listing the house, and knew nothing about it for my editorial purposes. Surely they were sorely disappointed I was an editor, not an online millionaire from New Zealand wanting to invest in Dallas real estate. This bugged me — because I’d have to scroll forever to find the actual agent — until I learned what was going on. Right from the getgo, I said, I don’t think this is fair to the consumer. If they are really interested in a property, why shouldn’t they or their agent have direct access to the listing agent, not a go-between?

Apparently the state of New York thinks the same thing. (more…)

Are Zestimates an invasion of privacy?

Back in May, Zillow was sued by several flippers in Chicago who were annoyed that Zestimates were undervaluing their flips (likely because the system hadn’t caught up) and bringing in bottom feeders using Zestimates as holy writ on appraised value and therefore purchase price.

In my May coverage, I noted that Zillow seemed to have an easily winnable case because Illinois law makes exceptions for using an “automated valuation model.” Simply, because it’s an algorithm analyzing data and not someone physically evaluating a property, it’s OK.  This morning, U.S. District Court Judge Amy St. Eve agreed with me when she dismissed that count of the lawsuit with prejudice (haha). Note: “with prejudice” means it can’t be tried again … it’s done.

However she also dismissed counts II-IV without prejudice, meaning they could be tried again, even though she ranks the odds of success as slim.

(more…)

This statement just came over from Zillow. The real estate search giant says it won’t pursue legal action against Kate Wagner and the McMansion Hell blog, but Wagner agrees not to use Zillow photos moving forward. 

“It was never our intent for McMansion Hell to shut down” they say. Well, when a billion dollar company threatens you with a cease and desist, think you just keep on publishing? 

Bad PR move on Zillow to send Wagner that letter. Good move to send out this notice.

Hello, please see below for a statement from Zillow.

We have decided not to pursue any legal action against Kate Wagner and McMansion Hell. We’ve had a lot of conversations about this, including with attorneys from the EFF, whose advocacy and work we respect. EFF has stated that McMansion Hell won’t use photos from Zillow moving forward.

It was never our intent for McMansion Hell to shut down, or for this to appear as an attack on Kate’s freedom of expression. We acted out of an abundance of caution to protect our partners – the agents and brokers who entrust us to display photos of their clients’ homes.  

Emily

EMILY HEFFTER 
Public Relations Manager 

P 206.757.4439 
M 206.850.5970 

 @EmilyHeffter

Greg Hague is a Phoenix-based real estate broker and owner of Real Estate Mavericks. He is also an attorney. He is mad as hell at Zillow and “not going to take it anymore.” So Greg has started an on-line petition, that we are including here, in case you want to sign it. There are already A LOT of signatures, at this printing more than 12,000.

We told you about Zillow’s new “Instant Offers” program, an integrated experience which allows sellers to bypass Realtors completely and buy homes online. Certain homes. Instant Offers allows homeowners to receive all-cash offers on line from a group of 15 large investors along with a side-by-side comparative market analysis (CMA) from a local Zillow agent Zillow advertiser.

Many Realtors, like Greg, see the program as an attempt to push them aside, breaking many promises the company has made to steer clear of the transaction. (more…)

By now you have called in to refill your Xanex Rx after learning that Zillow is not only democratizing the home buying process, it’s turning it into an Amazon-like experience. We knew this was coming.

The online real estate disruptor announced this week a pilot program for buying and selling homes online called “Zillow Instant Offers.”

The way it’s working now: if the seller chooses to use the “Instant Offer” program, they will also receive a comparative market analysis from a local real estate agent, free of charge. That can help them decide if they want to proceed with the sale, and it might even lead to a lead for the providing agent.

One might ask, why not use a “Zestimate”? I mean, Zestimates drive us all crazy, though I think, I hope, by now homeowners know it’s really a starting point, nowhere near the actual value. Last year Zillow announced they had significantly improved the accuracy of the Zestimate tool, and after all, they said, home is worth only what someone is willing to actually pay for it. I believe there are nuances in that phrase: interest in real estate spurs more looking, which in turn spurs more buying. But keep repeating the fake message enough and it becomes the truth!

Jon tells us Zillow is getting sued in Illinois over those Zestimates.

So it’s interesting that at this critical juncture, Zillow is looking to boots on the ground agents with knowledge of the market to back up their AVM. Maybe this is the mousetrap… (more…)

zulia2-1024x492So apparently Trulia’s agreement with ListHub to receive listing data was set to expire next spring, 2016. But ListHub decided to turn it off sooner, like February 26, based on the Trulia-Zillow merger.

ListHub — which is owned by Realtor.com operator Move Inc., a News Corp. subsidiary — announced Thursday that it had terminated its syndication agreement with Trulia in the wake of its acquisition by Zillow and would stop sending listings to Trulia on Feb. 26.

Zillow announced Friday that it had filed for a temporary restraining order in a bid to keep listings flowing to Trulia.

 Well now a Judge says that cannot happen.  Trulia was given a temporary restraining order to NOT stop those listings coming. Bring ’em, baby. Apparently, the cessation was too much of a jolt for most brokers with spring coming up. (more…)

zulia2-1024x492

You may know by now that Zillow has closed on its acquisition of Trulia, without so much as a blink from the US Department of Justice. You may also know that uniform listing feeds — aka House Porn —  to Zillow from all 810 MLS in this country ends April 7, when the age-old agreement Zillow has in place with ListHub expires. ListHub is the company that syndicates real estate listings and feeds for more than 50,000 brokerages, and over 500 MLSs, in the US. These listings are then channeled to third-party publisher websites, like Zillow, Trulia and others.

But this is where it all gets kind of fuzzy and gives the average consumer a headache. ListHub is a subsidiary of Move.com, which was owned by Realtor.com, which is basically every dues paying Realtor in the U.S. So ListHub, kind of owned by Realtors,  gives (soon, gave) the listings to the portals like Zillow, who then turns and sells ads on these sites to agents. I mean, advertising is Zulia’s chief form of revenue. Kinda crazy.

According to my sources in the industry, it was Zillow who ended the ListHub contract as the two companies could not come to terms. At Inman last month in New York City, industry experts said it’s no big deal for the megaportal: Zillow will now go directly to the MLS and their listings will be even fresher. No more of this $512,838 zestimate for Champ D’Or stuff.

Well by golly it happened in Texas lickety split. The 24,000 Realtor strong North Texas Real Estate Systems has agreed to a direct agreement with Zillow to keep the North Texas listings flowing their way. (more…)

Method of home purchaseI like to sit at the heels of smart peeps in the real estate industry, folks who know the industry, the role technology plays,  and have a grip on where it’s headed with this tech/transparency marriage. One of my faves is Rob Hahn, who turned me onto James Dwiggins, Chief Executive Officer of NextHome, Inc. NextHome is a San Francisco-based real estate startup, independently owned, with a focus on changing the way consumers interact with local agents and shop for real estate online. When I saw that Rob Hahn had first posted James Dwiggins’ Facebook essay on “Zulia” — a buzzword for the Zillow acquisition of Trulia — I liked so much I just had to share it. Asked James for permission, he said sure.
Listen to what James says, and look at the chart above. From 2001 to 2013 the number of people who have used a real estate broker has actually increased, and increased a lot, almost 20%. This while all the online stuff was hatching! 
Consumers have been using agents more than ever in the era of the internet!
James says no way will Zulia become an on-line broker, and we should stop worrying about it here and now. He says that is not their model, and if it were, he cannot see how Zillow and Trulia becoming a real estate company “would make any sense whatsoever. So we should stop worrying about this. If we as an industry are scared of this idea, then we should be paying closer attention to Redfin who is trying to make this kind of model work to some degree. They are not the first and they certainly won’t be the last.”
Ah, Redfin!
Will Zillow and Trulia dominate online real estate space and continue to grow? Yes, says James, until a new mousetrap comes along. I want to add two things to his points: one, I think traditional media has failed real estate agents miserably, MISERABLY.  You pay through the nose for your branding ads and do they support you with editorial? NO! This is one reason why Zillow and Trulia were smart enough to become media companies themselves. As Kael Goodman of BlankSlate told me, traditional media doesn’t understand media, they don’t understand the potential. Of course,  Lockhart Steele did. Maybe that’s why he sold Curbed.com to Voxx Media last year for a rumored $20 million.
Here’s what James says:
I’ve been traveling the past week so I haven’t been able to comment on the Zillow/Trulia buyout and I know many of you have asked for my thoughts. Let’s set the stage first: Trulia was founded May 1st, 2004 and according to CrunchBase, they received 32.8M in venture funding before going public. Zillow was founded in January 2005 and according to CrunchBase, they received 92.5M in venture funding before going public. Both companies set out to change the way consumers search for real estate online and make money off the advertising revenue. According to NAR, in 2001, homebuyers used Realtors 69% of the time when purchasing homes. In 2013, that number is now 88% of the time. While homebuyers continue to search more and more on non-real estate company sites, ironically they are also using Realtors more as well. My take: finding a home online is the easy part and constitutes about 5% of the entire home buying process. The hard part begins once you want to make an offer and actually purchase it, which consumers understand to some degree. If they didn’t, those numbers would not be increasing like they have and lots of alternative models that past several years that tried connecting buyers and sellers online would have succeeded. In fact, almost all of those companies have failed. I’ve attached the actual chart showing the increase in Realtor usage from the 2013 NAR Profile of Home Buyers and Sellers.With regards to everyone worrying about Trulia and Zillow becoming a real estate company or franchise. We all need to understand that this is not their model whatsoever or for their shareholders sake, shouldn’t be. At the end of Q1 2014, Zillow had 52,968 premier agent subscribers. At the end of Q1 2014, Trulia had 66,700 premier agent subscribers. As everyone knows, their business model depends highly on having real-time listing data on their sites which is provided by brokerages and agents who in many cases are paying for premier placement. If they became a real estate company, you could almost guarantee two things: 1.) 52,968 & 66,700 premier agents subscribers would likely stop advertising on these sites, destroying their revenue, and eventually the companies as well… and 2.) If Zillow and Trulia were real estate companies, they wouldn’t want competing agents advertising on their sites either. That would be allowing competitors to take away buyers and sellers from their own agents which makes no sense. It’s exactly why every real estate company and franchise doesn’t allow its competitors to advertise on their sites now. That would be counter productive to making money. In other words, I can’t possibly see how Zillow and Trulia becoming a real estate company would make any sense whatsoever so we should stop worrying about this. If we as an industry are scared of this idea, then we should be paying closer attention to Redfin who is trying to make this kind of model work to some degree. They are not the first and they certainly won’t be the last. Are Zillow and Trulia dominating the online real estate space and will they continue to grow? The short answer is yes… until either “organized real estate” starts listening to consumer needs and builds something they actually want and will use, or another outside entity creates it. Lots of companies create game-changers and then lose the throne. Think AOL, Netscape, Internet Explorer, IBM. It can be done and it will happen again including our space.In closing, this is just two major online portals consolidating their businesses in a market that is fast becoming oversaturated as it is. They have just over 110,000 combined subscribers in an industry that has 200,000 potential subscribers at best. They’ll combine resources, streamline operations – (job consolidation) and hopefully become profitable. Please feel free to chime in if you see something different. RobKeithImranNobuAaron, I would love to get your take on this as well.