Zillow is Not Your Competition: A Point from My Presentations

Happy Friday everybody. I’m back from the road, because, yeah, that started again. I wasn’t thinking of writing anything today, but then I heard the latest Randing and Raving from Bill Risser and Joe Rand. It’s an entertaining podcast because Bill and Joe are super entertaining guys. Go subscribe!

In any event, the question that Joe took on was about Zillow, and the whole “rant” was on point… but it made me think about the presentation I had just given to the Missouri REALTORS conference. I thought it might be interesting and useful to think about for y’all over the weekend.

For the TL;DR crowd: Zillow is not competing against you — agent teams using Zillow are competing against you. And they’re winning. The important first step, then, is to identify who your actual competition is.

Joe’s Randing and Raving

The basic point that Joe makes in his podcast is that Zillow is smart, identified what consumers want, and delivered it. He doesn’t think Zillow is evil; they just do what they’re supposed to do.

“Is a shark evil? No, a shark just does what a shark does.”

Joe points out that Zillow is doing what it does. It’s a company, and a company wants to grow and expand, and that’s what they’ve done. And he says that the only way the industry fights off disruption is to do a better job for the clients.

“It’s not their job to look out for our interests. It’s your own interests. You gotta look out for yourself. They’re not doing anything illegal. They’re doing what they do, and they’re good at it. So we gotta be better.”

He’s not wrong of course, but there’s something there that needs further clarification. That something is “they’re doing what they do, so we gotta be better.”

But what exactly is it that Zillow is doing? When Joe says, “we gotta be better”… better than whom, and better at what?

My Point: Identify the Competition

Here’s the point I make when talking about one of the most important trends in the industry: Zillow does not compete against you. Other agents compete against you.

No matter what the rhetoric, no matter what the narrative, fact is that if you are an agent, you have never lost a buyer to Zillow. You have lost a buyer to a Premier Agent who advertises on Zillow, but neither Spencer Rascoff nor Rich Barton have ever driven a buyer around in his car. Never. You have never lost a listing to Zillow. You have lost listings to other agents who have apparently done a better job of convincing the homeowner to list with them instead of with you, but again, neither Greg Schwartz nor Susan Daimler have ever sat across from a seller at the kitchen table and done a listing presentation.

What is it then that Zillow has done and does do? It creates technology, creates traffic, and sends leads to paying agents. That’s what Zillow does. (Well, and iBuyer, but we can get into that later.) In a sense, that’s no different than any technology company. CRM companies create CRM products and sell them to agents, who use them to compete against you. Transaction management companies create software and sell that to agents who use it to compete against you.

You don’t want to pay for Zillow leads? Don’t. Don’t want to pay for Realtor.com leads? Don’t! No company anywhere has ever forced you to buy leads from them. Brokers and agents choose of their free will to do that, because buying those leads makes them money. You think they’re losers for doing that? Fine — that could be a very valid opinion. But here’s the thing.

Think about what Joe Rand says: “It isn’t Zillow’s job to look out for our interests.” You gotta look out for your own interests.

The same goes for other agents, other brokers, and other agent teams. It isn’t their job to look out for “our” interests either. Their job is to look out for their own interests, just like it is your job to look out for your interests. If their interests are to buy leads from XYZ, buy technology from Company ABC, then take your listings and your buyers away from you… well, your job is to look out for your interests and compete in the best way you can.

The point I make then is this:

Why are they winning?

Because they have control over the agents, which improves the consumer experience, which improves the service level they offer to the consumer. You can debate that of course, but then as Joe Rand says, it’s up to you to be better than those teams with their transaction coordinators and marketing specialists and showing agents and buyer agents and whatever.

Zillow, Opendoor, Redfin, <insert whatever technology you’re afraid of here> have nothing to do with that. The competition is between you and the other agents in your marketplace.

The same analysis applies when you’re talking about brokerages as well. It isn’t Zillow’s job to look out for your interests, and it isn’t your competitor’s job to look out for your interests. All the talk about “brokerage community” ignores the fact that those brokerages are constantly trying to one-up each other in pursuit of agents, of transactions, and of commissions. The competition is between you and the other brokers in your marketplace.

Silicon Valley and Wall Street have very little to do with that.

Be Better

So the natural next question has to be, “Be better than whom?” and “Be better at what?”

Unless you’re operating a web portal for real estate, or an iBuyer, “Be better than Zillow” doesn’t even make sense. If you’re a real estate agent, then the “be better” has got to be “be better than other real estate agents in your local marketplace.”

I think it is so critical to identify who your actual competition is. Because everything else follows from that.

So once you identify your competition, then you can think about the “be better at what” question. If you’re an agent, then you have to be better at the things that an agent does, whether that’s lead generation (sphere marketing, door knocking, or buying leads) or service delivery (negotiation, contract knowledge, product knowledge, etc.) or psychological counseling or whatever.

If you’re an agent competing against other agents, being better at them at the 200-meter dash doesn’t make a bit of a difference, right?

The same goes for every entity in our industry.

If you’re a brokerage, then your competition is other brokerages. You have to be better than them at whatever it is that brokerages do: recruit, retain, train, compensate, whatever.

If you’re an MLS, then your competition is other MLSs… well, except that the MLS is a local monopoly so there’s that… but you get the point, right? You have to be better at whatever it is that the MLS does, not at what a broker does or an agent does or a tech company does.

Clarity and Truth Shall Set You Free

The saying is that truth shall set you free. For real estate, I add the word Clarity. Because we have a tendency to conflate issues, conflate individuals and companies, and tell partial truths. I think it’s because our industry tends to run on emotion and hope, but whatever the reason, there is a need for clarity in thinking, then the pursuit of truth based on that clarity.

Once you have clarity as to your own situation, your competition, and what it is that you have to do better at… I think the path forward should be straightforward. At that point, you probably know what it is that you have to do.

So get there. Clarity and truth shall set you free.

-rsh

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Rob Hahn

Rob Hahn

Managing Partner of 7DS Associates, and the grand poobah of this here blog. Once called "a revolutionary in a really nice suit", people often wonder what I do for a living because I have the temerity to not talk about my clients and my work for clients. Suffice to say that I do strategy work for some of the largest organizations and companies in real estate, as well as some of the smallest startups and agent teams, but usually only on projects that interest me with big implications for reforming this wonderful, crazy, lovable yet frustrating real estate industry of ours.

12 thoughts on “Zillow is Not Your Competition: A Point from My Presentations”

  1. I have lost a buyer, my good friend and client. He went to Zillow to check his home value and Zillow made him as he clicked the button, they did not offer me commission. I could have sold for more money on open market but The Zestimate was similar to offer price, a battle entailed on value but ease won so I was able to get Opendoor higher so he took that deal from OD, I made a fraction of what I would have. Either way iBuying and Zillow is competing against us. I lost a listing to Zillow (they started the chain) and he is a frequent visitor.

    The other aspect is when Zillow’s Zestimate is too high, it convinces seller to shop for another agent than me (it has happened multiple times in the past) that will promise the higher Value convinced by Zillow, very often unattainable value. I have many of those. That’s 2 ways we lose to Zillow.

    Lastly, IDX and Zillow send leads off my listings, to other agents uneducated on the property and my seller pays more, when I offer variable commission. They were the best at getting to the top of search (before becoming an iBuyer), but this happens a lot. That is the 3rd way we compete with Zillow.

    We chose to be a Zillow Premier Agent making up for our loses, as the Sword cuts both ways, but want to make sure we are discussing all of the competition points.

    the question is as a partner, should they send leads off my listings to others?

    Reply
    • You mention idx. Idx and Zillow produce buyers for your listings that you wouldn’t otherwise get in a timely manner, satisfying your seller and earning you commission and repeat business to some degree.

      In regards to the zestimate argument, frankly, if you can’t persuade your client why you should earn their business over a number on a page, I think most agents would say you need some sales training.

      Reply
      • Thanks Doug, my team has done 1 Billion in sales over the past 8 years. I just don’t agree that it is clearly in seller benefit to send interests buyers to an uniformed Agent or justify their belief that their house is worth more than it is. I appreciate your dig though! remember, We are partners!

    • Hey Jeff – thanks for the comment. You raise good points that are worth addressing.

      On Zillow Offer or Opendoor… I strongly suspect (and maybe you could ask your good friend) that anyone who is going down the iBuyer route is not really interested in an agent sale. They value convenience and speed and certainty far too much. I happen to know you’re a great competent agent, but this is a case of someone wanting to walk into a store right NOW and buy a pair of shoes instead of ordering a made-to-measure pair and waiting 6 weeks.

      On the Estimate issue… I guess I feel like that’s a car dealer complaining about KBB prices. The competition was still another agent who promised to hit the value, not the guy who published his opinion of the value.

      As to your question, “should they send leads off my listings to others”… I suppose my take is, “What’s ‘should’ got to do with anything?” As Joe Rand said, their job is not to look out for your interests; your job is to look out for your interests. If the value of advertising a listing on Zillow outweighs the value of lost leads, you can choose what you want to do with that. (Though you probably should explain that to the homeowner whose fiduciary you are….) If not, then you choose what to do with that.

      But again, I don’t see that as “competition”.

      Reply
      • Jeff – I think maybe we ought to record something as a conversation on this, because you raise really awesome points.

        My short take though is this:

        “I have invested millions to compete for their eyeballs at the top of funnel and have found their trip down their opinions trip down the funnel, has been changed before they get back to me”

        If you have only invested millions, then yeah, you’re not competition for Zillow, Realtor.com, Opendoor, Redfin, Compass, etc. etc. Does that suck for you? Yes, yes it does. But it sucks in much the same way that my blog can’t compete with HousingWire or Curbed Media or whomever. Size and money matters; it always has, always will.

        I would look at different methods of competition if that’s your goal.

    • Hi Jeff,

      You are great at selling Real Estate. I am not. But maybe I can give a tip on how to handle the seller to strays because they think their house is worth more than it is.

      First of all, show them the margin of error that Zillow publishes for your area. The overage may be within the margin. 2nd, let the seller know that there’s a reason why the word estimate is the foundation for the word Zestimate. This is your opportunity to show the seller why your the price expert; how you sell homes for more than asking, how you negotiate great deals for buyers, how your % of sale to listing ratio is tops in your area/mls. If it’s a unique home, show them how Zillow is not very adept at pricing out unique properties.

      I believe you can win more of these battles by using these points. My past clients at Zillow have told me they’ve retained seller clients using these talking points.

      I wish you success.

      Doug

      Reply
      • Those points, your points used to work more then now, I teach my agents aggressively your sales tips, already mastered by any grizzled vet nearly a decade ago, but with 6 Million sales(US) and Zillow having over 200+ Million visits monthly, in combination with your commercials and SNL Skit, clearly you are working on deepening the trust relationship. Rob Compared the Zestimate to KKB but in housing we have “representation”, we are trying to build trust and for the 4 years before the interview online, I competing with Zillow to earn the trust of consumers in my market place. KKB is not the dominant Car search portal and there is not trust or relationship being built by the car sales person.

        Rob is clearly one of the best analysts, but counter his argument, yes are we are not competing at the final step at the bottom of the funnel, but I have invested millions to compete for their eyeballs at the top of funnel and have found their trip down their opinions trip down the funnel, has been changed before they get back to me. So simply saying we are not competing is not a as simple as comparing KBB in my opinion.

  2. ROB,

    You’ve brought to light this pivotal point in time where the business mechanics are changing. Maybe the result is true competition amongst Realtors – you know, “we do this better because….”

    Absolutely great read. One of your best ever!

    #longtimereader

    Thanks,
    Brian

    Reply
  3. Fair enough. My only suggestion then would be to role play with your agents to make sure they really have it mastered. You may be surprised that a few struggle with the objection and need a refresher. Good luck.

    Reply
    • Clearly you are not in listing appointments, your comments make that abundantly clear. I have been on 2000 listing appoints (listing 60-80Million yearly) over the past 8 years, and your logic is flawed, I do appreciate your opinion but the reality of your comments doesn’t exist. Grass looks green from where you sitting! thanks for the debate!

      Reply

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