Zillow turns three, escapes easy asessment

Zillow turned three last week. I totally missed it until I ran across Simon Baker's post yesterday, which lays out some astute observations about what the young company means.

People ask me about Zillow all the time. What's the strategy? Where's Barton? Where's Frink? Is there any exit?

Bottom line: I have no idea. The company is private. I won't even venture a guess as to revenues. I do know that if they were anywhere near profitable, or had seen a significant increase in revenue in 2008, we would have heard about it.

This leaves me to offer a few of my own totally subjective observations, which I present here merely as points for discussion or debate.

Here goes:

1. The real estate industry owes Zillow a debt of gratitude, whatever their fate may be. The backlash against the Zestimate was stoked by those with a competitive agenda and clung to by agents who, perhaps justifiably, had an utter lack of confidence in their own capacity to deliver value. The Zestimate was and remains a very rough measure, but worse, I would argue, was the slapdash pricing guidance offered by the hundreds of thousands of shamefully under-qualified agents running wild during the boom years. True professionals never fretted about Zillow, consumers got more information to aid decisions, and brokers were forced to rethink their own approach to merchandising their valuation services. Everyone that matters comes out ahead.
2. Along these same lines, Zillow has been an 87 million dollar test bed for brokers. There are lots of lessons to be taken from the company, but the one that stands above all others is this: Consumers are ravenously hungry for anything that casts light into the darkness of the real estate market.  Brokers are just now beginning to leverage this insight. Those that do it right will reap great rewards.
3. For all its innovative energy, the company has failed to have the transformative impact many, including myself, saw three years ago. I stated then that Zillow had successfully re-defined the real estate listing, which would send shocks through brokerage, MLS and listing aggregator businesses and from which some would never recover. Not so. About a year in, the company went to brokers looking for listings. Now they are knocking on MLS doors. The brokerage business is being rocked right now, and MLSs are making some interesting moves, but it's not Zillow's doing. The change the company brings will be indirect.
4. Traffic is meaningless (beyond a certain point). I don't know about you, but I am really tired of Hitwise versus Comscore debates, blog posts touting monthly numbers, and press releases discussing "stickiness". Traffic is required to build most any kind of web-based enterprise, but at some point I want to know about the other end of the funnel: Conversion rates, traffic quality, revenue. At this point we all know Zillow is great at generating a shitload of traffic. Whether it matters is still up in the air.
5. Focus is everything. A paradox: I love Zillow (and so did investors) for the expansiveness of its vision. But I also think it suffers because of it. As Joel pointed out, Rich Barton's vision of a marketplace for all things related to real estate is alluring. But I struggle to find coherence on Zillow.com these days. There's the original valuation play, the mortgage play, community, and little bit of frivolity. These things feel disjointed to me, and, from Zillow's perspective, often require discrete resources. Companies like HomeGain and LendingTree that managed successful exits during the first wave of online real estate innovation did so because that were militantly focused. I think we can all take a lesson from that.

So happy birthday to Zillow. Now what do you think?

-- Brian Boero

Forget transparency: Let's find a new clarion call in 2009

 

That's my mortgage broker, letting is all hang out.

My Realtor? When my wife and I sold, I knew exactly what she netted. I knew her split. I asked.

The closing costs on my recent refi were of course conveniently broken down for easy scrutiny. "Document preparation fee" sounds like bullshit, can we get rid of that? Done.

Many called for "transparency" in the real estate business over the past few years. It became an easy Web 2.0 buzzword. I put a lot of stock in it too: If we just make the information available and uncloak the sales games, the real estate experience will improve. Zillow raised $87 million dollars on this idea.

I was wrong. Very little changed. Buyers and sellers, though armed with comps, Zestimates, school reports and trend charts, still ended up paying an under qualified agent too much money far too often. Brokers got less profitable. Good agents suffered armies of fools. And the public's view of real estate is more jaundiced than ever.

In reality, consumers could always see the compromised links in the real estate value chain quite clearly. They certainly knew the score on commissions. The light of day can shine with the power of a thousand suns into the dark corners and clauses of the real estate transaction. The real problems, which are structural, remain. 

Yes, some people did get burned. But that wasn't for lack of transparency in most cases. It was a double helix of profit motive and magical thinking that is, in retrospect, nearly impossible to untangle.

So as I head off to Inman's Real Estate Connect conference today, I am looking for a new clarion call for all of us who want the real estate business to be better.

See, real estate matters. We're not selling ringtones here, folks. We're talking about shelter. Lives. Families.

We can do better. But can has seldom been enough. Perhaps now, in a time of must, it will happen.

Coming down

Well I woke up Sunday morning,
With no way to hold my head that didn't hurt.
And the beer I had for breakfast wasn't bad,
So I had one more for dessert.
Then I fumbled through my closet for my clothes,
And found my cleanest dirty shirt.
An' I shaved my face and combed my hair,
An' stumbled down the stairs to meet the day.

I'd smoked my brain the night before,
On cigarettes and songs I'd been pickin'.
But I lit my first and watched a small kid,
Cussin' at a can that he was kicking.
Then I crossed the empty street,
'n caught the Sunday smell of someone fryin' chicken.
And it took me back to somethin',
That I'd lost somehow, somewhere along the way.

That's Kris Kristofferson's Sunday Morning Coming Down. Real estate's coming down pretty hard too. And many are finding they've lost something along the way: Perspective. Business sense. Integrity.

I'm hoping we can get it back this year. But to do so we've got to move beyond believing that if we open things up a little it will all be okay.

With what, then, do we lead the charge to a better industry?

Honestly, I'm not sure. People smarter than me have suggested possibilities in the past few months, but it's not clear to me yet.

I am hoping I'll come back from Connect with some answers. 

But please: Let's drop transparency. It didn't do the trick.

Stay tuned.

-- Brian Boero

Let's call it Zulia

Brian wrote this toward the very end of December 2007. I remember both of us flying down to Los Angeles (each from different destinations), meeting at the airport and grabbing a cab to meet with a client. We were throwing ideas around and before long we realized the cabbie was completely lost. In the few minutes I spent trying to get the cabbie back on track with the directions we had, Brian hatched this idea and presented it to me. It was one of those moments when I wished we still had our tech company so we could build an app that enabled our customers to do this. I loved this idea then, and I still love it today. ...Marc

On Friday, Davison and I gave a presentation to a group of top producers at a large real estate company here in the Bay Area. At these things, I usually play Ed McMahon to Marc's Johnny (minus the pre-show hi-balls). I keep things moving and laugh at all the jokes.

But this time I wanted to take a few minutes to share an idea I had with the crowd. I offer it for your evaluation below.

I've been thinking that if I were to sell real estate in my neighborhood, one of the things I would do would be to create a comprehensive database of images, sales histories and notes on every single home in the neighborhood (in my case, about 1,200 homes).

In other words, I'd create my own private Zillow or Trulia -- or, really, something even more valuable to my clients and prospects. Maybe I'd call it Zulia.

The data would be impeccably accurate, the images would be clear street level views, and it would be frequently and meaningfully updated. Each home would have its own page. Heck, I could even run this on Wordpress. Every home would be a post.

But -- and the real value would lie herein -- all of the data, all of the images, would be complemented by my own assessment of the home. This might include observations taken on a broker tour at some point in the past ("next door neighbor raises German Shepards"; "living room gets very little light in winter"), or notes on sales prices that would make such data much more meaningful than a list of out-of-context comps. I might, for example, note that an unusually low sales price could be attributed an out of area listing agent, not a marker of a market shift.

This database could be used in a couple different ways. I could either use it as a tool for myself and my clients and keep it password protected. It would be helpful in discovering buyer preferences or helping shape sellers' perception of their home's value. Or I could leave it wide open.

Either way, I'd be using the Web to leverage my valuable experience and knowledge in a new way that would help clients and differentiate me from every other agent in my neighborhood with a stack full of comps from the MLS.

The agents in attendance liked the idea. But in reality, most were selling super high-end homes and don't get their fingernails dirty in the nitty gritty of technology. With a more time and effort, this could even be done at a brokerage level.

Your thoughts?

-- Brian Boero

Zillow Advice: Innovation deflation

Zillow Advice launched this morning. And I'm feeling apocalyptic.

Seriously: This release, while nicely executed, says a lot about the state of online real estate innovation.

In short, despite a few recent gems, their ain't much of it right now.

It's a straightforward, and long-awaited, parity move. One that was probably necessary. Trulia Voices has been growing uncontested for a while now.

But do we really need another online real estate "community" where hungry and over-eager real estate professionals lunge at consumer questions that so much as graze their area of expertise?

Do more page views and more registrations, however they may be sliced and diced, really help the fundamental challenges at the heart of Zillow's business model?

What new value is created here?

Sorry. Enough with the buzz kill. I'll crawl back under my bridge now.

-- Brian Boero

Hell breaks loose in the new listings war

I returned from my vacation last week to find my inbox and reader filled with talk about listing coverage, comprehensiveness and quality sparked by a somewhat ham-fisted PR gambit by Roost.

I had just written about this the week before. It's been a pet peeve of mine for a long time. The fact that many of the most celebrated and trafficked real estate sites offer consumers a woefully inadequate view of the market is problematic.

Offering 70% of the inventory is OK when you're selling, say, digital cameras; it is not OK when you're claiming, with full--throated cries of "transparency" and consumer love, to help people make the most important decision of their lives.

Real estate has always claimed a certain kind of exceptionalism. Homes are not airplane tickets. Realtors are not stock brokers. And not seeing the perfect home in the next neighborhood over carries more consequences than not getting that new pair of Crocs in the color you really wanted.

I know: IDX is not perfect. And offering a full picture of the market dictates following Redfin's lead by offering MLS listings, foreclosures (many of which are in the MLS as well), and FSBO's side-by-side. But online real estate can and should do better than the gossamer fiber of broker feeds holding together otherwise great sites like Trulia and Zillow.

At the risk of sounding like a pedantic buzz-kill, I must admit that I found it hard to get truly excited about Trulia's nicely executed iPhone app and smart commitment to mobile, when I know, sitting on my deck searching "all homes for sale" on my phone, that what I am actually getting is something different.

I am left feeling that this sort of innovation is akin to a restaurant that obsesses on the dishware -- the means of delivery -- but drops the ball on the food.

I am not picking on Trulia. I just wish they and others would circle back to and nail down some basic content requirements.

So I hope the debate continues. It's healthy - and necessary.

-- Brian Boero

Zillow jumps into the credibility gap, naked

Last week, Zillow lifted the veil on its much anticipated mortgage initiative halfway. The consumer-facing part is still under wraps, but we now know the company plans to screen the mortgage professionals it allows to interact with its consumer visitors.

They have jumped straight into the credibility gap plaguing the housing industry these days. Naked. The splash was big and some people are uncomfortable.

Since the company launched two years ago, they have played around the edges of the industry's Achilles heel -- the space between what it says and what it delivers -- by giving consumers free access to information that had been jealously guarded by practitioners.

They have now moved beyond data to the practitioners themselves. Who's good? Who's bad? Who's going to tell me what's what? Zillow will.

Bravo!

Those who are professional, who have hewn to the consumer side of the line all along, should welcome this. Those who floated on the magic carpet ride that was the boom market with thin credentials should freak out.

I won't ascribe too much importance to this development. Last week's announcement was not a launch. And the originator requirements they outlined are only impressive relative to the anemic standards set by licensing authorities. But this is nonetheless a signal moment that should not go unconsidered by real estate brokers and loan originators alike.

Why

Go here. It's the "President's Message" to consumers on the Website of Tarbell, REALTORS, a major California brokerage company. It reads, in part:

"I am confident our highly skilled real estate professionals will provide you with the unparalleled level of service and expertise that you deserve"

Then go here. This is the page for the "Real Estate Licensing School" the company runs. It's featured on the home page of the company's Website. The key phrase here is: "Pass or don't pay".

Tarbell is a venerated company in many industry circles. And the folks there are honest and decent. I use the example above because when I came across it last week I was struck by the astonishingly vast philosophical chasm exiting between Zillow (and many others in the online real estate category) and much of the "traditional" brokerage community.

Transparency on the one side; fog, in my opinion, on the other.

So what happens if Zillow starts putting its imprimatur on Realtors? How vulnerable will most brokerages be if (I would say when) a ratings/review site like HomeThinking, AgentScoreboard or IncredibleAgents gets its bearings and takes off? How quickly will consumers drive out bad actors once they have the means to do so?

A time to destroy

Philosopher Joseph Shumpeter coined the term "creative destruction" to characterize the process by which capitalism sustains itself: New entrants -- innovators -- destroy old and sometimes still valuable companies, processes and markets to create new value.

Zillow is rocking the creative destruction angle right now. Real estate brokers and agents that want to be around ten years from now better join in.

To do so will be painful. But safe is no longer an option. Whether you look at it as a Hail Mary pass or a long term investment in your future, it may be time to:

• Destroy the blinders maintaining a closing-to-closing range of vision
• Destroy the comfortably hackneyed voice emanating from your marketing department and recognize that while honesty with the consumer may lose you one deal or recruit tomorrow, it will gain you a hundred over time.
• Destroy the porous walls around your brand and build real standards into your recruiting and training processes.
• Destroy the gap between claims and reality you can no longer hide from consumers in a Web 2.0 world.

A happy ending

I am not sounding the real estate brokerage industry's death knell. I am underscoring opportunity. When I survey the industry, I think there are plenty who will fail to seize it. But there are some, too few, who will take a cue from Zillow.

The old real estate sensibility is a teardown. Start swinging the ball now.

-- Brian Boero

The customer has left the building

Last month, the Financial Times reported that Google's search numbers coming from the iPhone were so high the company's engineers thought the data were bogus.

Further on in the article the company's head of mobile operations asserts that "the number of mobile searches will overtake fixed internet searches 'within the next several years'.

I've spent the better part of the past five years making the case that real estate brokers and agents need to ditch the office and its menagerie of paper based, profit eating animals like the copy machine, fax machine, and file cabinet. Adoption has been slow.

But consumers are moving rapidly to relocate the real estate experience away from the desk. And so far, neither the real estate brokerage community or the online real estate industry seem to be taking it all that seriously. Perhaps it's denial. Brokers just getting used to the fact that they need to offer tons of free data and information on their company Websites with no strings attached must grapple with how to serve it up to go. Online media companies challenged to monetize destination websites must now figure out how to monetize a mobile platform.

That's rough, but the customer has left the building. It's time to hit the road with her. There's no choice: She's going with or without you.

Here's an example: If my local brokerage company doesn't offer me an IDX app for my iPhone I'll simply subscribe to a search on Trulia via RSS and view listings within the absolutely amazing experience that the mobile version of Google Reader delivers. That'll be great for me, but tragic for my brokerage and something of a half-win for Trulia, both of which will have conceded an important brand touch point.

Consumers can easily get sports scores and weather on their mobile phones. Where are the homes?

There are some bright spots. Realtor.com launched a Windows Mobile app last year. SmarterAgent, a great little company that survived the online real estate dark age of 2001-2004 just closed a round of financing and is gaining traction for its mobile home search offerings. TextBound, a new venture backed company offering SMS apps to Realtors, launched last week. Zillow has offered Zestimates via SMS for nearly a year and a half. The New York Times and a few other newspapers offer mobile versions of their real estate sections. U.K. based Properazzi unveiled mobile property alerts late last year.

But these are largely small gauge or isolated efforts amid a sea change in consumer behavior. Here are some things I'd like to see soon:

1. A major IDX vendor release a suite of mobile IDX apps for all major platforms (Windows Mobile, Blackberry, Android, etc.)
2. True mobile versions of Zillow, Trulia, Frontdoor and Roost
3. A bunch of real estate iPhone apps unleashed shortly after Apple opens up its platform later this month
4. A real estate website vendor roll out a brokerage web platform optimized for mobile use
5. A real estate specific version of the Yahoo! onePlace service announced today
6. The NAR to redirect every dime it is planning to indulge in the Gateway delusion toward development of mobile applications for practitioners.

Listings are nearly everywhere. The major search sites are reaching parity. IDX is widely adopted. The winners in real estate search will win on experience and service. The small screen will be a key battlefield. Those who ignore the writing on the wall will be pretty lonely back at the office.

-- Brian Boero

Online real estate's Winter of Uncertainty

"So now, less than five years later, you can go up on a steep hill in Las Vegas and look West, and with the right kind of eyes you can almost see the high-water mark--the place where the wave finally broke and rolled back."

 

That's Hunter S. Thompson writing about the apotheosis and retreat of the 1960's counterculture from within the decidedly un-sunny season called 1971.

 

I've thought of this passage (and, yes, trivialized it) lately in trying to figure out where the story of Web 2.0 in real estate is headed.

 

I get these questions all the time:

 

"What's interesting in the category right now?"

"What do you think of Zillow?"

"What's the killer online real estate app?"

"What do you think of Trulia?"

 

And honestly, my answers have been a little thin lately, my tone a little wistful. Things seem to have stalled since the orgiastic real estate Web 2.0 love-in at Inman last Summer, where I, along with most everyone else, was in the drum circle banging out:

 

wiki-wiki-wiki-UGC-UGC-blog-blog-blog ...

 

Today online real estate is in a Winter of Uncertainty. Zillow has not, and likely will not, significantly alter the real estate experience. The company seems somewhat directionless. Trulia feels less compelling now that so many others have joined the listings party. Few brokers have embraced the "conversation" and become "transparent". Most agents resist new marketing tactics because "they take too much time."

 

There have been positive developments or course. FrontDoor launched (disclosure: they are a 1000watt Consulting client) and is developing a compelling real estate media experience. And the assembly of agents who use Web 2.0 tools to transform their business continues to grow, slowly.

 

But the overall arc of the story bends towards slow change, not rapid transformation.

 

Where does this leave us? Not in a bad place necessarily. The drum beat  hasn't become a dirge. We just need to recalibrate expectations. The Old Way won't crumble overnight, no matter how many beers we have at Bloggers Connect. I think we're going to see more plays like Roost, which did not aim to reinvent the entire online real estate experience, but rather took one piece of it - IDX search - and improved upon it. Or SquidZipper, which gives agents a neat little platform for channeling their local expertise without throwing ten other features at them.

 

There are more of these companies coming. We're working with some of them. Think about it: has anyone really nailed online neighborhood information? Or agent ratings? Someone will. You can count on it. But it's going to take time.

 

There will be no online real estate revolution. No tipping point. No tidal wave of change. Just a slow rising tide that swells almost imperceptibly, carrying upon it those who seek, in time, the higher ground.

 

-- Brian Boero

Partial vision

If a listing is fed to an FTP folder and no one sees it, does it exist?

The old line about the tree falling in the desert kept bounding around my head after a debate I had with a colleague earlier this week. The issue? Whether consumers notice - or care - that most home listings sites offer them only a partial view into any market.

I notice and care. And the number of people like me will grow. Why should we believe that the educated, tech savvy people who search for homes online will endure hopscotching between sites to get a complete picture of available inventory if they don't have to?

Let's say you're a fan of sci-fi. Would you find Amazon a compelling destination if the company offered only 60% of the titles in that genre? Or maybe you're a shoe horse. Would Zappos have nearly as much appeal if you weren't comfortable knowing that they give you a look at everything Kenneth Cole has to offer? There's a reason these sites are category leaders.

There was a time, those misty golden days of 2005, when a mashup and a nice UI made for a beguiling home search experience. A site like Trulia made Realtor.com and your locals broker's IDX feed look pretty antique, as indeed they were. But the emergence of slicker IDX products like Diverse Solutions and the innovative spin of Roost are changing the game at the very time real estate search and classified sites are proliferating. Even Realtor.com's got a refresh in beta.

The listings legerdemain can't be sustained. Consumers who bowled over auto dealers, travel agents and insurance brokers may never roll real estate, but it's fanciful to think they won't wise up to half-stocked shelves.

So, no, I was not too stoked about Zillow's announcement of a deal with NCI.

I think we're headed for a major shakeout in the listings space over the next 18 months. A site like dothomes may pull enough levers to play the traffic arbitrage game; horizontal classifieds sites like Oodle and craigslist may get some casual browsers; but they certainly won't emerge as category leaders. Consumers - at least those who are serious about finding a home - won't settle for partial vision. Would you?

Who wins?

Brokers who leverage the killer tool (IDX) sitting under their nose.
MLSs that wake up and vote for Lincoln.
Media companies that create a more broadly conceived online real estate experience
Internet companies that leverage IDX

Am I off base? If so, tell me. It's an important question.

-- Brian Boero

Walking on the Moon

Giant steps are what you take, walking on the moon
I hope my legs don’t break, walking on the moon
We could walk forever, walking on the moon
We could live together, walking on, walking on the moon -- The Police

Most real estate folks today are earthbound. They walk the solid ground of tradition. They need gravity. Even though it weighs them down.

Many have bought into a doomsday reality. But not everyone. In some of the worst markets in this country,  beacons of inspiration are thriving. They are busier than ever. 

They are the moonwalkers.
Their feet hardly touch the ground.
These are their stories.

Kevin

He is an agent with EWM in Miami, a market hard-hit according to some. Not Kevin Tomlinson. 21 days into 08, he is about to surpass 2007 in net income.

Kevin isn’t a flash in the pan agent that flaunted his early-decade success on European vacations and fancy sports cars. He didn’t bail on his broker either. He stayed put and invested. He knew order taking wasn’t going to last.

While listening to an Inman audio conference in ‘07, Kevin emailed one of the speakers. Asked if she could teach him what she knows. Ardell responded. She brought him to Active Rain where this expert from Seattle mentored a novice in Florida. It says much about the new online real estate mindset. It says quite a lot about the Active Rain community.

Today, the rewards have paid off. While some of his peers spend their time selling off assets, Kevin’s spends his blogging, learning and selling. “Everything I know I post”, he says. “I never lead generate. I never drip email anyone. And I have more business than ever.”

Tracey

Ten seconds into playing Tracey’s homepage video, my wife walked over and said “Who is that? I want to buy a home from her”.  Lori isn’t alone.

Tracey Thomas sells real estate in Calabasas, a city filled with agents wondering what to do next. A 20-year veteran, Tracey came online in ‘96 because she was fascinated by it. Most of her peers didn’t “get it”. Tracey had no idea where the web was going but she grabbed on for the ride.

Now that the “hobbyists” are leaving the industry, Tracey is doing better than ever. When she lists, the home immediately goes to postlets. It gets enhanced on Zillow. It's marketed with a vflyer. She blogs about it along with posting a video she shoots herself.

Tracey is a doer. She walks the walk. On the moon of real estate.

Kris Berg

When Kris entered real estate in '97 with a Masters in Civil Engineering she was “marginally web savvy”. Unclear what a domain was, how it was hosted, or what a server was, she nonetheless knew mastering technology was critical to success.

In ‘98 she bought a book on building Websites. Her first attempt wasn’t great or gorgeous, but the URL went everywhere. And business followed. Mid-decade, when there was enough business to go around for everyone, no one worried about the future. Few planned for it. Not Kris. She stayed up late and studied. Learned how to program. And began uploading floor plans to her site – something no other agent considered and something that became highly sought after when the fires of ‘03 destroyed many San Diego subdivisions. 

In ‘06, she started blogging. 3 months later the blog surpassed her Website in traffic. Her business increased without the help of any lead generation gimmicks or drip email. She finds these things disrespectful to her readers and customers. As a result, 2007 was better than 2006. 2008 will soon surpass 2007. 

“I don’t want to be left behind” Kris told me. “If I see that something is going to be the wave of the future... surfs up!”

Wishing my days away

Imagine building a company with agents like this. Imagine turning your current agents into success stories like this. This is real estate in 2008 and beyond. These people and others like them are real estate's hope.  It's agents like these - people who know how to get clients, advise clients and make transactions happen -  that will fuel the entire real estate industry.

Brokers, vendors, franchises, lenders … you feed your families off the business these people create by virtue of their brains, their tenacity, their vision, their hard work and their desire to bring an elevated , holistically new real estate experience to the table.

Imagine a real estate industry filled with only the best of the best. I do.

Tomorrow … more.   

- Davison