Recently Amazon teased the industry by launching (then removing) a new “Find a Realtor®” service. Pundits jumped all over it. Zillow shares declined and brokers are left to wonder what’s next.
By Steve Murray, publisher
I recall sitting in Zillow Co-founder Rich Barton’s offices a few years back when he commented that, while our industry seemed to be scared of Zillow, he was worried about firms like Amazon, Google and Apple entering the industry in some fashion. We reported on his observations at that time. No one commented then. Perhaps we are all smarter now.
There are three true fundamental building blocks that undergird our industry:
- What percent of consumers use an agent to buy or sell a home?
- How do consumers find and choose a real estate agent?
- Do consumers think that the commission-based compensation method is fair to them?
The only way large changes can occur in our business is if any one of these big three change. It doesn’t take a change in all three; it only takes a change in one to have a big impact on our business.
How Consumers Choose an Agent
Amazon entering our business with a potential “Find a Realtor” can obviously impact the second factor. Over 60 percent of all consumers report that they chose a real estate agent through a personal connection. This number is down somewhat from ten years ago when it was closer to 67 percent. Some recent research suggests that consumers are going online to check out agents through ratings and review sites, as well as places like Facebook, Google and others. A trend has already been established. Consumers are looking for agents online more than in the past and selecting them based on what they find.
What might this mean? First, agents and teams who want to be found by online shoppers must be sure they can be found on Amazon. One example of this desire is that 68.5 percent of all individual agents ranked by REAL Trends on America’s Best Real Estate Agents (total of 12,570 agents and teams) and 39.4 percent of all teams have a Zillow or Trulia profile page. Of all agents and teams ranked in this report, 57.3 percent have a profile page on Zillow.
Brokers should expect that their agents will want to find a way to be featured there. This will cost them (or you) more money. If the agents are paying for it, the value exchange between you and your agents will be weakened just a little bit more. Then, Amazon will join Zillow as a well-known and regarded source of such information. It may cause a further decline in the share of consumers who find their agents online versus through personal relationships. It may expedite the shift of market share to larger producers who can afford placement on Amazon, as has already happened.
I would imagine that sooner or later, Amazon will expand its offering to include some property information and similarly, Google will make its presence felt. There are hundreds of millions of real-estate searches going on each month and millions more watching HGTV. Homes are a hot topic and likely that interest will grow. Where there is an audience, there are those who want to reach and monetize that audience. There are $70 billion-plus reasons for their interest (commission revenues) not to mention the revenues of mortgage, settlement services, home repair, furnishings and more up for grabs.
One other thing to add: Recently, most of the newspapers in the industry joined forces in an agreement to seek an anti-trust exemption from the Federal government to negotiate content license agreements with Facebook and Google as to how these two large media companies can use newspapers content. Legal experts say it likely won’t happen.
Is that what it will come to in our industry? Stay tuned.