[Editor’s Note: This article first appeared on Phillip Cantrell’s LinkedIn page. If you don’t know Phillip, and you have an interest in real estate, you should. I am reposting with his permission but you probably should at least follow the man on LinkedIn. His bio is below. The post has been very lightly edited for legibility and for grammar & punctuation; otherwise, what appears here are Phillips words and thoughts directly.]
Yesterday began with a message from one of my associates asking if I had “heard the news?” Of course, by 6:30 I was already well engrossed in the happenings of the world, so my response was “What news?”
The news was: Zillow has become a full-blown real estate brokerage.
Within hours the industry media touted such headlines as From Portal to Brokerage: Zillow Takes Massive Next Step Into All-in-One Real Estate Services along with an explanation that beginning in January, in the Atlanta, Tucson, and Phoenix markets, Zillow will now have licensed employees selling the properties they buy via their iBuyer program, Zillow Homes. Meaning, Zillow will now be a real estate brokerage in those three markets – with many more being sure to follow. In case you missed it, you may view the announcement video they released to the industry here.
By noon yesterday, at least 25 people had asked me for my thoughts on the subject. That included multiple contacts from Zillow execs themselves. Those calls started right at 8:00 am. The emails and questions continued overnight, and so far, I have given either benign answers or no answer at all. If experience has taught me anything, it is the importance of taking a minute to structure my thoughts.
Undoubtedly owing to a huge differential in IQ (he is a LOT smarter than me), my close friend Rob Hahn pushed out his thoughts last night in an articulate and well thought out post on his blog Notorious R.O.B., which he has made public. It is an excellent read that makes some brilliant points. As we say in Tennessee, that really “got me to pondering.”
My immediate mental reaction to the news was the recollection of a conference presentation a few years ago where multiple representatives of Zillow stood on stage and emphatically declared that Zillow is “only a media company” which sought to use the site to gather consumer views, and then monetize those views into a product to sell to the real estate industry. At the time, they were very clear that Zillow did not possess even the remotest interest in ever becoming a brokerage. Umph.
Things change. Consumer demand changes. Market conditions change. Companies pivot to exploit opportunity. It is what happens in the real world. My company certainly has pivoted in the intervening few years, so I probably have a better understanding of the concept than many.
With that said, my head tells me that the most important part of this announcement is not that Zillow has become a brokerage in certain markets, but that they are now fully participating members of each MLS in those markets where they operate as a brokerage. Clearly, with many more markets to follow.
As I told our affiliates midday yesterday: “Why is this a big deal? Because, at least in those markets where they operate a brokerage, they will now have full IDX feed access to all data on each MLS. Think about that for a second. In those markets where they operate a brokerage, they no longer need the brokerage permission to have complete access to all MLS data (included DOM, up to the minute closed data, and complete inventory to repurpose however they see fit – within rules of course).”
Up to this point, the MLS has been the one remaining bastion of informational power to the real estate brokerage industry. Yet we need to be completely honest – and with this statement, I am certain to ruffle feathers – Zillow exists because WE (the industry, self-included) FAILED to be responsive to consumer demands. The consumer was demanding information, and we failed to deliver that information. We had the chance with Realtor dot com, but we blew it, opting instead to abdicate on the challenge and sell it to the highest bidder.
Let me rephrase that. While we did not necessarily withhold information, we certainly failed to deliver it to the degree and extent that the consumer was demanding. Hence the rise of Zillow. Perhaps we were not listening closely enough. Zillow saw a need and filled it.
Taking those thoughts on step further, when the industry failed to police itself to the extent the consumer demanded, Zillow also responded by introducing a ratings system so the consumer could have a greater feeling of certainty in the quality level of the practitioner with whom they were dealing. This is huge. Nobody just walks into an attorney office, or doctor office, or even orders a plumber without checking them out first. Yet in the past, we expected real estate consumers to blindly pick a player just because they saw our face on a billboard.
Our team has been loudly advocating for years that had the industry self-imposed higher standards, a rating system would never have gained traction. Our strongest belief is that the barrier to entry needs to be raised, the supervisory requirements need to be raised, and that the educational requirements for maintaining a license need to be raised. Yet the industry associations have consistently tabled and killed our recommendations in committee.
When the industry failed to work toward solutions to remove the huge amounts of friction in the purchase and sale experience, at least to the extent the consumer demanded, we saw a rapid rise in iBuyer systems combined with ancillary services. Bravely, Zillow has placed a serious bet on this segment. Again, a response to our own failures, and simply a capitalization on the gross fragmentation of our industry.
Despite all the cries of anguish I have heard in the last 24 hours, what we really have here is not a competitor taking unfair advantage, but a competitor who has seen opportunity, pivoted accordingly and stepped into a business void. To be frank, we are where we are because of a situation of our own making. The consumer demanded it, and we failed to respond. We sometimes seem to not grasp the fact that history is littered with the carcasses of companies who ignored consumer demand.
This does not have to be. In the end, our superpower as real estate practitioners is the fact that all real estate is local. No national portal can ever compete with that IF that superpower is managed correctly.
To be clear, these are not intended as words of blame, but words of encouragement. Encouragement to do better. Encouragement to BE better. After all, our registered trademark is #BeBetterBeBenchmark and it means something. The bottom line is that ALL real estate practitioners (self-included but especially my fellow broker/owners) must take this latest move by Zillow as serious warning. We MUST step up our game, our level of professionalism, and above all, our service to the consumer. We MUST constantly encourage our affiliates embrace the fact that the days of rolling out of the rack at 10am, making a couple of calls, and then going out to play, while still knocking down a six-figure annual income have just been declared obsolete. Forever.
As I told our affiliates last night: “You may recall me predicting this over two years ago, and that I’ve been sounding the alarm ever since. Often to open scoffing. Well here we are. The largest public real estate portal in the world, will now deal directly with the consumer and no longer needs YOU to have access to all MLS data. My previous warnings included the urgency of holding on to your clients with iron talons, and that warning has never been more urgently emphasized than this move makes it.”
“All that is to say, the new tools we have given you over the past year are your best defense against this new competitor…and this competitor is THE 900# gorilla of competitors. Get up, get your business in order, and get to work building defenses around your business. My sincerest hope is that you have already been working hard to do that over these past two years based on my previous cautionary warnings.”
Some will listen. Some will not. Some brokerages will put the proper tools in place. Many brokerages will neither heed nor understand what the future portends. They will therefore succumb, but such is the cycle of the business world. Those who are smart, and work hard will do just fine. The strong will survive and will figure out how to navigate this new era.
In the end, the consumer will always win. Focus on that, instead of marking the corners of your territory, and the rest will follow.
About the author: Phillip Cantrell is the Founder and CEO of Benchmark Realty LLC. Headquartered in Franklin/Nashville, TN, Benchmark is currently ranked among the top 25 independently owned brokerages in the entire US. The company will transact over $3.2Billion in real estate sales for 2020, spread out over roughly 10,000 transactions throughout Middle Tennessee. He may be reached via email: email@example.com