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.
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.