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Google in talks to buy Yelp; is real estate asleep at the switch?

[Note: Yesterday - 3 days after this was posted - Techcrunch is reporting that the near certain deal, which was covered as pretty much done even in mainstream media, is now off. At the same time, rumors are surfacing that Google is going to by Trulia. Time will tell.]

This is getting interesting. Multiple sources are reporting this morning that Google is in serious talks to buy Yelp.

Local/mobile analyst Greg Sterling says “The combined consumer pull of Google + Yelp in the local space would present an almost insurmountable challenge to many local publishers.”

Om Malik is not so bullish, arguing that the local review space will rapidly move real-time through services like Foursquare, Loopt and Gowalla.

Either way, this should concentrate the real estate mind on what is rapidly becoming self-evident: Google is going to become a significant force in real estate in 2010 and beyond.

Let’s rewind the tape from the past few months.

  • In October, the company went bigger, placing a “real estate” overlay option on all Google Maps. This was a move of a different order.
  • In November Search Engine Land broke the news that (in their words) “Google builds out a national real estate search engine” by creating Place Pages for every individual property. This, in my mind, was the biggest move – for now Google had not only exposed listings to significant traffic, but created monetizable pages to throw it against. That business model sounds familiar, doesn’t it?
  • This all took place concurrent with local/location moves not directly aimed at real estate, but which could come into play if Google pushes further into the category. Notable here were the placement of local results in SERPS for non-local search queries (e.g. – possibly – displaying property listings around the user’s location on a search for “mortgage rates”) and the distribution of bar code-like window stickers to over 200,000 local businesses that allow people to call up information on that business on Google simply by taking a picture of the sticker (will you bar-code your home when the time comes?)

So”

As most of us in real estate listen to the sounds of crickets chirping in RPR-land, Google is readying something that could scramble the landscape for everyone from Zillow to the lowliest MLS.

This is not a bad thing, in my opinion – it is just the thing brokers, MLS operators, online real estate players and practitioners need to be watching headed into 2010.

There are tens of thousands of Realtors on Yelp right now. There are tons of industry-provided listings on Google. Make no mistake: Google could become the most heavily used source for both finding a realtor and finding a home very quickly ” if it wants to.

The situation for the industry here is something like a classic Prisoner’s Dilemma, where cooperation (e.g., either withholding listings from Google, Murdoch-style, or coordinating on terms of engagement) that produces the greatest good for the greatest number is consistently foiled by defectors who go for the big win.

Google’s success will be conditioned by the extent to which the industry formulates a coordinated response. I’m not holding my breath, and neither are consumers.

Will Google really go for it?

That’s the big question, isn’t it? Real estate is one of those “be careful what you wish for” verticals for outsiders. Microsoft, eBay, IAC and others have made runs at it only to be chastened. And while Google has made vertical plays in health and finance they still seem rather tentative.

But I would not rule it out. If there is one company that can “crack the real estate code” it’s Google.

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12 Responses to “Google in talks to buy Yelp; is real estate asleep at the switch?”

  1. Louis Cammarosano says:

    Brian

    I don’t think those in re are asleep at the switch but rather suffering from not having the global reach, hundreds of millions of visitors, and 22 billion dollars in CASH that google has to finance and execute on their RE plans.

    Some of the largest RE players (like Realogy) are heavily leveraged without a lot of free cash flow to invest.

    The “heavily funded” Zillow snared “just” $87 million; Trulia and Redfin about half that amount. Much of that probably already spent during the last three years as start up expenses meaning that the total amount of money available to throw at fending off google is not that great.

    Innovation can cut some of google’s monumental traffic, technology and cash advantage, (witness Zillow’s bold move into apt lisings) but don’t hold your breath.

  2. Brian Boero says:

    @Louis

    When I say asleep at the switch I am speaking more of the brokers and MLS operators who seem locked in internecine struggle while the rug may be being pulled out from under them.

  3. Nick Bostic says:

    This was a fairly predictable move after everything that’s been happening over the last several months. If they control SERP’s and now a ton of Yelp reviews, my next prediction is that Gowalla or Foursquare will start to integrate those reviews, at least as an option. I know in my neck of the woods, “friend” reviews on those social geo-games are fairly limited, I would love to see Yelp in there too.

    Keep your eyes on the data, if someone else has it, Google probably wants it. And buying Yelp is a heck of a lot easier than trying to roll their own at this point.

  4. Louis Cammarosano says:

    @ Brian “the brokers and MLS operators who seem locked in internecine struggle while the rug may be being pulled out from under them.”

    Organizations fight the battles that they have the resources and inclinations to fight.

    Certainly Native American tribes if they were at war with each other probably didn’t stop just because the US army was around the corner….

  5. Barrett Powell says:

    Ok, here’s where I show my age…back when the web browser first appeared as Mosaic and then Netscape Navigator, Microsoft went shivering and running for cover. Why, because they knew the Internet changed everything and the browser was the “window” to the real power. Back then Yahoo was simply an aggregator of list of websites.

    Fast forward to today. Microsoft releases Bing and is in talks with Yahoo to try and stem the NEW “window” to the world…Search.

    It aint just real-estate here folks. Google is poised to be the next real monopoly. You will see what they want you to see. You will pay what they want you to pay. You will live or die by the grace of the big “G”, and it isn’t God.

  6. Jaime says:

    I wonder what impact, if any, this monumental move will have on our insignificant piece of the pie? Is this really going to change the way the Remax and Keller Williams of the world do business on a day to day basis? I guess I’ll just have to get my “Google” badge on my site like most realtors put the “Zillow” badge on theirs. Because really, isn’t it all I need to show that I’m keeping up with the times?

  7. Matthew Ferrara says:

    While I agree that most of real estate IS asleep at the switch – implementing RIP, er, I mean, RPR or worrying about where their next tax-credit bailout will come from, I also think this is a non-issue. I know absolutely nobody who uses Yelp. Not a single person in my sphere of influence, which is mostly Gen X’ers who can barely tear their eyes away from their smartphones uses it, and more than half had even heard of it. Perhaps amongst the glitterati Yelp is a big deal, but I know more people who use the Zagat’s guide and OpenTable.com and old-schoool Orbitz than either search or contribute (is that called Yelping?) on Yelp.com.

    In fact, I hadn’t been there in months, so I just went and here’s what I found: 3000+ restaurant entries, 2000+ shopping, 889 beauty and spas, and then on downward toward real estate at 297. With Pets right behind at 189 or so, I am just guessing that Yelp is a non-issue for real estate…

    I’m going to go “contrarian” as usual and suggest that these review sites are non-starters for Gen X and Y’ers moving forward. Especially Gen Y is more likely to post “where should we (eat/entertain/travel/play)…” to their social network and get direct people results from PEOPLE THEY KNOW than sit around reading strangers’ reviews… Just like Consumer Reports is “so over” I think “yelping and yapping” review sites are likewise useless. I’ll speak for myself: I’m tired of reading other people’s complaints, and since I don’t trust them in any way, I’d rather pay for Zagat’s (or a professional review) or even take a risk on my sphere of influence’s Facebook recommendation than spend minutes or hours reading “common folks’” reviews of anything.

    Last, but not least, I’ve yet to EVER see research that indicated anyone bought a home because of the nearby restaurants, hotels, bars or whatnot; most people still rank square footage, family space, nearness to job and even price far higher. So it’s fairly unclear if searching for homes “by local restaurant or hair salon” is really a game-changing technology.

    Matthew Ferrara
    http://www.matthewferrara.com

  8. REALonomics says:

    Brian, the real estate industry is one of the greatest examples of collective Rip Van Winklism. The Google initiatives are but another example of our pervasive snoring and the depth of our slumber. We have long ago predicted that, barring our own transformation, “Non-Brokers” would snatch the consumer from the vice-like grip of an industry built upon control models. While Google (and others) create the new models of tomorrow that will attract millions of consumers to fresh and easy access to real estate information, we continue to spit shine a tarnished model with propositions like RPR.

    Regards to all and to all a good night!

    Donald Teel
    REALonomics
    http://www.REALonomics.net

  9. Portland Condo Auctions says:

    Google could be scary competition to the rest of us real estate web firms out there. With their power, they could eventually strong arm all of the MLSes to partner with them and feed the data into a single Google maps database.

    -Tyler

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