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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