1000watt Blog

Writings about real estate, branding, marketing, media and technology from the principals of 1000watt.

Friday Flash: Whitespace, identity and MLS Jenga

Zillow launched a new TV spot. It is well done, as you would expect, but that is not what’s interesting from where I sit.

Consider that the company plans to spend tens of millions on advertising in an effort to fill what Spencer Rascoff has called real estate’s “brand whitespace”.

This whitespace is presumably the awareness, goodwill and meaning that Zillow thinks national real estate brands like RE/MAX, Century 21 and Coldwell Banker have left on the table.

In my mind, there are two ways one might look at this from inside the real estate industry.

The first:

Other people spending money to promote my listings can never be a bad thing. And if Zillow can lay down a patina of consumer love over the real estate industry, that’s super. The transactions, and the more intimate brand interactions, still come back to me anyway.

And, after all, not a single agent or broker has lost a deal to Zillow. Not once.

So I’m cool with this.

The second:

This is a reach into my brand breadbasket that I can’t abide.

I’ve always viewed Zillow as being in the technology and marketing business. But now they’re in the brand business? This doesn’t feel right. If a Realtor couldn’t even get a cameo in the TV ad, then how does Zillow really view the practitioner’s role?

I believe that Zillow and its competitors are a good thing for this industry and, when properly engaged, drive tons of value to agents and brokers. But I see a thin line being walked here.

Zillow could have played this with a little more industry sensitivity. I know the company is worth $2 billion. That 55 million consumers come to its site and apps every month. That they have big brand aspirations.

But the broker and agent are still the customer.

Get more leads from the traffic you already have. Have 1000watt conduct a usability test on your website.

Seattle broker Kevin Lisota published a post a couple of weeks back pointing out that Redfin is explicitly declining to work with buyers looking to buy homes below a certain price point.

In plain language, Redfin is saying “If you’re not buying an expensive enough house, we can’t make enough money off you. So we’re going to refer you out to an agent at another company who’s part of our partner program.

Who knew Redfin was a luxury brand?

This also ties to a bigger issue: what exactly is a real estate brokerage these days?

Redfin definitely brokers homes. And in some ways, because they salary their agents and tightly manage service delivery, they are more in the real estate business than most.

But on the other hand, a lot of their revenue comes from simply passing on people who interact with the Redfin website and apps to agents who work for other brokers. They charge these agents a referral fee.

So, is Redfin a real estate brokerage? Or a tech company with brokerage licenses that extracts a referral fee from (and adds another layer of complexity to) the transaction?

They are both, of course.

Within this blurring of brokerage identity lies the seeds of disruption.

RealTrends, the respected consulting and research firm, launched an agent network called The Fellowship of Realty Professionals. I like anything that sets a standard in this business, so the fact that they’re limiting membership to truly productive agents and teams is great.

Part of the membership is a listings database where members can “upload pocket listings on a searchable site, marketing properties to the elite sales associates in The Fellowship before the listings are placed in the MLS.”

The Fellowship probably won’t siphon enough listings away from the MLS to make a difference, but it could. And given that the 90/10 rule is operative in real estate, it’s reasonable to think that some sort of private network, someday, could deal a serious blow to MLS cohesion.

It kind of feels like we’re playing a game of Jenga with the MLS at the moment. A block pulled out here, a block pulled out there.

How will it end?

Check out this ad campaign from IBM. It’s so, so smart. And talk about a format made for real estate!

Enjoy the weekend.

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8 Responses to “Friday Flash: Whitespace, identity and MLS Jenga”

  1. Brian Hickey says:

    Brian,

    I had the same take-away from the Zillow ad……..where’s the tie-on to the agent. I was thinking that it was purposeful…but maybe I’m just looking too deep?

    Thanks :)

  2. victor lund says:

    I sure hope that agents get permission to publish their listings to The Fellowship before they do it. After all, it is the broker who is responsible for the actions of their agents and this is may be a violation of their agreement to participate in the MLS.

    It would be pretty harsh if a brokerage’s access to the MLS was cut off by actions of a few agents who are circumventing the participation requirements of the broker in the MLS.

  3. Sam DeBord says:

    That was a great read, Brian. As for MLS jenga, they seem to be going through more of a remodeling project than a teetering tower. Ask a multi-billion dollar company like Zillow or Trulia how easy it is to manage a database of thousands of homes and keep it from being stuffed with outdated listings and data. They haven’t figured it out yet, and they’re only on the copying/aggregating end.

    The beauty and the curse of the MLS is that it has thousands of data input providers and fact-checkers. Agents who actually live and work in these locations manage the database. The MLS’s broker members manage the enforcement of data quality. While it’s certainly not perfect, it’s nearly impossible to replicate the quality and mass of custom data, and the speed with which expired listings are removed. It can’t be done with software, or with personnel working offsite.

    The death of the MLS is a popular topic, but the creation of a private broker network will in itself require a new management/enforcement structure of its own to be effective. That is just another new MLS, in my opinion.

    • Brian Hickey says:

      Greg – I didn’t see that “contact agent” screen shot at the end – thanks for pointing it out.

      Wonder what agent they are referring to…a Zillow agent, random agent, the customer’s own agent…whom?

      One other thing Brian: “And, after all, not a single agent or broker has lost a deal to Zillow. Not once”.

      I have read/heard that some agents are using Zillow to “pre-sell” their listings…and it has worked. Also, I saw a Zillow sign in the window of a home recently..presumably a for-sale-by-owner – so clearly the attempt and ability is there.

      I have no idea what Zillow plans to do…but my instincts tell me more than what it appears…and they are quietly doing a good job doing it.

      We’ll see :)

    • Galen says:

      Brian, plenty of agents have lost deals to Zillow: Instead of charging a referral fee, Zillow charges agents up front for leads. So agents who aren’t paying up front aren’t getting leads from Zillow.

      Zillow, Redfin and Estately all help consumers pick the agent they’re working with. We get paid different ways – and I think a referral fee means the company and agents’ interests are much better aligned – but it isn’t as black and white as it seems here.

    • Jay Thompson says:

      “So agents who aren’t paying up front aren’t getting leads from Zillow.”

      Not quite a true statement, Galen. Any agent can create a profile on Zillow, for free, and be identified as the listing agent on their listings, for free. Yes, we have paid advertising placement for agents, but paid advertisers are NOT placed above listing agents with free placement. Many agents, myself included back in the day, have gotten leads from Zillow, for free.

  4. Brian Hickey says:

    Galen,

    IMO, referral fees are great…bigger numbers and like you said, you’re aligned with getting a deal done – the agents’ goal.

    The downside can be quality control. As much as we think the agent will be glad to pay the fee…often they are not so glad, or in the worst case the broker may have a policy that sets parameters for when they pay, or don’t pay a referral (we learned that the hard way).

    :)

    Thanks,