![Ep 120: Hands in the Cookie Jar – Zillow’s Big Announcement [Transcript]](https://media.doyouconvert.com/285/2021/6/9/MPM-general-blog-header.jpeg?width=880&ois=02fc3d7&fit=bounds&height=494)
This transcript was auto-generated using AI-powered software. Please excuse any typos or grammatical errors.
To listen to this podcast episode, visit Ep 120: Hands in the Cookie Jar – Zillow’s Big Announcement.
Kevin Oakley 00:12
Welcome to Market Proof Marketing the podcast from the marketing minds Do you convert.com where we talk about the current state of all things digital and how they impact Home Builders and developers around the globe, we’re not here to sell you. We’re here to help you and to try and elevate the conversation. I’m Kevin Oakley and with me today, as always, is the ad doctor, Andrew Peek.
Andrew Peek 00:31
We are here Episode 120 with Becca, hi, I think she’s here. Everyone’s having a great week yet. Good.
Kevin Oakley 00:39
Fantastic, fantastic week we hired a new person, they said, We will introduce you to them on a future date. Right? A little programming note, we have still found that it’s easier overall to have three people on an episode than four, we’ll still have more people hop in now and then but the team is going to be rotating in one at a time just to keep things simpler on the production end for us. So go to market marketing, calm and vote for your favorite guests. Right, yeah, sorry, I guess I’ll have to take
Andrew Peek 01:16
rice, Becca, Julie. I like it.
Kevin Oakley 01:21
Julie can tell I have my spot. She’s She’s done a great job for us, as well as Bryce. Okay, moving on. quick update on events. So the pulse we’ve got over 250 probably get to 300 before we’re done or blast past it. Other people who have had virtual events that are not free, because virtual events that are free are often worth the price of admission for actual events that are not free. still say that there’s often a huge rush at the end. So we’ll be ready for it if it happens, but I’m thrilled with the folks we’ve already got coming in as well. Thanks again to all 18 of the amazing sponsors of the program. It’s going to be fantastic. by the hour this there’ll be less than a week to go until
Andrew Peek 02:05
like what you said on the live yesterday was where with the industry be without those 18 people.
Kevin Oakley 02:09
Oh, it’s crazy. Yeah, if you look at that list of people, I’m going to pull it up right now. Yeah, just scroll through there.
Andrew Peek 02:15
Good point.
Kevin Oakley 02:16
Okay, so I’m gonna say them all again. But this is not just to give them a shout out. But just in your mind’s eye. Imagine all these companies not existing, and how your business as a builder would have been affected when the pandemic hit. Lasso, OpenDoor, O’Neil Interactive, Novi home, Bomb Bomb, Anewgo and Rendering house, Homebridge, Clear Evaluations, Avid Ratings, Outhouse, BDX, Focus 360, Box Brownie, Zillow New Construction, Tuten Creative, UTour, the Davies Imaging Group and NterNow you take those away. That’s crazy. The best websites are gone. The best CRMs are gone, the best syndication partners are gone. The best rendering, you know, it’s just Holy smokes, we’re left with nothing but the MLS all over again. So that’d be sad. It’s crazy. Yeah, it really is. We also don’t forget to check the events page, add to cart.com for more information on the online sales Academy, as well as the market proof marketing Academy. What are those things we don’t have enough time to tell you about them all right now, you’ll hear more about them later. But they’re unique. But one of the kind opportunities to get extremely interactive in a small group setting with you convert either related to online sales or digital marketing, and a great opportunity, especially for those of you who are able to work with us on a regular basis. But you want to kind of see how things are done and get baptized by by fire, so to speak by our methodologies and systems and processes. That’s going to be there for you. All right. A little thing happened just as a tease, and they’ll probably show the title of the episode. We’ll give it away. But Zillow did a thing this week. So there’s gonna be quite a bit of news and discussion around that. We may also have some folks join us from outside of the new home industry, because I’m always interested to hear general Real Estate’s feedback on what’s going on as well. So if we get those, we’ll insert them in between one of the breaks coming up. But let’s start as always, with storytime. I’ll go first, actually, because this was super fun for me, one of our builder partners, their marketing director is on maternity leave. And so the VP of Sales and Marketing who marketing is not the strong part of definitely the sales part is stronger. Text me a little bit of a panic, Hey, can we talk today or tomorrow because I’ve got to go meet the developer for one of our communities, who’s not happy with how they feel like the community should be marketed it the community is not completely broken, but it’s also not meeting our internal goals or the developer’s goals. And he’s convinced us because of how We’re going to mark it on the property. And PS, he wants a lot of billboards. That’s his answer. And so like Batman with a bat signal on the sky, I was like you had me on billboards, I’ll clear my schedule, whatever I need to do to help you, we will save this money from being thrown into the toilet. So what we used and this is fun, it I love, I love everyone who’s listening. I what I love about you all is I mentioned a high five to Ryan Snarr. I just nation for using a particular tool reporting tool that we use with our builder partners, and how he is consistent send it to me, I had this not exaggeration that sometimes influencers do five different people reach out to me via text and email and say, I’m either gonna start doing that, because like, there’s this invisible competition with anyone mentioned on the podcast, I just want to be the best. And that’s one reason why you guys are awesome. And the other one was people just saying like, Hey, what is this mysterious report? And so what’s great is it reminded me how amazing it is. And we’re gonna find a way to share that with everyone at the pulse as well. But here’s the approach or the methodology, if and I’ll just open it up to you guys real quick. This is extended story time. I like it. If you were going to go meet with a developer who wanted you to do more of something. What What would be your thoughts as a way to approach this? So you know, they’re coming in hot of you guys. I’m talking about my neighborhood. I need billboards, because without billboards, no one knows this place exists.
Becca Thomas 06:33
Any? I would want to show traffic we’re generating and outcome from appointments and sales.
Kevin Oakley 06:42
Right? Yes. Yeah. And it like that, in particular in comparison to all the other neighborhoods, right? Yeah. So this builder is in Texas, they have over probably 2530 neighborhoods. Oh, and this is the only one that really comes up on a regular basis. So it’s, it’s on its own. And so you’re right, absolutely. We want to show all that information, but in context to pay, we’re not broken everywhere. We’re just broken here. But the trick is, how do you do that in a way that tells the developer nicely, that it’s their fault. And they feel good about acknowledging that it might be a shared fault in terms of product pricing, positioning, how the community looks, the community interest, body met, all those things rolled up into one, the nicest way I know to say it is your community isn’t really even hitting our average goals. Like, if we get 1000 people to look at a community page. Typically, in that month, we would sell three homes, two from online and one from walk in. And we got you significantly more than that thousand. And we got two leads. And by the way, the bounce rate was the same time on page as the same as averages, like everything’s good, except for you’re just not interesting. And I would I would do that in a Columbo for those of you who are over 35 and might know who Columbo is, go check YouTube. He was a he’s a investigator in the 80s. And he always he dressed like a bum he looked like a bomb with a trench coat. And everyone thought he was stupid. And he’d always be like, a one more question. And then he would put it all together and like, trap the the perpetrator in his line of questioning, okay, when they would never suspect it. And in a way, that’s what we’re doing with this developer in this scenario is saying, Man, you know what, we just can’t figure this out. Because we are getting more people to consider your neighborhood than our average community. And it’s performing at one eight of the results. So yeah, we agree like we’re not happy either. Let’s take a look at some of the reasons historically why that community might be hitting at one eighth of work normally is and now it becomes a more collaborative process. And you’re kind of doing the I don’t know. But you do know you’re just letting them them say it and kind of come up with and my favorite part from all this is shot a quick live video, I plugged in the real numbers and got the report set up for her because she’s not a marketer. She’s the VP of sales and marketing. But she sent me a text message back with an animated GIF of like an eight year old girl given the thumbs up or like fist bump action, and she was like, Oh, my God, that that went perfect. Nailed it. And nailed it. And it’s just such an amazing report. So developer meetings, especially where they’re trying to tell you what to do. from a marketing perspective, it’s really helpful to look at your community averages, of how much traffic Do we need to get to a community how many appointments should be generated? How many leads should come from that? Or how many sales should come from those appointments, and wherever it’s falling off, go back to episode number four, podcast number four, and we break all that down by We’re gonna we’re gonna include this, this report to all the pulse attendees as well. So I’m excited. It was it was fun. I’ve definitely gone back to that. And I feel like I need to write a book just about that report and how it works.
Andrew Peek 10:12
Like it’s like a playbook. What’s the, there’s this this is funny, like a little bit ago, I was waiting to jump on the podcast. So I’m like, flipping through Instagram for a second. And like a real popped up with this guy’s name is old school real estate, I there’s something like I don’t know, who even knows if he’s involved in real estate, no idea. But he has these like 22nd things. And he sits there smoking a cigar. He’s like, from the south. Maybe he’s late 60s, big dude. And he’s like, rah, rah, rah, rah, numbers don’t lie, people lie. But numbers don’t lie and all this stuff. And I’m like, well, this is essentially the more sophisticated until actual version of what he’s talking about. And he was referencing like rentals or something like that. But like both the numbers are there like you can’t, you can’t disagree with the numbers.
Kevin Oakley 10:57
And when the percentages are so far off from where they should be. That’s what made this example. So great is at the current poor conversion of qualified traffic, looking on the website to only getting a small number of leads, they would have to push more eyeballs to just that community, then the builder gets an entire month for all locations. So it’s just like, This is absurd. Yeah, you can’t solve this by running. It’s just not possible. Right?
Andrew Peek 11:26
Did she say what the what was the solution. So
Kevin Oakley 11:29
that is definitely my follow up. And we’ve been hounding her for years, by the way to come not years for months to come on the podcast. And she used this terrible excuse of, I’m having my first child as a reason to delay but we are going to have her on. We will unmasked we will unmask the master VP of sales and marketing. When she gets here, I’ll let you know that it’s her. And she’s fantastic. But it was it was something new for her. And it was just always, always good to see data being used to tell a good story that gives an excuse for other people to change their mind. So no billboards, no billboards or
Andrew Peek 12:05
Praise the Lord.
Kevin Oakley 12:05
I don’t know that. All right, back, you got something else worse?
Becca Thomas 12:09
Yeah. So we had another builder partner. This week, they’re launching their new site. And the first thing I always do when I go to the site is check the facebook pixel and the Google Tag. It’s important. Yeah. So the facebook pixel made it over and we’re set to go. It’s gonna update some links.
Kevin Oakley 12:33
I think that is such an interesting question that sometimes Well, one good good job to, to the developer for doing this properly. But I’m still trying to figure out what is the use case for when you want to start with a new analytic account or a new pixel? Hmm. I can can you think of one Andrew, I can’t.
Andrew Peek 12:52
I, I’m trying to think I’m trying to like there. I’m thinking like, in my brain, there has to be a reason why.
Kevin Oakley 12:58
It’s a total blind spot for me. I could
Andrew Peek 13:01
unless you’re backed into a corner, because you it’s not your account, like it’s not your
Kevin Oakley 13:06
church, if you don’t have access, and then it gets you access. But otherwise, but like, yes. Start on the same on the same everything in the tag manager that was there. Yes. From an analytic and pixel perspective, and even AdWords, potentially a Google ad. Sorry, still call it? Yeah,
Andrew Peek 13:22
the Google? Yeah, I don’t I need to look it up. And like, see if I could pull our builder partners accounts by age and see if there is some unspoken correlation between like an older account, having lower CPCs and the amount of time they’ve been running Google ads. Hmm. Very cool. Old School meant that you have an old account that’s always been running ads will always have a lower CPC
Kevin Oakley 13:46
Andrew Peek 14:44
imagine but I’m guessing we’ll have to add. I don’t remember seeing that part in there. But I guess that’s a guess if I didn’t see an answer, right. elections, I think and I would think for just to make it easier for smaller businesses. Just to like, not have to worry about
Kevin Oakley 15:02
the practical why I think the strategic Why is they don’t need to anymore because their computer vision system is good enough to identify all that text and turn it in an image and turn it into text that their AI and their teams can analyze quickly for terms that are just like we talked about, gosh, a year and a half ago, where if you you have a picture of a woman in a kitchen? Yeah, the alt text of that image started to show you what the AI could see. So it’s a woman and kitchen. Yeah, that’s my thing. I just think it’s almost unrelated. So it’s kind of no news. But it’s gets people excited. Because let’s face it, a lot of advertisers not us. But a lot of advertisers feel like they have lost opportunity and tools when it comes to social. I think this is their PR attempt of like, Hey, guys, it doesn’t matter anymore. Because we can still adjust the delivery the way we think it should be adjusted based upon what the text is because we can read it, even if it’s just an image. So let’s make people feel like this is a win. I mean, does say we will no longer penalize ads with higher amounts of text. Yeah. But but it doesn’t say, to what extent it? I mean, it says not no penalty at all. I don’t I don’t buy that.
Andrew Peek 16:15
Yeah, and it’s still I still don’t think they’ll perform as well. And I think in this article,
Kevin Oakley 16:19
I mean, there still will be an inherent penalty. Because if you do it poorly, people aren’t going to want to interact with it, which will then get it pushed down. Because terms of delivery
Andrew Peek 16:27
deal looks like an ad. Mm hmm. Versus like, Oh, yeah, let me explore those houses versus if it’s, I don’t know, now I need to we need to do a new case study. I’m sure gore pulses all over this.
Kevin Oakley 16:40
But what we’ll do another test to I think the biggest news for me here on this takeaway is this is not this is not an excuse to go, like Facebook as my new source to send out digital flyer type. Looking at stuff. Yes, your point. There is still this cops and robbers game. And there. We talked about it before, like having the button of read more view more, whatever. Having the actual button on Facebook does reduce effectiveness. That’s just the button. So imagine if you’ve got a bunch of salesy texts in there. There’s no doubt you’re reducing effectiveness.
Andrew Peek 17:17
Yeah, it’s almost like making it harder to find the link will make people more interested, click the link, and then that gives better feedback to Facebook to find the right people.
Kevin Oakley 17:29
Mm hmm. Well, and again, that’s where the penalty is in deliverability, or reach and impressions. However they have because of that computer vision, a better idea of who should and who shouldn’t see it, and who’s more likely to take action. So they can say there’s no penalty. But if they can read the text and determine who the best matches or maybe decide that there’s fewer people who are a good match, that’s still a penalty in my book. So I think we talked all the way around that one, but But still, it’s good news. I think that you don’t have to implicitly worry about that. It’s more about the overall appeal of the ad now than just the text roll on its own. All right, on to the big story, that that broke yesterday morning, from inman.com Zillow to hire agents as employees for ibuyer transactions starting in January 2021. And this by the way, if no other reason, was a good day to be an Inman news subscriber. So if you had taken advantage of that Inman Connect discount with do you convert before which we made no money on it was not a sponsorship. Which is Brad being nice. When he was on the interview with us. This is a great reason to have I had people emailing me like, Hey, can you see this whole thing? Can you send me a copy? Because I wanted to read more details like so I started doing January 2021. Zillow offers transactions will be managed by a salaried Zillow employee who is licensed to act as a real estate salesperson through Zillow homes. So when they buy a house through their ibuyer program, originally it was we will partner with local agents to represent us in that transaction because we don’t have agents. And now, I’m not sure if you guys are surprised by this or not. They want their own employees who are salaried and that’s an interesting idea in and of itself. Yeah. What do you guys think? initial thoughts unfiltered? No? wrong answers. Yeah.
Becca Thomas 19:37
From the consumer point of view, that it’s going to be a lot more smooth. So for me if I was going to sell my house to Zillow, I would talk to Zillow and then I would talk to a real estate agent and then I would talk to Zillow again. And then there’s just a lot of logistics and things that can get lost between jumping between the different people involved. Yep. And if I just had if I had one contacting fellow, but I could talk through and organize the whole process, then I would have a much smoother, more relaxing sales process, in my opinion.
Andrew Peek 20:22
Yeah, I agree. I think keeping it all the same will be a better transaction for the consumer. And then the salary makes sense to me. Yeah. Imagine if they’re transacting $50 million in real estate a year. I don’t know what one person could handle Hmm. That would be sort of commission. And then who, but I’m sure there they have some type of I’m sure there’s it’s incentivized like salary plus? Well, it is yeah,
Kevin Oakley 20:45
that doesn’t mean that salary isn’t a great salary, you know, perform well, or that there isn’t performance bonuses, bonuses, but the idea is one in some way, potentially, you’re getting rid of some of the commission breath of I just want to give everyone a great service because I’m getting a salary and you better believe that Zillow is going to be, you know, using rating systems and reviews to figure out and get all that feedback on a consistent basis of who should be getting the next the next transaction opportunity to write. So I think it’s interesting from that standpoint. And back when you saw the words right out of Zillow group’s chief industry, industry development officer who said, in the interview, job, they really found out that you need one person that the customer could talk to. And they knew that this would be the person that would guide them and Shepherd them through the process now. And what it doesn’t say here is, it’s also to zelos benefit to have one person Shepherd in through the process, because when it comes to things that may be shoppable, throughout the rest of the experience, I’m not saying all agents do this, but some agents would make sure to let you know that you have an option to pick a different mortgage title for title insurance, you might be able to go through someone else, but Zillow wants the whole transaction and all pieces of that transaction. So this simplifies that messaging, too. It just keeps it streamlined. Whereas once you’re dealing with independent folks working for other companies, you can’t really control what they’re telling the customer through that entire process better.
Andrew Peek 22:15
I feel like it’d be like working with a builders preferred, like mortgage. Yeah, partner, like, they’ll say, like, here’s why we work with them. They’ll be like when when we built with KB, like, we were hands off and all of it as far as like, we didn’t have to provide any updates if there was a delay or anything like that. So they gave you the advantages, but they’re like, Oh, we could do your own thing to like, bring, you know, do what you want. But you don’t have to worry about a single thing if you use our preferred people. Yeah, that’ll keep it smoother. I’m sure the cost will be transparent and competitive. I would soon.
Becca Thomas 22:50
Yeah. And I wouldn’t think that the employee for sale would kind of be a hybrid of a sales agent and an online sales person. Like, they would mean to be able to help people answer their questions, and then follow them through.
Andrew Peek 23:10
So how does this thing work?
Kevin Oakley 23:12
And and, you know, there’s almost no online sales people out there who are paid a commission based, pure commission, like you get X percent of the sale price, right, that just because the volume is too high of what online salespeople are involved in. So, again, that’s where the salary makes sense. It doesn’t say again, that they’re going to make 50 grand. I’m sure it’s going to be a good salary for those who are doing 50 million in transactions. A lot of
Andrew Peek 23:38
transactions imagine they would do an unfiltered episode, right? Like it’s a if they they might do 200 homes in a year. That could be easily the lifetime homes a real estate agent, real estate agent done? Absolutely. Yeah. It’s I don’t know. It’s,
Becca Thomas 23:54
and they’re starting in limited markets.
Kevin Oakley 23:57
Yeah, they’re not going everywhere. They’re going to their higher volume I buyer markets, which makes sense, but you have to imagine that the goal is to go national as quickly as possible. There are some other pieces of this puzzle which we’ll get into in other stories, but I think, again, back to where all this is going. And Zillow stock used to be I think, in the 30s not too long ago. It’s now right around 100 bucks. where they want to go like Since launching the platform I’m quoting from the article here. Since launching Zillow offers, the company has launched integrated mortgage title and escrow services through Zillow home loans and Zillow closing services. So Samuelson said the company’s announcement today brings Zillow closer to creating a one stop and and transaction platform. Yeah, and that’s where this is not a doomsday scenario. I think there’s certainly ways that intelligent folks are partnering with Zillow for the foreseeable future. But someone who controls the transaction end to end and also controls the heart and mind of the consumer. For a lot of other people, and again, this is what makes it so interesting is that open door just got that 40 billion $50 billion infusion by going public. Redfin, interesting. We were having a conversation earlier and, and I think it was Bryce mentioned that a lot of her friends who are trying to get a house in the hot market that we’re in right now, like, man, All my friends are using Redfin, because i don’t i, this, it didn’t catch me off guard, but I didn’t realize it was to this extent, she was just saying in her market. The data flowing through Redfin was so much more quick and getting updated, that when a house is only on the market for three days, they stopped using the so that’s to say that Zillow does not have a monopoly here. But in terms of where consumers generally start in it, and then the ability to have the end to end transaction that is definitely going to make it a valuable company if they succeed. down the line. All right. So moving on to from the notorious our ob. Let’s see, I feel like we should go to the Who is this person to get full credit? I found this on Twitter. He is a managing partner of 70. s associates a strategy consulting firm in the real estate industry. It looks like a very intelligent associates
Andrew Peek 26:25
in your name, like your background. Do you convert and Associates better? Do associate?
Kevin Oakley 26:33
Yeah. So I mean, this is a fantastic article. I think it is famous for sure. And we’ll just go through some of the main points here. But this is kind of a general real estate market opinion from someone who is saying, well, the headline says it all don’t force Zillow into a corner.
Andrew Peek 26:53
Dirty Dancing reference. Right?
Becca Thomas 26:55
And it’s got a picture of a grizzly bear.
Kevin Oakley 26:58
Yes. So I think part of this is and it gets to it at the end. Zillow is market cap, I think is around 22 billion as of the recording of this. So it’s a little bit of like Zillow is an A wild creature that you don’t want to get stuck in the corner because then what happens to those creatures they attack it’s, it’s almost an outside of like, we need to partner correctly with this animal, or else is gonna tear our heart out. So let’s get right into it. And these are just the the subheadings of his article one, Zillow is our competition. And I think Brad Inman, in his interview with the folks at Zillow was like, is this news should we be surprised? Yes, to some extent, it would be irrational to say that Zillow is in no way competition to any other industry, really any other business that is in real estate. It is part of our competition, that doesn’t mean you can’t partner with it strategically. And there’s a lot of people who have made a lot of money partnering with Zillow strategically. The second one, which is more interesting to me, is that Zillow is forcing change. So it’s forcing change from the consumer. By giving them opportunities they didn’t know they were missing and now they couldn’t live without in terms of information about properties and assessments and, and transaction detail that you have to go to the auditor sites to find and floor plans being created from photos on existing homes, all the things we talked about before. Now, okay, here’s where it really gets interesting. Zillow is joining with the MLS and changing to MLS ID x feeds. So this is actually for the tech as listening, a bigger news story than the first part, I think, yeah. In terms of how data is going to be flowing into Zillow. I’m just going to read from the article here for a minute bear with me. The second big news that dropped was that concurrently with bringing its market making business in house, Zillow will fully join the MLS as a participant and utilize the MLS ID x feed to power its dominant website. And yes, this means that Zillow will also be joining NAR and its licensees will become realtors, because many MLS does require realtor membership to join. This is actually a far bigger change than the first one, I guess. I guess I subliminally took that from him. I agree. So what this is saying is any existing home or inventory home in builder speak will need to come through the MLS. Whereas currently you can choose to send your existing inventory homes that are built are in the field to Zillow directly. That’s a pretty big change. There’s a lot of tentative Reasons why that’s important to comprehend because your local MLS may have restrictions on the amount of content. For example, not too long ago, the Pittsburgh MLS when I was there, I want to say they had like a 15 image limit. And there is file size limitations. And so it’s like, how are we going to get our featured videos to to the platform, and I’m sure Zillow will have to help everyone understand that. But also, there’s a lot of builders who currently don’t use the MLS at all. Because you have to have a broker’s license or pay real estate agent a flat fee to get all those things loaded in. And there are services like in the Ohio market, I think it’s HMS Home Services is a flat fee broker where if rent a broker is what we used to call it back in the day where you pay them like $200 a house and they just make sure that everything gets in the MLS accurately. But if you’re a builder, who currently doesn’t put things in the MLS, Zillow has got to figure out a way to make that easy for you to help you do that, or you’re going to have to assign an internal resource to go that direction. Now, the good news is, currently, my understanding is that floor plans and community level data for homes to be built, or the community level stuff can still be fed from your website, kind of as is maybe a little bit of a tweak to the to the feed coming in, is necessary, but it’s still gonna be fed by the back end of your existing website. So it might not sound like much, but for those of you who understand some of the technical stuff involved in here, I agree with the author that this is a bigger impact, potentially. The first one is not surprising. Maybe that’s a better way of saying it, that Zillow would hire agents to sell their own homes, and maybe five years from now, agents from Zillow that are involved in everything like that’s not surprising. What is surprising is that Zillow has historically pushed away from the MLS as an archaic slow way of doing it. For them to switch to this is is is interesting,
Andrew Peek 32:12
and what why do you think they is this because it can broker and they have to
Kevin Oakley 32:17
part of that he actually goes on to that in the article. So this is where it comes down to it does not help to push Zillow into a corner. Basically, the MLS is extremely valuable. And hopefully some of our guests will be able to articulate this better than I can not being a realtor myself. But the MLS is still in some ways even though it can be archaic, the crown jewel of what, what realtors have at their disposal. So
Becca Thomas 32:42
there’s also room for improvement, right? So if Zillow buys in, then all the sudden, they maybe have some extra capital to make improvements for the archaic parts and allow more images, more space for descriptions, and maybe even an API that feeds from your website over to your MLS. So you don’t have to put things in both places.
Kevin Oakley 33:11
Yes, that that that’s a huge win is for the builders who are putting things in MLS frequently being overwritten, or having two listings show up and not like well, one goes to the builder, one goes to an agent, if the lead gets filled out what’s happening here, Why are there two, some have older photos than another, it just made troubleshooting all that a lot harder. I think the MLS gun comes down to is the way to guarantee that they’re getting the data. So MLS rules about the free flowing information to other MLS members and the ID x feed means that other companies who are upset with Zillow for making this change can’t just be like, Alright, fine, you don’t get our data because you’re not a member of the MLS. So you can’t have it anymore.
Andrew Peek 33:59
Remember? Yeah, yeah.
Kevin Oakley 34:02
Yeah. Now, this is where the article really gets interesting is now why does it Why do we not want to push Zillow into a corner? So he says let’s play through a few hypothetical scenarios to see how this could play out one. Let’s mess around with the MLS data. The first most obvious counter to Zillow during the MLS would be to make a variety of changes to screw around with a members access to get to that data. I don’t know what that might be. But let’s just say that the MLS is do a variety of things that make it harder or impossible for Zillow to continue operating with the MLS ID x feed that they want to do. And this is just so classic. He’s like, what do you think happens next? Does rich Barton just announced Hey, we’re gonna close up shop because the MLS makes it hard for us to get the data. Like that’s not happening and Zillow has over 2 billion in cash, they’re worth $22 billion. They quite literally, in the author’s words on the online real estate space. No one else is even close to the 200 and 18 million monthly visitors. So guess what? You cut them out of the MLS or With the data, they’re just gonna make the MLS eventually, to some extent irrelevant, because they’ll build their own better system that will find a way, they will spend the money to find a way they’re just not going to give up. Again, that idea of pushing them in a corner might make it worse for you than simply if you can’t beat them, join them. But also, you can still beat them in a lot of ways. If you’re, if you’re branding correctly, have good technology partners, you can be more personal in a highly valued transaction like a home, you can win your unfair share of that business, but just going straight off, and that’s what a lot of general real estate folks do is that this is terrible. How could they do this? Again, did you not see this coming but the other one would be to cut off their money. Meanwhile, the other the other cookoff from the industry as a bunch of agents and brokers saying you need to stop spending money on Zillow. you morons who gave Zillow money just funded your competition and so on. Meanwhile, Zillow has for years been saying, if you’re not the very best, we don’t want your money. They take actions like best of Zillow to show that they’re serious. Most of the agents saying the above wouldn’t be allowed to buy Zillow leads today. The game has changed a long time ago under Spencer rascoff, the former CEO. So this idea of Look, they’re not they will. Zillow is wanting to partner with agents who are the best. So make sure that the overall customer experience and connection to their brand is the best. That’s been their strategy all along. So the folks who are like I’m gonna take my $200 and go home. And I can’t afford to spend more than 200 because they don’t do enough transactions because they’re not professional enough or who knows what, what reasons why. Okay, that’s nice. You know, they’re gonna they’re gonna ignore that. That idea.
Andrew Peek 36:54
Yeah, I like how he brings up the point. Like, if it’s working, even if you don’t like the platform, you’re not going to cut the budget. Same like with Google ads. If you don’t like Google, you’re not going to cut Google. So Facebook, if it’s working. The real estate agents will keep sending the money to Zillow.
Kevin Oakley 37:09
Yep. So he closes out here. I’ll just read this part. If you force Zillow to become a competitor, it will. If you force Zillow to become a national MLS. It will if you force Zillow to become the evil empire, it will. fair competition is perfectly normal and natural. I personally am looking forward to the competition that the new open door will bring to Zillow, realtor and Redfin have been competing against each other for years, they’ll all come up with something. And I agree, I mean, eventually it comes down to two or three companies figuring out the solution. But again, the solution that for the foreseeable future has to be done at a national or big scale level. And that leaves plenty of room for the right actors doing the right things to be successful at the local, the truly hyper local level. So thank you, notorious RLB. We will reach out to him and see if he wants to hop on the podcast at some point in the future to articulate those ideas even more, but that was awesome. And then last but not least, what he predicted would happen 30% of agents This is from mn.com 30% of agents plan to decrease ad spend on Zillow. realtor.com. curators, co founders say agents are starting to realize they do not need a middleman and can go directly to consumers. Now this is an interesting idea. And Chris Smith is a great guy, again, hopefully hope to have him on the podcast or his co founder at curator, really smart. It’s no secret. I don’t think though, that Chris has not been a fan of Zillow or the idea of a middleman for a long time either. And, and so they asked the question, what changes to your digital advertising spend Do you anticipate making in the second half of 2020 and 47% plan to increase but they’re not. They’re not planning to increase with a syndication partner. The number one channel that agents plan to spend more money on is social media, specifically Facebook and Instagram followed by video with more than half of agents saying they plan to spend more on each of those. So direct to consumer is also the path that you know mattress companies and eyeglass companies and you name it that’s that’s the hot thing. It’s interesting idea to think of a tech company like Zillow be being considered part of the old guard. And we’re just going to go direct to consumer.
Andrew Peek 39:37
Yeah, I feel like so curator if Uh huh. Are you familiar with how they sell?
Kevin Oakley 39:43
That’s a service. So yes, they’re selling the idea of getting rid of the middleman, right?
Andrew Peek 39:48
Yeah. And they they sell so they sell Facebook ads, essentially Facebook ad consulting, whatever service to real estate agents by the zip code, which I don’t know how they’re doing that now. Because Yeah, the mile radius and stuff interesting. Yeah,
Kevin Oakley 40:00
they do. They also do landing pages and they do website designs. They do more than that. But that’s probably the most high profile thing that they their core thing.
Andrew Peek 40:07
Yeah, yeah. So it’s Yeah, so it’s, um, like, I don’t know, that direct to consumer, you’re like, Oh, that sounds really fancy. It’s like, no, let’s work. builders are direct to consumer. If you think about, like, if you want to hear that word, Facebook ad to the butters website,
Kevin Oakley 40:22
there’s no doubt that the answer is correct. Like my my thing that I’ve asked a lot of people over the last couple of weeks, and it’s even more relevant now is, who has more homebuyers? So, or Facebook and Instagram? And a lot of people their initial answer is Zillow. Or they would say, Well, certainly Zillow knows the more most qualified homebuyers. And I don’t think that’s true. In fact, Andrew, has shown us how with the facebook pixel, you can see the data that Facebook is learning. Oh, yeah, in the puzzle, it actually tells you what is Facebook and Instagram learning about what you’re looking at right now. If the pixel is used, it’s really cool. And on Zillow, once you go to an individual listing, you can see the zip code, the home, sometimes the price range that the search is being done. And so whatever Zillow is learning, Facebook and Instagram is learning more. And it’s only a one way street, Facebook and Instagram cannot will not unless Zillow buys it via an ad the same way we would isn’t sharing information back to Zillow. So there is true to what the folks a curator saying, it’s just a question of how well can you execute on that idea from beginning to end, because you’ve got to you’ve got to have that whole thing down through the entire customer journey.
Andrew Peek 41:50
It’s I feel like it’s almost similar. This is simplifying it. Like back to the matrix example. There’s more mattress buyers on Facebook than there are on Amazon. Right? But Will someone they get shown purple, I think it’s one big brand like the egg demonstration all this stuff with a mattress. And then through this journey, like purple, purple, purple, they start seeing remarketing for purple stuff. Will they eventually go to Amazon? Who’s the big e commerce giant to look at mattresses? And then do they go back to purple? Which is a little different? Because it’ll be in Dubai from purple director purple on Amazon. But yeah,
Kevin Oakley 42:25
yes. And the answer is they will do both Yes. And wherever else they’re going doesn’t have great content, and UX, and great calls to action and a great online team to follow up and answer questions. That’s what I mean by the answer is yes. No doubt that the number of builders who are positioned correctly to go direct to consumer and say we don’t need Zillow at all. That’s hard. Now, the other things to consider though, is there everyone has fewer inventory homes and ever had if any left. So if any, that’s historically been where most builders have seen the most value is by promoting existing inventory because it’s easier to convince someone who’s shopping for an existing home to consider your home that’s already done or almost done and ready to move into. So there’s there’s no shortage of things to consider. And we’ve already in the first couple days of this announcement had many, many conversations with our builder partners about how to how to think through this but never a dull moment. Thank you Zillow for spicing things up this.
Andrew Peek 43:31
That’s good. All the future spiciness will be fun, too.
Kevin Oakley 43:35
Yep. All right, if we are successful, and getting any other folks from the general real estate side to hop in any of our former guests or other folks that we’re connected to, we’ll take a quick break and we’ll be right back with them. All right, first up from varying perspectives on what Zillow has moved means and its impact on both customers and partners. I’m using air quotes as a joke. Zillow partners have lots of people and an actual way but some partners are feeling a little bit sad about the move. And so joining us first here is Deidre Woollard editor with million acres a Motley Fool company and someone who has a long track record of writing and watching the real estate space. Thanks very much for joining us today.
Deidre Woollard 44:39
Thank you excited to talk about this.
Kevin Oakley 44:41
And just give everyone a quick synopsis of what million acres is and how it’s what the purpose of the site is and and what you do there.
Deidre Woollard 44:50
So million acres is a free site for all things real estate investing everything from investing in stocks like Zillow, to Reed’s to also rental property on and things like that. And then we have a couple of premium services that are similar to Motley Fool services with stock recommendations and things like that. Awesome.
Kevin Oakley 45:09
Yeah, Motley Fool has always been one of the go to places. I mean, CNBC and Motley Fool is where I feel like I get 98% of my financial information insight. So again, great to be on here. So you didn’t necessarily break the story, but but you wrote a fantastic article on the million acre site, titled Zillow plans to create real estate brokerages. And so give us the context here from your perspective, and your viewpoint of what’s going on.
Deidre Woollard 45:39
Well, what’s happening is that Zillow, I mean, they’re not exactly creating real estate brokerages, but they are becoming a licensed brokerage. And they’ve been a licensed brokerage in many markets for years, partly because of the flex program, which is the program where agents Get, get the leads, and then pay a fee when there’s a closed transaction. So they’ve been working on that program for a while, and that required them to be licensed. But this is the first time that Zillow has said that they’re going to have like employees who are licensed and I think the interesting thing is they’re not saying they’re going to recruit agents was a video that Emil send Stroup or chief industry officer I believe, but out and he said that they’re not recruiting agents, they’re going to turn employees in their employees are going to become licensed. Hmm.
Kevin Oakley 46:25
So and I know part of the conversation around here. And some of the frustration comes from and you referenced it in your article in 2014. Greg, Greg Schwartz, Zillow is then chief revenue officer say to the Zillow was, quote, a media company that helps people find homes. And so that always leads to kind of two questions, one, are we surprised by this or not? And then two, doesn’t even matter if where Greg was coming from at that point, because now the company has found itself for lots of different reasons needing to do this. So first, are you surprised?
Deidre Woollard 47:01
I don’t think I’m surprised because I’m a part of a lot of real estate agent groups on Facebook. And all of them have been saying this for years and years and years. So I think a lot of people kind of feel vindicated at are pointing at it. And going, look, look, we told you, and that’s been part of the pushback of like, Don’t buy leads from Zillow don’t make anger that has existed in the real estate industry for years. And they did pivot from being a media company, both Greg Schwartz and Spencer always used to say that and then a few years ago, they stopped saying that and when they pivoted toward ibuying, when they started doing mortgages, and really creating a sort of like single platform for transactions that really changed.
Kevin Oakley 47:45
Yeah, and in many ways, internal and external things have driven them to this, right. So from a financial perspective, talk about why the stock and the pressure to deliver results and, and might have necessitated some of this change in strategy, even if, originally in 2014, they didn’t see this happening, at least not at this time.
Deidre Woollard 48:08
Well, at that time, their main source of revenue was the premiere agent program. So for and that’s always been how Zillow has made its money is selling leads to agents and brokers. And I think part of what may have happened here is that it became it became it’s become less valuable. I mean, the program is still growing revenue was down. I believe it was 17% in the second quarter, partly because they gave a lot of discounts during COVID. But they’re predicting that program to have revenue 2%. But they’re also trying to build this other business because they’re seeing this as not necessarily the future of real estate, and they see ibuying as being the future of real estate. So they’re really putting their energy, their focus there. I think that’s one of the reasons you now have rich Barton in charge. And he’s really, he’s really focused on ibuying. As part of as an important part of the future of Zillow,
Kevin Oakley 49:01
I probably should be asking this question to a current real estate agent. But I would love to hear your perspective. Part of what I wonder is, were there enough agents using that premiere agent platform effectively, where Zillow started having to do some of this on their own, because there just aren’t enough agents set up with the right kind of team and the right technology to be able to handle so like Zillow is kind of saturated the consumer mindset, I guess where I’m coming from, right they own the brand for real estate for the for the consumer in the US. They had a tremendous success with the premier program and getting people signed up for that. But if those leads that they’re passing along, don’t all turn into sales, then that also creates churn for that program. And so was there just start did they maybe they noticed a tipping point of ages, have all all at some point tried this or the ones that are going to try tried it. And we’re still have some churn. So I’ve got to start pivoting and kind of grab the grab the reins. I don’t know, does that make sense at all?
Deidre Woollard 50:08
It does. And I worked in brokerages for years on more on the marketing side, but I worked with consulting with a lot of agents. And I know that there were agents that really made a great success out of Zillow leads, and there were ones that weren’t and I think that’s been part of Zillow, his frustration, is that they’ve never been able to sort of connect, they can great these great leads. And then they can give them to agents, but they don’t always convert. And sometimes I mean, leads just anyone who’s ever been in real estate knows leads don’t necessarily convert on the first try, you know, they can convert six months, sometimes even years later. And so Zillow had experimented with doing you know, what they call like a warm transfer where you get someone on the phone, and then you directly transfer them to the agent. So they’ve tried a lot of things with the premier agent program. But I think partly they felt the need to, to kind of get in there and and really try things out. And I don’t believe that they’re just going to stop with licensing their own people. I feel like eventually they’re, they’re getting a little bit more into, I would say into red fin space at this point.
Kevin Oakley 51:10
And I agree with you, I was talking with Bill Lublin from century 21 in Pennsylvania, and he was like, I don’t really see it. But that that was my perspective, too. Was someone else mentioned yesterday? Well, why didn’t Why won’t they just buy Redfin because it’s a lot easier. And just like you’ve got culture differences. I mean, it’s one thing like remote when they acquired Trulia, and Zillow, there was a lot of culture work that Spencer had to do to bring those two organizations together and make it all work. I mean, I know people who worked both organizations, and certainly not all of them, made it through that transition. So it seems like it’s a natural progression that they can do over time and not bite off more than they can chew. And also, it’ll end up being less expensive. But yeah, so since you mentioned that I also was curious to get your perspective of, and this is total projections, which are just fun, right? Whether you’re right or wrong. Yeah, I feel like in the next five years, if zillah starts to make progress here, they there’s no reason why they wouldn’t also look at what Airbnb does. And say, of all these things were requiring maybe we just use the algorithm to find the best 2% and we actually don’t turn and sell, we turn them into an Airbnb, like product where you could use the same interface to find a short term, if it’s home. And, you know, is that also sound crazy, crazy?
Deidre Woollard 52:30
No, but I’d actually go in a different direction, because I was talking to a reporter the other day, Ryan, December from the Wall Street Journal. And we were talking about how if there is a foreclosure crisis in the future, in the coming years, how it’s gonna be different this time because there’s AI buying and because there’s also so much more institutional investing. So I think that what Zillow could do is actually instead of going the like Airbnb model, actually go toward either selling properties to companies like invitation homes, or just becoming a direct renter. Yeah. Building a large platform I met that’s absolutely a possibility. Also, they get stuck with, you know, with homes that they can’t sell it the market suddenly shifts that could actually that would go in
Kevin Oakley 53:12
rich Barton saw before about how easy it has been for them to raise capital, but capital is also capital in the sense of whether it’s an institutional investor giving the money to Zillow to then do that, or I mean it Yeah. When you just look at the money flowing around that makes total sense that that there’s that opportunity. Last question for you. on the MLS front? Was it a surprise to you or those you’ve talked with Zillow decided to go down the path of being a full on partner with the National Association realtor and the MLS as part of this adjustment?
Deidre Woollard 53:44
Well, I certainly think it’s interesting I used to work@realtor.com about a decade ago and I know one of the problems has always been getting the data and getting the data faster. And that was one of red fins key advantages. One of the reasons people loved red fins app more accurate and and listings went up faster, which is increasingly important in a market right now. We’re median home price median home, like days on market just keep dropping. So this is great. This is
Kevin Oakley 54:11
so fun about talking to so many people in such a short period of time, which is different than how we normally do it. But we were talking and the main news portion that one of our employees here do you convert was mentioning that, and realtor.com tried for 10 plus years to say we’ve got better data than anyone else. And it never seemed to be good
Deidre Woollard 54:29
for a while but they did it through individual relationships with MLS is like over 800 at a time and that was just really hard to manage. I had that gap, that whole team for you know, getting all that data and cleaning it up.
Kevin Oakley 54:42
But it’s interesting to hear how Redfin seems to have this like whisper referral campaign where the consumer not the, like the professionals and realtor.com knew they had the better information more accurate, but the consumers have picked up in a different way Redfin’s message especially during the pandemic. So that our employer was saying they had multiple friends who were just like, Why Why are using anything but Redfin because if the house is on the market for three days, you may not even see that it was available on Zillow. And so it’s interesting that you brought that up, because that’s definitely something we’ve been hearing.
Deidre Woollard 55:14
Well the other thing that probably doesn’t get talked about as much is there still is that desire to create that national MLS there’s the you know, the broker public portal, which has been a it’s been a project that’s been in the works for a long, long time. And you know, it hasn’t it, it’s gone through some transitions and has never really come out. And I think that was always designed to be a quote unquote zillow killer, but they couldn’t they couldn’t get it together. And you had a lot of really smart people with a lot of experience in real estate have worked on that project. But it just, it hasn’t happened. And so there really isn’t anything to challenge. Zillow is dominance in terms of recognition. I mean, but the interesting thing is Redfin cracked the top three, I think, a couple months back, because it was always Zillow, Trulia and realtor.com. Now Redfin is up in the top three. So that is very interesting.
Kevin Oakley 56:11
Okay, I promise. Last question. Second thing is, is there any way that you see one of the top six companies opened or Redfin Keller Williams, creating a true strategic partnership or acquisition with another? And if so, who might your guess be if you had to roll the dice?
Deidre Woollard 56:32
Well, I’m really interested to see what happens with open door and Redfin because they have a partnership. But now that open door is going public was going public through special purpose acquisition company, so kind of going public through the back end, they’re going to be a publicly traded company, and they have this relationship with red fin, as partners I, which has been, you know, it’s been in and out, sort of, there’s been a lot of talk about it. So I don’t know what’s going to happen there. And you do have the other companies. I mean, I’m, I really want to see companies like religie and Keller Williams, figure out a response to this. Because otherwise, you know, they’re, they’re really going to be in trouble,
Kevin Oakley 57:11
huh? Yeah. Yeah, that they’re, the options are becoming more limited, that’s for sure. They’re gonna have to try a hail mary. Pretty soon. It feels like Yeah. Well, thanks again, so much for hopping on with us and encourage everyone to go check out all of his other articles you’ve been writing for over 10 years in real estate? Uh huh.
Andrew Peek 57:32
Absolutely.
Kevin Oakley 57:33
Lots of great stuff out there. And we met on Twitter. So good things from Twitter to Absolutely. Thanks again.
Deidre Woollard 57:39
Thank you.
Kevin Oakley 58:02
And we are back with Bill Lublin, the CEO of century 21. Advantage gold and you will remember him previously been on the podcast, in the myths in the early days of the pandemic, where we were trying to get a read on what was going on out there. And at the time bill, everything in the in the great Commonwealth, as they say in the state of Pennsylvania, yes to shut down. completely worth as they say, we weren’t. You have made it to the other side. My friend, congratulations. You
Bill Lublin 58:30
know, I read a post from a friend of mine recently, he said to you remember when we started and we were three weeks in and we thought, yeah, three weeks? We can do this. Now. It’s seven months later? Yes. Yeah, we were we were shut down for almost a quarter of a year
Kevin Oakley 58:45
as the as the CEO of a brokerage. What is your take on on zelos decision to hire salaried agents and help them sell their ibuying wares?
Bill Lublin 58:58
You know, it’s really funny. I mean, if you go on social, you’ll see people going we did a thing. And like they built a gazebo in their backyard or they bought a boat or bought a new car, right? When Zillow did a thing. They actually got the entire residential real estate industry in an uproar because the thing that they did was something they had promised not to do, almost since their inception. And they you know, they have been continually saying, we don’t want to be a brokerage. We don’t want to be a brokerage. A number of years ago, they bought one of the companies they bought because they were a big company for acquiring things. One of the companies they bought were licensed in all 50 states, thereby making them licensed in all 50 states. And everybody got up in arms and said, Oh, Sal is getting into the real estate business. And Zillow said, No, we’re never gonna we’re not a brokerage. We don’t want to be a brokerage. We never want to be a brokerage messy. And then now they are Becoming a real estate brokerage, as a an outgrowth of their AI buying business. So, look, I’m not a big stock guy. And the people that run Zillow are far, far smarter than I am. But they are a company that has been built like most tech companies on speed and velocity. And you know, they’ve made billions of dollars without ever showing a profit or without showing, without consistently showing a profit. I can’t say that they’ve had a few quarters yet where they’ve come out in the black. And yet people buy and sell the the people who have created wealth, absolutely their IPO. And
Kevin Oakley 1:00:42
the only Twitter kerfuffles that I’ve been involved with was some random person, when I was recommending that people might look at the stock when it was down in the 30s might be attractive, right? They’re like, You’re crazy. I’m shorting this thing. It’s never going anywhere. And I was like, Okay, fine. Now it’s at 100. It’s right. I’m curious what you think of this is that Spencer rascoff, the former CEO of Zillow, I think I have this imaginary conversation where a rich Barton says, Hey, man, let’s go to lunch. And I’ve been thinking, and I think we need to go in this direction. And I can hear Spencer, being a generally good guy saying, I can’t do that. Because I’ve been telling everyone, for the last however many years that this is not where we’re going. And I texted this to someone when it happened. I said, I think rich Barton just said, Hold my beer man, I’m coming in.
Bill Lublin 1:01:30
That’s right.
Kevin Oakley 1:01:31
I’m gonna make this happen. Well, I
Bill Lublin 1:01:33
don’t think I’m not sure that there was lunch involved. When Barton came in, and rascoff left, it was obvious that the powers that be within zillo wanted to move in a different direction. Well,
Kevin Oakley 1:01:47
yeah, on the podcast earlier in the new segment, we went through the notorious aro bees article, and share it around, which you know, talked about don’t put Zillow in the corner. And part of me wonders if part of this initial part of the buying experience where they were giving the homes they needed to sell to local agents to sell was saying, There’s still too much pushback, this is harder than it needs to be if these are our own people thinker in our own way, same but we’re training them to say and do an act, this all might be easier. So there’s, there’s part of me that’s like, they’re always focused on the customer. They’re always focused on how do we scale the business and get more profit, but but it also seems like, they’ll play with a partner until they just say, look, it’s not worth this much pain. Right?
Bill Lublin 1:02:30
Right. You know, wait, listen, if, let’s I’ll tell you what, why don’t we do this? This week, you make dinner, and next week, I’ll make dinner and on Sunday, you know what, this isn’t working for me? Right? Look what they’re doing. They’re not hiring agents. They’re actually licensing their existing employees or furloughed employees or whatever. And I don’t think it’s so much about the consumer. I think it’s about generating income, controlling the agent. Being able to mandate what they do when they do and how they do it, which you can’t do with licensees with the independent contractor agreement. I’m not going to back Zillow into a corner. Okay, and if Zillow if the industry does nothing, and Zillow thinks they have to do something, they’re going to do it. And if the industry or members of the industry, like I don’t
Kevin Oakley 1:03:24
know, the dog kind of thing, right, like they’re gonna do whatever it is that they need to do kind of regardless, right,
Bill Lublin 1:03:28
yeah, they’re not. I don’t think, other than they don’t want to make things harder than they need to be. Certainly. And I don’t think they want to alienate, you know, they have a lot of balls in the air right now. Right? They have, I can’t
Kevin Oakley 1:03:45
quite figure out if they’re trying to become open door. Redfin, a little bit of both with Airbnb on the side or what?
Bill Lublin 1:03:53
Airbnb has nothing to do with it. But confusing them with red fin is a really big mistake, other than other than Redfin, and they are both really, really good at making a really, really attractive website. But I think you could say compass, too, but they’re all different business models. They truly are.
Kevin Oakley 1:04:14
And I wonder how much crossover of those models we might see over the next.
Bill Lublin 1:04:18
I don’t, I mean, people keep conflating them. And I don’t think that’s actually accurate. I mean, compass, I think is looking towards their IPO. Right. And, and they’ll get their look, once they have their IPO, we’ll see how long their top team is there. Or they say, well, it’s time for us to turn it over to the next generation. And then they go out and become you know, like they start running a VC for something. Right, you know, probably some form of real estate tech. Glen Kalman has, has shown that he’s an extremely adroit, very, very bright pivoter also, yeah. And he has sort of he started out with an employee and consumer discount model, and has sort of moved more towards a traditional model. He started that very well, he and xip started at about the same time. And ziprealty ended up being a CRM that was acquired by religie. And he’s he’s still a real power in the industry. I think this is about facilitating their facilitating their ibuying. But the other thing that their ibuying business does, is for every two and a half people, every two and a half listings they get, they generate 97 and a half potential sellers. Yeah, they’re getting the leads. Now, I don’t know where they’re going to go with that. Right now. We’re in an inventory short market. And I said to you, when we were setting up to come on, you got to tell all your home builders, they got to build more, they got to complete more, they got to find the woods somewhere, they got to get the windows out of the warehouse, and help because there’s a tremendous demand. I mean, in Philadelphia, in the city, I think we’re at 2.4 months inventory. And in the counties, we’re at about 1.6 months inventory. And a balanced market is six months. Yeah. So they they may be and again, I’m not suggesting that I have any clue what they’re doing. They may be thinking, well, we can either take the 97 and a half percent of the people that inquire about ibuying and then don’t sell to us. And we could sell them to Bill Lublin, or Joe Blow or whomever and get a 35% referral on that and not have to do any work. Or if we have a well trained Salesforce, maybe we can just list them. Yeah, we can get some share of the hundred billion dollars a year paid in real estate commissions every year. So I don’t know where they’re going. I don’t know
Kevin Oakley 1:06:57
how they couldn’t, it would be really hard. It’s the cookie jars open, the parents have left the room. Is that right? Or not at some point only because when you control the platform where the consumer is looking at it, any ability to add a button on things that you own or have a listing of that, that another listing doesn’t have a button that can do some magical thing different or offer a different experience that’s going to be really hard.
Bill Lublin 1:07:23
Right? So I mean, look, stellar is going to do whatever Zillow needs to do, make themselves more profitable to increase the, you know, they have obligations to their shareholders. They’re not beholden to anybody else in the real estate business. They’re going to be like any other brokerage. Now they’re going to join the National Association of Realtors, they’re going to join local MLS is they’ll no longer have to pay for feeds, you know from any of these MLS is they don’t have to negotiate as an outsider, you know that we have an ID x agreement. So So
Kevin Oakley 1:07:58
does that mean builders know and fear the term IDs because the feeds from their websites always break? And they’re not sure what the heck is going on? But But what is? Well, I
Bill Lublin 1:08:08
think all your builders are to stop trying to do it on the cheap and they ought to hire a good real estate broker, and then they wouldn’t even have to worry about it. They would just give me a call and say, Bill,
Kevin Oakley 1:08:18
I wouldn’t be surprised if that’s another thing that Zillow is considering of how do we help make this MLS process as smooth as possible? Well, the
Bill Lublin 1:08:26
process the process is not the process is not really show terrible. The industry works on making it smoother. You know, I chaired the NRS MLS issues and policies committee A number of years ago. And one of the things that we were concerned about and that MLS is around the country are concerned about this, how do you make the transmission of that information? You know that the ID x feed is a fee that that we share with each other for advertising purposes, so that each of us can have all of the stock on all of our websites. So I don’t again, I don’t know what their long term plan is. I think the team their their their Look, they’re they’re very, very bright people. They’ve made a ton of money. They built a tremendous machine. But you know, they’re not what there are people at Zillow that are friends. But the company’s not my friend. Randy more than any company is my friend.
Kevin Oakley 1:09:27
Oh, shoot. Well, Bill, I told you this would be 10 minutes. I have no idea how long as time has passed, but I appreciate your your insight. As always. Thanks for joining us on the show and we will be in touch again sir.
Bill Lublin 1:09:40
Absolutely great talking to you again. Thanks.
Kevin Oakley 1:10:03
All right now we’re joined with another former guest of the podcast Sean Carpenter, a Coldwell Banker realtor in Columbus, Ohio, as well as an owner of his own national speaking program talks to real estate agents across the country. I follow your Twitter feed. And I feel like I get to travel the country because you always take pictures of interesting places and do interesting things. You don’t just hop straight on you, you drive a lot, actually,
Sean Carpenter 1:10:28
I drive if I can, because I enjoy the wind the windshield time, Kevin listening to podcasts like, like market proof marketing and stuff you guys do. But I look when I go to a city to speak, I try and get a feel for the area. So I try and visit the local craft breweries play golf, if I can. Certainly if it’s near a college town, I’m going to visit the campus. Uh huh. The stadiums. And so I love to really get a feel for the areas that I traveled to.
Kevin Oakley 1:10:51
Yeah, and Sean’s a regular blogger, too. So make sure you check him out on Twitter, you’ll get not just those amazing insights of different landscapes across the country, but some great blog posts as well. So Shawn zelos move. First question, which I think I know the answer to surprising not surprising. Not surprising. Yeah,
Sean Carpenter 1:11:12
that’s surprising it, you know, it, it’s probably just been between the lines. And I think anytime you ask, is Zillow gonna become a brokerage? You probably know the answer when you ask that question.
Kevin Oakley 1:11:22
Yeah, I when I was talking to Bill yesterday, I said, it’s a little bit like, the parents have all left the kitchen, the cookie jar is open, filled with the kids favorite cookies. And you don’t even necessarily tell the kid he can or cannot take a cookie, you just leave what’s going to happen eventually? Sure, the cookies are going to be so next question then quickly is is scared, not scared.
Sean Carpenter 1:11:45
Not scared. I don’t see how it’s going to impact my business. And when I say my business, john Carpenter Inc is really, you know, I don’t work for coal banker. I work with coal banker. Most most agents around the country are independent contractors, from everything I’m hearing about this move. Zillow is gonna be hiring employees, licensed them, they will serve as their listing agents on these properties. I don’t see them. Maybe I’m wrong, Kevin. And maybe it will evolve into this. But the difference between what I do or what an employee of a company does is I build relationships with my customers and clients and try and earn repeat and referral business.
Kevin Oakley 1:12:20
Yeah, I was listening to Brian Bolero. And the gentlemen at curaytor yesterday did an interview to and some of their points were very interesting to me, which made a lot of sense as well is that the best agents are very entrepreneurial. They’re not necessarily people who would make great employees in the traditional sense of you must do XYZ, we’re going to measure every metric, and the best of the best also have an income level, that a salaried position might not be attractive for. So those are two other interesting ideas. And so, so you talked about Sean carpenter, Inc. So your personal brand, again, for our audience of home builders, who their brand is the company, they work for the builder, that that’s the niche that no national company can really attack as long as you continue to invest in it.
Sean Carpenter 1:13:09
Oh, of course, you know, I mean, I’ve spent the morning Kevin, sending emails, video, text messages, text messages, and phone calls to people in my sphere of influence people that at some point in time might have a real estate need, might think of, you know, of real estate or know someone who does. And if they can think of me among the many realtors, they know. And that’s really the same thing I would think the best new home sales reps would be doing is not just churning and burning and getting to the closing table and on to the next one is what about those people that they’ve helped for the last six to eight months, they built a relationship where they felt comfortable popping into their model home ask a question when they’re bringing their family by to show them their home building going up and being finished. Those people know people who might want to build those people know people who might want to buy and I think if if they’re just after the closing just, you know, ending that relationship. I think it’s a huge opportunity I that it sounds to me like that’s what the Zillow transaction agent will do.
Kevin Oakley 1:14:07
Yeah. So what what am I missing? Do I am I only connected to the people who are calm and rational on focus on their business? Or when I when I look at Inman or some other place and it’s just OMG. How could this be what what are other agents missing or not thinking about then why are they wild? the hubbub?
Sean Carpenter 1:14:29
Yeah, I don’t know Kevin, and maybe they’re the same people who are still waiting for the internet to replace agents. No, it’s in the MLS
Kevin Oakley 1:14:38
go back behind the curtain. So they have to talk to me at every step of the way that those same individuals.
Sean Carpenter 1:14:44
Yeah, it’s Listen, it’s all real estate’s local. There’s so much I do I do a presentation around the country called Getting in tune with your audience what real estate rockstars can learn from real rock stars and it’s kind of a look at the rock and roll business and real estate business overlaid and Think about this for a second. Kevin, at one point in time, The Beatles, The Rolling Stones, the Beach Boys and Bob Dylan were all at the top of their game. Yet there was enough ears to go around. One person making a great album didn’t stop the other band from making your great album. Right. And what gunfight is a great quote by Glenn Frye, the lead singer, the Eagles, the late lead singer of eagles, he said, You know, when he was younger, in the rock’n’roll business, he was worried that other people putting out good records would stop him from putting out good records. And then he realized that other people putting out good records isn’t going to stop him from putting out good records. And so listen, there’s gonna be 5.1 million sales. Yeah, residential real estate sales this year. There’ll be 5.1 million sales next year. They’ll be 5.1 point sales a year after that. And so there’s plenty of business out there. So I don’t know why people get so Chicken Little The sky is falling over. Something everybody knew was coming.
Kevin Oakley 1:15:53
It’s funny. There’s people in my world who anytime someone else starts a new home podcast of any type. They’re like, Oh my gosh, can you believe in? I’m like, you’re I know you’re trying to trigger me but I don’t get it. This doesn’t. This doesn’t panic me in the least the more the merrier. And if anything, I don’t want the people who aren’t the folks who should be in my tribe feeling like they’re like they’re stuck. I don’t really like this market proof marketing thing. But I gotta listen to it. Because it’s the only one right it helps everyone figure out the right person that that that meets their needs. And I totally get that now the MLS is the other thing I’m trying to ask everyone about because I know enough about the MLS to be legal and not get fined. That’s how much I know about the MLS, less, but Zillow deciding that as part of this process, they’re gonna they’re salaried agents will become part of NAR, at least the majority of them and abide by those rules, as well as participate in MLS to get their data. That’s not traditionally been zelos approach. And just what does it mean for from that perspective? Can people once they have an ID x feed like to your own site? Can you still pick and choose? Is there laws of reciprocity there? How does all that work?
Sean Carpenter 1:17:07
I think there’s a brilliant Trump move by Zillow, all the people that are haters, right? There’s a little haters are like, well, I’m gonna, I’m just gonna tell my broker to stop sending our feed to them. Uh huh. until they become a broker, join the ID x. And then you have to distribute your listing to them unless, unless there’s a broker out there that is bold enough to not distribute to any of them. Right? For for a Keller Williams or Cole banker, or XYZ and in Topeka, Kansas to say, we will only have our listings on our site, we will not have any other listings, and we will not share our listings with other people. Now, that’s a conversation at the kitchen table. I love to hear that script or dialogue to say now, Kevin, I just want to know that we will only be advertising your house to the people in my company, and it will not be advertised to anybody else. So I hope a lot of people drive by and see the sign. Okay. So I think that’s the the interesting play is that the people didn’t want to share their information. It’s now going to be shared. Mm hmm. And listen, I got into I left this comment on Brett calthorpe. It was a good book, good friend of mine who used to work for Zillow kind of in the role that Jay Thompson was in. People always say they’re stealing our leads. They’re stealing our leads, they’re stealing our leads. And my question is always like, so if I drive past your yard sign today, Kevin at XYZ Realty. And when I get home, after writing down the address, I call my agent with slippery slope Realty. Yep. Did the sign steal the lead? Because that shouldn’t be your lead. Yeah. So I just I don’t understand that. And so MLS, I think is listen, the whole point of it. MLS stands for multiple listing system, right, not magical listing system. It’s going to be an opportunity for me if I have a buyer to find a home that maybe a Zillow agent is listing that matches my client’s needs. Why wouldn’t I want to have that available to me?
Kevin Oakley 1:19:01
Yeah. Yeah, no, it’s the most interesting part of this to me, because I think the agent part was, you saw it on the roadmap. But I, as much as I’ve read about Zillow wanting to go a different route, besides the MLS, that that was the big adjustment that I think is going to impact the market as much as anyone else because for now anyway, it’s just I buyer purchases being sold by those agents again. If that changes or not, then then they become more of a red fin approach. Where again, yeah, so yeah, it’s an interesting world out there, but I agree there’s nothing to be painted, but I gotta be honest, I was hoping someone would come on here and just lose their mind because that’s good for that’s good for entertainment value of the
Sean Carpenter 1:19:45
podcast. Geez. Listen, I I’ll be curious to see how many of the agents that are currently Zillow, premier agents, spending money, right to get leads, and will continue to spend money with them. I’m sure Zillow knows that by making this decision Many people then will stop sending money. But some probably will they like it, hey, if I can continue to get leads in my area not affected by I buyers at this point in time, as of the recording of this, you know, Zillow doesn’t have a presence, but I buying in Central Ohio, it doesn’t mean they won’t tomorrow. But there I said there’ll be plenty of agents because they get a good return on investment. I know an agent that spends $25,000 a month with Zillow for leads, wow. But her ROI is almost four times that she spends $300,000 a year and can attribute about 1.4 million in sales to those leads. Now she has a tremendous team. Deep is a integration that literally every day is just churning those leads. But does it work for someone like her, she’s getting four extra
Kevin Oakley 1:20:48
guys, that’s the other last point here is this idea of going direct to consumer and skipping Zillow or any syndication service. That person who has that kind of team that’s necessary to respond to the Zillow leads fast enough to engage them to get them to the point where they can get that transaction is the same person who if they ever need to decide to go another direction. It’s that same team that’s going to help them do direct to consumer, just way possible. So that’s the other that’s the thing about this pandemic is just where things start aligning of whatever I need to change now. Or do now, that would also help me in the next couple of years. That just seems like a no brainer. Now, if you want to go that route again, you’re you as a solopreneur is said hey, it’s all about the relationships, and I’m going to do speaking and other things on top of that. So that but but for those people who are concerned about volume and scale, that’s an a really interesting point that,
Sean Carpenter 1:21:47
listen, there’s other people out there, they could partner with realtor.com and get a footprint they could they could do Google, right. And really just dig into that, you know, people typing in homes in insert town here.
Kevin Oakley 1:21:59
Yeah, our neighborhood or zip code.
Sean Carpenter 1:22:02
Really, you know, saturate YouTube with pre roll videos and become that face that everybody sees, like, you know, I mean, every town in America has that one car dealer, that Banjo and says we’re dealing or whatever it might be that everybody knows they might not use them, but Top of Mind awareness. A lot of people do. Right,
Kevin Oakley 1:22:20
exactly. Awesome. Well, thanks, Shawn, for tapping on and giving your perspective and I like that shirt my friend,
Sean Carpenter 1:22:27
also a doctor and the team.
Kevin Oakley 1:22:30
I will also Sean does a weekly,
Sean Carpenter 1:22:34
weekly show. Yeah, it started during shelter in place. It’s called Lost lyrics. I do it on Facebook Live and I have a great time kind of quizzing. It’s kind of a musical trivia night.
Kevin Oakley 1:22:45
Yeah. So if if you’re one of those people who like to hang out at bw threes or other places with a trivia box, why now you can eat your wings at home, hang out with Shawn, and have a good time. All right. Thanks, guys. Good to see you.
Andrew Peek 1:23:18
has to be about Zillow. Right? Yeah.
Kevin Oakley 1:23:21
Next question of the week has to be about Zillow. So here we go. How do you feel about zelos hiring of agents as employees, salaried employees to sell their existing homes? Surprised, not surprised. Or think this is just the beginning of an evil, evil plot to take over the entire planet.
Andrew Peek 1:23:46
The Dark Side feel like this is Star Wars or something.
Kevin Oakley 1:23:49
But really, I would just love to hear everyone’s feedback on this, because from the very beginning, and I this is complete hearsay, I do not know this is true. But I remember someone hurriedly coming up to me at the builder’s show, gosh, seven years ago maybe said, Do you know what Zillow is trying to do? I said, No, tell me what asila trying to do. They want 1% of all transactions from home builders. That’s their goal is to get 1% of revenue from all home building companies. And I said that’s interesting. And they said, I know isn’t that terrible? I said, I don’t know. I mean, if they do a terrible job at it, then yes, but to me, they’d have to create an awful lot of value to make you want to give them 1% of your revenue. Yeah, until they do that. You don’t have to, at least if you maintain a good brand, do digital correctly, have a great website, all these other pieces that we talked about. So I’m still conflicted on that. And there’s a lot of builders who are unwilling to invest in marketing and selling their homes. Well To begin with, and so yeah, they should just build great homes and let someone like Zillow take care of the rest. There are those people out there. So in one sense, I get excited about the idea of hitting an easy button, even if it’s more expensive because you’re paying per transaction. there’s just lots of different feelings going going through. But But more than anything, the reason I keep coming back, even when Zillow makes mistakes, which they’ll tell you they’ve made mistakes before too, and and how they’ve rolled things out or done something is they adapt, and their focus on the consumer aligns with my focus on the consumer. Hopefully, everyone’s who’s listening, you’re focused on the customer. Because that has to be our guiding light as marketers, we can’t just create efficient campaigns that are completely out of touch with customer needs, wants and desires. So in that sense, we’re all aligned. Right? Yeah. And I think I think there’s points so let’s let’s hear from you. I’ve said enough. Let’s let’s get some feedback. All right. As always, you can call in with comments, questions, brilliant statements on this episode or any other at 404-369-2595 or email them to show at Do you convert calm for publish articles, blog posts, videos, and more? Check out do you convert.com it’s also the best way to find out how to connect with us on Facebook, Instagram, LinkedIn, and everywhere else. We are online. Thanks, everybody. See you next week.
The post Ep 120: Hands in the Cookie Jar – Zillow’s Big Announcement [Transcript] appeared first on Online Sales and Marketing for Home Builders - DYC.
