What is Zillow’s Plan?

Filed under: Market Comentary

Zillow has forever been the place to go when people want to check the value on their house, known as a “Zestimate.” Many regular consumers who aren’t in the industry didn’t realize that Zillow has been a big lead generation source for people in the real estate and mortgage industry.

For example, people visit Zillow to look at houses. This information is gathered by Zillow, then sold to Realtors. This is how the business has worked for a while: a lead generation tool.

Recent Changes for Zillow

Starting a week and a half ago, Zillow became a brokerage – which means they are now in the business of helping clients buy and sell real estate.

Maybe this isn’t the most surprising news. It makes sense, because they’ve been gathering real estate data for years. Now, they are going to start helping to sell it.

Here’s Where it Gets Interesting:

There are a lot of real estate agents up in arms right now because there are things going on that aren’t kosher in the industry. If agents did some of these things, they would lose their licenses quickly.

For example, it came out last week that Zillow is finding houses that are listed for sale, then reaching out to the seller to help them understand how to break their relationship with their current agent and list with Zillow instead. This is a HUGE ethics violation and breaks every rule. If any regular Realtor did something like that, there’s no question they will lose their real estate license.

But now you have this big, publicly traded company looking to generate more return for their investors. Presumably the regulators will step in to check these things, but it will be interesting to see what happens. When a multi-billion-dollar industry comes into a space, it will obviously ruffle everyone’s feathers.

There are going to be some people who are perfectly fine selling a house through an electronic service. But based on my experience, I believe that the majority of people need personal support. It’s an emotional and stressful process, which is why it’s helpful to have a local, human being available to help with this deal. I have a hard time understanding how technology will take over on a transaction that needs so much human support.

We always have to watch for disruptors, so it will be interesting to see what happens going forward. Reach out to me if you have questions or would like to discuss your mortgage.

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