Backed by Google, Zillow Set to Become Online Brokerage

Real estate is not just an online thing. It's a global thing. People buy houses all around the globe and, in many nations, the notion of online real estate is hot. In the small nation of England, companies valued at £312m or £40m, like Housesimple along with easyProperty and eMoov, are all trying to make a go of it with significant venture backing. Online real estate is ripe for the taking.

Zillow Group will not need to go out for additional funding to pivot to online real estate. The company is valued at over $5B and is operating at a run rate of $703M. Their balance sheet shows $570 million in cash and cash equivalents.

Moreover, as the Sydney Morning Herald reports, Google has registered as a licensed mortgage broker in the US and is already working with Zillow to sell home loans. Google has $90 billion languishing in cash. Situating that cash in home mortgages is a way to put that money to work.

Zillow Knows the Consumer Better than Most Brokers

Want to know who owns what house? Zillow knows. Zillow launched an effort to acquire public records data years ago. But Zillow's customer record goes beyond the public record. Zillow knows the home buyer and seller's email address and phone number from a decade of consumers passing through their portal. They even know who the agent was that worked with them on their last transaction!

Zillow Premier Agents Are Ready

When you compare and contrast brokerage business models, Zillow is likely to pursue a model like RE/MAX. Zillow Premier Agents are already paying $500 or more in desk fees. These agents are well trained in working with online buyers and sellers and they have pent up demand for agents to join in every Zip Code in America.

Zillow Broker Website Is Ready

Zillow.com or Trulia.com can quickly convert to an IDX powered broker website. Indeed, RETS.LY is the data aggregation solution for this. And they obviously have the consumer traffic on their future broker website already, leading the planet with more than 50 million monthly visitors. They also have mobile search in the bag for both agents and consumers.

Zillow Agent Websites are Ready

Zillow has long supplied agent websites through their subsidiary Diverse Solutions. Even though Diverse has not been on the cutting edge of agent website innovation, they are in the market and have IDX feeds running everywhere important. With Errol Samuelson (longtime commander of Top Producer) at the helm, I would not be surprised to see a fresh new product sitting somewhere on a development bench.

Zillow Lead Routing and CRM is Ready

Zillow Premier Agents have access to a full suite of lead management solutions already. I was a bit surprised by the move to shed Market Leader from their product list. Perhaps they are building out a marketing suite or have their eye on another acquisition. They have added CRM to the Zillow Premier Agent offering, so that is good to go.

Zillow Transaction Management Is Ready

DotLoop is a third place runner in the transaction management race. They are well behind zipLogix and Instanet because those companies have control over the state forms and local disclosure forms required for transactions. If Zillow becomes a broker and a NAR member, that barrier to entry goes away.

Why Would Zillow Become an Online Brokerage?

Zillow has capped out on advertising revenue. In January of this year, they applied significant pressure to their broker advertising products in a calculated move to switch their revenue stream to agents. Brokers were really not that interested in the leads anyway – they just passed them along to the listing agent. But listing agents and buyers agents are starved for leads and were not total un-happy-ish about the price increase. The price increase weeded the garden of agents who were casual advertisers and paved the way for serious online real estate agents to get the customer flow they need.

Zillow can continue to move forward with their mortgage programs. They appear to be RESPA compliant.

Zillow can continue to work with owners and renters to satisfy the property management business.

Zillow can continue to work with developers with their New Home marketplace.

Heck, Zillow can even continue to support FSBOs.

Zillow already has Upstream, Broker Public Portal and RESO.

All of the initiatives that the brokerage community is pursuing will only catch them up to Zillow Group.

Timing

What everyone wants to know is the timing of all of this. That is a hard guessing game. There will need to be an inflection point. Perhaps it will be the resolution of the litigation with MOVE, operators of Realtor.com. Perhaps it will be driven by the Zillow board of directors who see the company failing to transition to yield profits, despite capping out on every KPI like revenue per agent, site traffic, etc.

Regardless of what feelings you might have, the cards have been dealt and Zillow is holding the royal flush.

To view the original article, visit the WAV Group blog.