How to Zillow proof your business
Today we are talking about the big Z. All of the activity lately, showing time, all kinds of things that I've seen people post about, coming at your listing. All this stuff is going on, all kinds of agents have been up in a frenzy asking questions, making assumptions, so what does it mean for you and how you can make it not impact your business whatsoever?
We’re really concerned about the things that are happening in the industry for the long term. It takes time to change a consumer's behavior. It can take a generation, sometimes, and we know we've talked about the Nestle and their coffee that they sold in Japan, from the book “The Culture Code”, and how they waited. What they did was they started feeding the kids candy-flavored coffee in order to get them indoctrinated, because they were tea drinkers over there, and now they sell so many tons of coffee per year because of that plan. For us, that level of thinking, a lot of different cultures think generationally and a lot of different corporations do. We have to have that 100 year business plan mentality.
Gee, 100 years from now I hope that we're all floating around in flying cars and everything is holograms and stuff, and we can just walk into a hologram house and say, "Yeah, I'll take it." What we see and what bothers us is that Zillow is moving all these chess pieces in this direction, and we know their background, right? Their background is taking over the travel industry and really knocking that out, and we lament sometimes because we would love to have a good travel agent. The problem is, now that they've removed the veil so to speak, we know that the cost is more than the value to the point where it's like, "Ah, I'll just get on Expedia and do it myself." Or Travelocity, or Kayak, or whatever, you know?
So we can't help but feel like we're kind of the frog in the pot and they are just moving these pieces one by one to checkmate as much as they can of the industry. As agents, we've got to do something to stop it,at least for our own personal business as much as we can. We’ve said it before, we think that as agents, we all think that we're competing with each other and we don't realize that game theory, change one rule of the game, the whole game has changed. This has changed to where we're now in competition not just with each other, in fact we should be more in arms with each other, to combat these huge external threats with billions of Wall Street dollars, like Zillow.
We've seen the rise of EXP, they just released their earnings for 2020, and they are just smashing it. Their stock took a giant jump recently. You look at that, and their market cap has gotten to the point where it's like nine billion dollars, so their company on the open market currently is worth about nine billion dollars, which is a lot of money. Right? That’s just a drop in the bucket for Zillow. Zillow's like 42, 45 billion. It's mind boggling, really, and you know, what do they actually produce? They're an intermediary in the transaction, and they're trying to get that platform consumer goodwill, and let me tell you, they'll eventually get it. They're going to roll out, what we read recently is, in some markets, the Zestimate will be the price that they buy their house for.Imagine being able to go, look, and see what you could sell your house for, and click the button. That's a dream come true. We don't think that that's going to go off without a hitch. We think that they're going to have some serious trouble. They overvalued a house that we recently sold by $200,000, which is significant.The Zestimate was $200,000 dollars more than the market value of the home.
Do you know what Zillow's revenue was last year? Around $3 billion. Insane revenue. About $500 million dollars went to research and development. So think about that for our industry. There's arguably, what? 1.2, 1.3 million agents in North America and you got this company spending half a billion dollars on research and development? Now, most people don't know that there is a significant tax incentive to have a good deal of your revenue over in that bucket of research and development. You do get tax credits for that, from the government, but it doesn't matter. What the heck are they researching $500 million worth in our industry? I'll tell you what it is; it's how to capture more of the roughly $60 billion in commission industry that is out there.That is a pittance in comparison to, a lot of their plans, because the big money is in the house itself and being able to slice a piece off that transaction. We don't have anything against them necessarily. They're a force, a business, and of nature, that is allowed to exist, because they provide value to the marketplace in a way that gives them the right to do what they're doing.
But we think as agents we have to be smart and we have to band together, and how that happens, I'm not fully crystallized on. But we know this, if you only have one pillar or a significant pillar, and that is it, you are in trouble. You need to have multiple pillars of lead generation, marketing, to have your business more secure, so if they go and they switch on you, you're not stuck or out of business or becoming an employee for Zillow.
Right after they'd bought ShowingTime, we saw somebody post immediately after logging into ShowingTime and they started charging for stuff that wasn't charged for before, like seemingly in the next week. But the day after it was announced, we watched a live with Tom Ferry, and he was talking about 70 or 80% of your business, if it's coming from one lead generation source. Not somebody that's, like us, Market Maker, who manages your marketing budget. We don't sell you leads, but for the Zillow's and Realtor.com's of the world, if the vast majority of your business comes from there, you are essentially an employee because you are the tail. You are not the dog.
We think a lot of people are like, "Oh, could they really? Would that even really work? Is that really going to happen?" Well, we're going to find out. There's a couple of things that we would remind you, whatever the mind can achieve, so they've got all these people there, with all this brainpower, and all this cash, and they've got a brain suck of smart people that are thinking in this directions, and then it takes a little bit of time to change the consumer behavior. But it's already changing, and especially with the market as hot as it is.
It is really interesting, and this is the one thing that, whenever we’re talking to somebody, that has the inkling to be like, "I want my website to be the place that people go to search," and that is a very good thing to have. The only way you can do that is, my belief is, if you just have somebody that has a personal preference that just liked the way that yours is, and that's more luck of the draw than anything else, but when you have a company that's dropping 500 million dollars a year, and already has a technology that's unbelievable, it's hard to try and compete at that level at that game if it's just you.
That's just not going to happen.
Well, let me push back. We saw a lady, she commented on one of our posts recently. She was like, "Well, unless everybody goes and stops advertising," or, "unless Redfin and Zillow die, good luck getting people to your own website." And I'm like, "That's just a closed-minded mentality." She's just totally wrong, because the good news is, the consumers, still don't care. They still are monogamous when it comes to where they're going to search for homes.
That's why we still are able to generate crap tons of leads for a cheap amount of money, cost per lead wise, for our customers, because the customer, and especially on a local level, that's where you take it to them. Because they're so broad, right? Their marketing is just this high, top-level, broad swathe of the market. They're not going down and saying, "Oh, Frisco homes, search this." Now, obviously, they have some what's called dynamic keyword insertion for Google and whatnot, but it's still a very easy time for the agent to compete on a local level against these portals. And that's what we mean by having multiple pillars. If you have multiple pillars, you're going to be able to compete.
We agree with the driving in of traffic, right? But if someone has been trained to go to Zillow to look, once that happens, there's no point in trying to fight that current, right? Unless you can have a conversation and be like, "This is why it's probably not the best idea." The first time we had that conversation with somebody where we were going to Zillow and then we got access to an actual direct feed to the MOS, and we were like, "Oh, wait, so there's some difference here." It doesn't update as fast. We don't get notifications as quickly. It's faster over here, and when you're looking, and especially in a market like this, that's a real concern. Minutes matter right now, and so you have a chance, but you have to be able to explain that to somebody, but you're always going to be able to get traffic, because more people are probably like, "Yeah, I've got a real estate folder on my phone, and it's all kinds of apps."
Each time, Zillow's probably the most common one.
Because we've learned this even with big, giant companies, you try to have this charismatic figure that you can connect with, so Tesla, got Elon Musk. Apple had Steve Jobs. Amazon has Jeff Bezos, right? Everybody has a story that you fall into, and there's some trust built, and there's a person, not a corporation, because we're programmed to not really like the man. You know what we mean? The big corporations are evil is kind of how we've been programmed from a very young age.
We all have this connection, and on a local level, a community level, we talked to an agent this morning. She's 77 years old. Been in the business for 14 years. We had the best conversation this morning. She was Air Force for 22 years, got out, was a director for a 911 dispatch that had five different dispatches that she was in charge of. Did that for another 15 or 18 years, something like that, and then got into real estate, and she owns a restaurant. She's like, "But I'm ready to go, I'll do the best, I don't care. I'm just going to help them, and I'm going to get my phone to ring just because people in my community know that I'm trustworthy, and ridiculously hard working, and I'm going to take care of them."
So we had a conversation, and we were like, "Okay, so you have this at a local level, and the trust, and you're going to help them." Regardless of if they can buy a house right now or they can sell a house right now, she's going to legitimately give them the best thing. She's not in it for HER, whatever it may be, which, that comes back around, so we just had a really, really good conversation. But it all depends on what your goal is and what you're trying to accomplish. That relationship that she has can be amplified if she had a different platform besides just word of mouth. It's like adding fuel to the fire.
We were like, "We could take you and make you massive. We love you already, and we've talked for 20 minutes." And that's where the biggest difference is that we can see is, and we've harped on this for a long time. On a competition level, your brand is what you want to focus on. Zillow can't copy you. They can't do it. They just can't do it, and once you have a reputation in your market, and once people know who you are, and like and trust you, and then you add fuel to the fire , where you have consistent pillars of lead generation, consistent pillars of branding and indoctrination for those leads that is going to deliver a specific, repeatable, duplicatable result. They can't mess with that, unless they change over. We’re not worried about today, we’re not even worried about tomorrow for the industry. We’re worried about the next young buck. That's what concerns us. It's kind of like wrestling. We love it because it's just you. You either win or fail and you can't blame it on anybody but yourself, so it's a tremendous responsibility there.
We thought it would really be a shame for that to be disrupted, and so we think on today's level, the main thing that most agents could do is to look at where their business comes from and start to begin to build that brand in their market, build that lead generation in their market. Obviously some self-interest bias there, because that's what we do at Market Maker for our customers, but we really believe with all our hearts that that's the path that everybody should be on in this industry to make sure that they're controlling, not just today, but also tomorrow.
We always said whoever leads controls the market, and Zillow is controlling a lot of leads, but they can still be picked off on a local level, especially if you're investing in yourself and your brand and people know and trust you. That's the main thing. That's the only way to get in front of this thing for right now. We do think that there needs to be some type of an answer to these portals, and what that looks like, obviously nobody's figured out. But you know, we've all allowed this to happen and there's a lot of head-in-the-sand stuff. Like, "Ah, it's fine. My business is robust. We already got a brand." Yeah, that's great for you, but maybe care a little more about the next guy, right? Leave a step for the next agent coming up so that he doesn't have to figure it all out himself or herself or even worse not have the ability to get into the industry the way that we did. That's my feeling on the matter, and maybe it's too altruistic. Maybe we're just too competitive, to think like that, but that's what we got. That's where we’re at.
We’re just going to nail home that point. We read something this morning from an agent that I've kind of watched from afar, where he first started. His first year he did like 40 or 70 or something crazy, and he's run a pretty big tinny. We think he's like four years into it now, but he put out a post this morning that was like all lead generation, and he was like, "When I stop generating leads, I hurt my business three months from now, and it's hard because it's such a delayed thing that I know I've not been as consistent as what We want to," but he had this whole, "hey, these are the things that I want everybody else to kind of realize because I'm realizing it right now, because it's the lifeblood." And it's so funny because literally every single person that I've seen become a top agent in their marketplace, or cross the country, whatever it may be, that is the one thing that they all say.
it does take time, and that's the problem, so when agents get started with us, a lot of times, it takes time. Look, if you need a deal tomorrow, this is not the way to go. We can tell you that. We mean, you might get lucky. A lot of people do get lucky, but it's not going to be an instant, overnight. Market Maker is a long term answer to a very complex problem in the industry which is building up a database, having some consistency in your commissions, and being able to plan and know the math. If you don't know the math then, that's why we never shut anything off that didn't stop working. We were going over today in our market meeting, we were looking at different ads.
You have to create your own destiny without relying on some third party out there, and that's a skillset, and it takes time to develop a skill. It's like going to the gym, lifting a weight. You ain't just going to grab the 100 pound dumbbells and start curling. You're going to have to start with wherever you're at, right? You might not see the results in the first week, the first month, the first two months. But we guarantee by month three people are going to start saying, "Hey, you look good." You'll be like, "Oh, really? I don't feel like I look any different." Right? That's how it works with Market Maker, that's how it works with everything. I'll end with this, If it was easy, everybody would do it. Everybody wants to be a gold medalist, no one wants to train like one.
If you want some help with this stuff, go to marketmakercall.com. That's what we do. Check it out, see if your area's available, see if it's something that looks like it would be a mutual win, and fill out the form and come talk to us.
We always say here at Market Maker, we are you, not we. You are always one preposition appointment away. Go get it.