Zillow Homes…what the new brokerage means for you…and how to win vs the multi-billion dollar conglomerate
So today Zillow Homes is here, and they are hiring salaried agents. So today we’re going to talk about what that means for you, and how to win versus a multi-billion dollar conglomerate.
What is this really going to mean?
Everybody has been saying that it’s the end of real estate, right? The end is nigh, we knew this was going to happen, this, that, and the other. I think it was interesting because technically, in my mind, that’s not the case. It kind of evens the playing field a little bit. I mean, they’re going to have to join the NAR. They’re going to have to sign up for IDEXX and RETS data, wherever they’re licensed in. One of the things that people don’t realize is that Zillow still has a big patchwork of homes and the way that they collect their data. That’s why Market Maker, for example, has more properties than Zilow oftentimes in most markets, because we have a direct MLS feed. And agents can display those to their clients in that particular market.
But for the most part, I think that if you look at Zillow, they’re kind of running a Redfin play, right? Back in the early 2000s, we had a similar situation with banks when banks were getting into the business. They were going to turn all the real estate agents into real estate clerks, and they were going to have us name tagged. It was a big scare for all of us. And I only saw one sign that was like, First National Bank, Real Estate Division. It really never happened, and the thing that I think that concerns people is the fact that we’re really supporting Zillow with our advertising dollars.
But if you think about the bank play, right? Like every time we march a customer into a bank, we’re supporting that bank with our customer’s mortgage dollar. So not much different there fundamentally. I think that if Zillow were a big pillar of my business, I would certainly have a high sense of urgency to diversify where my business came from. Not out of spite, but just out of smart strategy, because I think that Zillow is going to continue to try to change as much as they can, to make as much money for their shareholders as possible. I mean, that’s pretty much what it is when you’re a publicly-traded company. You have a tremendous amount of pressure to increase earnings, right? And to hit them every quarter. And I actually think that this is probably like a net-zero, as far as information is concerned. It’s not a positive, it’s not a negative.
Now, there is a threat there. There is an amount of business that will be siphoned off, but they were already doing that. The difference is they were doing it and then they were turning this business over to mega teams. You know, I had a conversation with one and he was telling me about the interview process that he had to go through, and the amount of paperwork they had to sign. I mean, it was massive. I’m reading things, I don’t know if they’re accurate or not, but that these teams had to turn over their entire marketing policy, their campaigns, their management policies with their agents, and that Zillow was taking all that information to use, to build this themselves.
I don’t think that it’s going to be something that is going to take off. I think it’s going to be a slow kind of frog in the pot type of a scenario and situation. But I think that there’s a lot, as agents, we can do to focus, to not really have this as any type of a threat for us in our market. Because you’ve got to remember real estate’s all local. And if you’re a top agent, how concerned are you of a salaried agent coming in and competing against you? It’s not like they’ve spent the years in the trenches, learning the business, learning marketing, learning the management, learning the things that you know, to come in and compete against you. So we’ll go over some of the things that I think are going to be helpful for agents who do have a concern about this, but for the most part, it’s not a world-ending ordeal.
Their superpower in the industry is audience size, right? They’ve kind of gone and nailed the consumer, but not in a way that they know to go there. So there is a lot they got to figure out because the USP the instant offer, where there’s a Zillow fee that’s 11%, plus it’s lower than what you could get in the market. If you’re going head to head with that, you should win.
Unless they are just hardcore introverts and really don’t want to deal with you and would rather give up the equity in terms of not having to deal with real people, you should be okay. They’ll siphon off a section just based on what they have. The only real threat that I see is them trying to continue to figure it out. But even then, for me, it always goes back to the same thing. People don’t like relationships with companies, right? They like relationships with people, which is why even the big companies that have created this person, this charismatic character that someone can follow. People will buy Tesla just because they like Elon Musk, right? They might not even really like the car. Or they really just like the car because Elon made it.
Seriously, I mean, for me, when I think about buying Tesla, it’s not the highest, you know what I mean? Like buying a Tesla, it’s not the highest motivator, but it is a motivator. Like, “Man, I love Elon Musk. I want to support what he does.” He’s somebody that I can get behind. I stand for what he stands for, for the most part. And I think that that will never go away. I think that that will become increasingly more important as more noise comes into the market. And that’s what I mean by a salaried agent. If you’re a salaried agent out there, I’m not knocking that. I’m just saying, if you’re not working on your personal brand and your market to be that charismatic character that people think about when they think about real estate, well then guess what? It’s going to be harder for you to compete than for the agent that is.
And we keep saying it, it’s easier now today than ever before to do this. In the history of our entire civilization, as far as my limited understanding of it is concerned. And I just think that, at the end of the day, the fundamentals of real estate are going to apply to Zillow just as they do to us. And I think that with them having to join NAR, join whatever local board, state board, get an IDEX feed, it’s going to kind of even the playing field as far as the rules are concerned, and they’re going to test their mettle. We’re going to see what they’re really made of.
Now, there’s a lot of smart people there, but let me just say this. There’s been a lot of smart people in real estate. There are still a lot of smart people in real estate today. Some of the just grittiest people that I respect tremendously as far as entrepreneurs are concerned, running this business. Just don’t count them out because Zillow has some Wall Street money. I don’t think Gary Keller, for example, is shaking in his boots about Zillow coming in. He’s probably like, “Wow, good luck.” You’re about to learn some 30 years worth of lessons.
You’re about five years later than I anticipated, but you’re here. And it’s funny because this has been a reoccurring theme for us for like the last three or four weeks. Open door, $4.8 billion. Now they got money, then they got brain, right? VP of growth at Facebook, now running the fund or whatever. Becoming a figure in their arsenal. You got a Zillow getting into it, last week was KWS presence had half of your databases in. But you know, the answer is all the same.
I can’t tell you enough: it’s always going to be the same. It’s going to be the same. I mean, real estate fundamentally hasn’t changed, I would say arguably, in my lifetime. Might be for the 200 years it has been in existence. The form of media has changed. Technology has increased our ability to get more leverage, to do things at a higher scale, but they’re the same things if you think fundamentally. And as far as the process is concerned, buying a home is still scary. I mean, you’re talking about something that arguably is more of a commitment these days than a marriage, right?
You got a 30 year mortgage, right? You can’t, you can divorce and be done with that deal, but a 30 year mortgage, if you get out of that and you don’t do it properly, you’re going to have some adverse impact that might be more so than a divorce. I think people are always going to need to kind of hold their hand through that process. And yeah, maybe the way that that is particularly monetized, or that person is individually paid, could have some changes to it. But I think for the most part, it’s always going to need that human element. And I think that’s the thing that they always just kind of miss when they’re looking at disruption, they’re looking at getting rid of the real estate agent. I think that they just, they don’t put enough impact on that part of the entire process and procedure.
And it’s emotional, it’s ups and downs. There are all kinds of curveballs that can happen throughout the process, and when you don’t have someone as your guide through that process, it’s stressful for most people. But the answer always comes back to the same thing, and it’s like your relationship.
So what can I do about it?
The best way I’ve ever heard of it is, think of your community as an audience and try and build a fence around your herd, right? Not calling people cattle, but act like you’re a damn cattle farmer. And every single cow out there is worth some money to you. But you’d build a fence around it, right? You wouldn’t let them just roam free.
When we talk to agents and we’re like, “Hey, what’s your experience with online marketing in the real estate industry?” And they reply like, “Oh, well, I’ve had Zillow or I’ve had Realtor.” Let me just say that’s zero experience in online marketing. That’s basically a portal delivering to you somebody who is asking a question about a product, or a home, rather. So it’s the equivalent of getting sign call, right? So what do they really do as a company? Well, they get as many people as they can to go and click and shop on their platform. And they have no real monetization strategy outside of when that person is further down the process, they have their shopping experience dialed in in a way that they would request more information on that particular house. Which means they’re at the end of their buying journey, because people don’t request information on a property early on, generally speaking.
Top of funnel, middle funnel, bottom of funnel, the buyer’s journey, right? So at the very beginning, they’re just starting to get information. They’re starting to think about where they would want to move, what kind of a house that they would want to live in. Maybe what their home would sell for, what school district, things of that nature. As they get further down, the end of their processes when they’re ready to talk to a real estate agent. So if your experience with Zillow or Realtor is your only experience in online marketing, again, let me say it. You have zero experience in online marketing because what Zillow is doing is actually online marketing.
They’re bringing those people in, they’re nurturing those people with content, with blogs, with homes that match what they’re looking for. And they’re keeping those people in this nurturing process until they take their call to action. Which is when they get delivered to you, which is the end process. It’d be like saying, I know how to cook because I can open a can of Chef Boyardee. You don’t understand all the ingredients that went into that, and all the process prior to. It’s like, yeah, you can warm it up on the stove, but that’s not actually cooking. And so I’m saying all this to say, if Zillow is a big pillar of your business, you need to double down on understanding pay-per-click marketing, direct response marketing. I would be working on search engine optimization in my market. And I would also be doubling down on content.
Which we take all of these prescriptions for ourselves at Market Maker to make sure that you’re continuing to maintain and nurture that relationship with your database, your list of human beings who have reached out to you in whatever form or another in your market. And you now have the permission to have these kinds of conversations, whether they’re digital, or on the phone, or face to face. And that is always going to win in the real estate world. Again, as I said, if you’re a mega agent and you’re going up against somebody who’s a salaried agent, you’re not going to be scared of some no-name agent. Especially if they can’t promise to have their company buy the home for 11% less than market value.
Think of it like a big franchise that does a bunch of business. Think of like a Remax, right? If Remax wasn’t in your area and Remax came into your area and the first agent was a brand new rookie agent that has never really sold more than two houses ever before in their career, would you be scared? No. It doesn’t matter what brand they had with them because it’s always that personal side because it’s a personal relationship. I feel like sometimes we get out of that, and I feel like the people that probably get that the most are the ones that are referral based people, and have all of their business comes from their sphere of influence because they have to operate that way with their sphere.
But imagine that approach to an entire community or a database that’s 30,000 people. The results would be ridiculous if you can figure out how to do that. But we’re lucky because it’s 2020, and the quarantine helped this whole process, too. My relationship with my parents and my son’s relationship with my parents and other family was all virtual for the longest time. That was the only way you could communicate, but people get trained to that.
And the thing is, the more time they spend with you, the more they’re going to like you, and the more likely they’re going to do business with you or refer business to you. And so it’s just a way to spend time, as you said, and continue to nurture that relationship. I think that you have to be careful at reading between the lines here, because there’s a difference between noise, and there’s a difference between contextual information. You want to have a purpose in your content strategy, and you want to have a strategy in general. You don’t want to just be out there doing a bunch of nothing. But it’s funny because even the agents that do just like an open house, or a Live, for their new listing.
I was reading a stat the other day about how much higher the consumption was of Facebook Lives than it was the year prior. I mean, it’s phenomenal, it really is. And so, this is just the future and you just need to get ahead of it. And I think that the main thing is to focus. Focus on what you want, keep your mind off of what you don’t want as far as your business is concerned.
If it were me, Zillow coming in, I would pay attention. I would look at my strategy. I would make sure that I’m diversifying. And then I would go back to work.
Essentially, that’s the prescription here: go back to work. Make sure your strategy is such that again, you’re diversified, and understand direct response marketing, pay-per-click marketing. And I would also, again, work on some SEO as it was tied to content. Some SEO that Zillow isn’t going to do. Like they’re not going to go and maybe check out a new restaurant in town, and maybe interview the owner, and have that as content that is higher ranking, as far as video is concerned. Also, doing school reports, right? There’s pretty much nobody doing that. And it’s important to consumers where their kids go to school when they’re looking to buy a home.
And that’s just understanding marketing. And I think if I had to sum it all up all into one: Zillow, what they’ve done to attract their audience and get 26 or 30 million unique visitors a month to their website is because they understand marketing. And they do a good job of keeping them in their ecosystem. But even then still, their conversion rate, the last time I talked to them was 4%. It should be so much higher because it’s at the very end of the funnel.
We know that when somebody requests information about a specific home they’re at the end of their buying process. Why wouldn’t it be 50% of those people bought that home, or bought a home from the agent they delivered them to?
That’s why it’s important to de-commoditize yourself because the customers are not monogamous. They go to Zillow and guess what? They don’t go to just only search and shop on Zillow forevermore. They’re going to always be looking for that elusive unicorn property that they heard their friend got. The one that’s not on the market yet, or the bank foreclosure or, you know what I mean? They’re always going to, it’s just human nature.
There are only two things people want in the buying process: They want to see as many homes as they can in the price range and area that they want, and then they want the best deal. So value is the main thing. The best way, when you capture a conversation with someone who is looking to buy or sell, the best thing you can do is to communicate value in a way that your customers cannot, for them to do business with you, value to the consumer.
What Zillow is trying to do in some of the advertising that I’ve seen, is they’re trying to kind of like pull an Apple, pull at your emotional heartstrings. Home is where the heart is type of thing. They’ll show some heartwarming moment and then throw in that Zillow logo. For your next home, Zillow. In fact, their tagline is, “Home has never been more important”.
And the cool thing is they got a lot of marketing brains, they got a lot of money, but a lot of these people haven’t spent the time in the business. They’re going to use sound concepts of things that work in other industries. They’re going to bring those to the table, but it’s not going to be nearly as effective as boots on the ground strategy for a charismatic character who has built themselves up into the mindshare of the consumer as someone who’s an expert and differentiated by whatever unique selling proposition that they’re going to give to de-commoditize themselves, as a benefit of doing business with you, or me, above all other options, including Zillow. Those things are still, fundamentally, going to be the case. And I think it’s going to be just as easy to win doing that properly against Zillow, it’ll probably be easier to win against Zillow than it would be a real bad-ass mega agent in your market, honestly.
Because generating the lead is the easy part. It’s like golf for me: drive for show, putt for dough. You can hit the ball 500 yards, but if you can’t putt on the green, you are not a good golfer. Conversion is the putting of the real estate game.
If you’re salaried, it’s not going to be as do or die as it is if you are just kind of out there trying to eat what you kill. There’s a lot of motivation in that. And so, if you’re salaried and you got metrics you got to hit to maintain your employment, that’s going to be what you’re going to do.
Way different mindset, way different outcome. You’re not going to be diving in, burning the midnight oil, studying your craft, flying out to every single coaching company, getting inspired, flying out to every single convention, rather. Getting inspired when you’re like, “Oh, I could take this back. And if I implement this, then I’m going to have this outcome. Then my agents are going to have this experience. And my customers are going to have this experience.” That all goes away. You don’t really unleash the power of the entrepreneur like that. And so, again, for me, I’m like, this is probably the best thing that could happen in the world of Zillow for us as real estate agents, based on their current model.
But the one thing that’s consistent in the real estate business is change. In all businesses, for that matter. But I think that, again, the main key takeaways here are diversifying your marketing and stay focused, stay focused. Don’t get distracted from these things because they are distractions, and it’s not going to make a difference today. So be focused on what you can do to make a difference today and in your business tomorrow.
And get your studying shoes on, your studying glasses, your studying hat, and learn marketing. It is by far the best thing you could ever do as a real estate agent, to understand.
As an entrepreneur, it’s the second best thing to printing money, honestly. I mean, if printing money weren’t illegal, that would be the first best thing. And so that’s why it’s the second best. Because when you can put an offer out into the market, and then have people respond to that offer by filling out a form or what have you, and then take those people that filled out that form and turn them into cash, right? That’s a life skill that, no matter what business you go in, you should be able to apply those same principles to, and get yourself some good income.
When you think of real estate, you think of Zillow. Instead of shopping for real estate, you go Zillow real estate. They want to become the burb of real estate, like Google search.
It’s just never going to be exclusive. It’s never going to be exclusive unless we, as agents, let them make it exclusive and don’t do these things ourselves. Like I said, don’t learn direct response, don’t learn pay-per-click, don’t learn SEO. Don’t learn how to put a piece of bait out there and get something to gobble it up so we can reel it in. And that’s essentially marketing, as far as a direct response is concerned.
I just want to dive into that real quickly, the difference between image and brand marketing versus direct response. Image and brand marketing are your logo, social media, websites, right? But direct response marketing is putting a hook out there. Putting something out there that gets people to respond to it instantly.
An example of direct response versus image-based advertising. I took this picture of this billboard and if you look at this gal, she spent some money on this thing. You know, aesthetically pleasing, not horrible. But how many leads is she going to get from that versus if she were to put out an ad that says get a free list of all the homes in this market. The top 10 best buys per square footage go to this market, homeless.com. People go there, and then when they get there, they got a form to fill out. That’s going to get her some people to leave a bread crumb of information for her to follow up with that are saying, “Hey, I’m over here and I’m considering buying in this particular neighborhood.” That’s the difference between image-based advertising and direct response.
That’s the difference between an image-based ad and direct response. And so, for the most part, Zillow is running like a hybrid of the two, which is very interesting. They’re trying to drive the traffic with image, and then they’re trying to get the people to fill out the form with direct response. But again, more of a passive strategy when they’re at the bottom of the funnel, when they’re more towards the end of their buying process so differently. And you need to understand these things as a real estate agent if you want to make the big bucks, period.
And yeah, if you’d like some help with these things, that’s what we do at Market Maker. Go to marketmakercall.com and check out how we help you make sure that you have a good combination of direct response and image-based app advertising, where we generate the lead for you, nurture the lead in a way that elevates your status and authority in the mind of the lead. Very important, that’s called positioning. And then ultimately delivers them directly to your calendar as an appointment. Again, it’s one agent per zip code. Go to marketmakercall.com. Didn’t know I was going to go into the pitch spiel, shameless plug there, but it was opportune timing, so why not?
That works, right into it. Okay. So, as we always say at Market Maker, you are always just one pre-positioned appointment away…