I can vividly recall the day when the brokerage industry learned that Zillow had obtained a real estate brokers license in all States. Rumors tore through the industry that Zillow as indeed going to “get into the business” and that its advertising and media businesses were not the true and core reason that they entered the industry. Since that time, Zillow has experienced significant growth in its media business, but as is true with all such things in business, that segment of its business has recently slowed to an estimated rate of only 2% growth.
So change must happen.
As you would expect, Zillow looked to new places to build its business, and ironically it was not where the nay sayers have thought it would “grow.” Instead of joining in on the traditional listing and sales process of the real estate brokerage industry, the company has embarked on what I think will be the biggest growth segment in the brokerage industry namely Zillow becoming a significant homeowner.
That's right. Zillow as a homeowner and as such, becoming a home seller. Well, how the times they have changed.
Who would have guessed that the next big thing at Zillow would not be brokerage but to own the asset that is centric to the industry. Zillow moves to take control of the industry assets that form the very foundation of the brokerage industry. The assets, the properties, that if managed and “offered” properly, could change the entire face of real estate brokerage services offered by the industry to the consumer.
And what’s more. Zillow, and all of the other iBuyers, are fast becoming what could be the industry’s largest and most powerful FSBO.
How crazy is that? Think about it. It’s not so crazy.
Instead of doing what everyone in brokerage feared, namely getting into the brokerage business, Zillow has become a potential user - a mega consumer - of brokerage services. Or not. And the “or not “ is the big deal here.
No one in the industry could have guessed this move. No one ever would have thought to demand that Zillow as a homeowner must use the services of its media customers. No one. And do you know why?
It’s because as an industry we think too much like conventional, traditional participants. We see things in a way too narrow scope and was we bask in our fragmented bliss, we are unable to join forces and do those things that need to be done to advance the business. To better serve the consumer and to confidently "grow into the future.’ I am a big fan of The Motley Fool. And it is at this point that I highly recommend you listen to what they have to say about Zillow Offers and its future challenges and opportunities.
You see, it is clear to me that Zillow has no desire to be in the brokerage business. Zillow does though have a desire to be a seller with a much improved offer for the buyer. To improve and streamline the consumer experience. That is the sole reason I believe that Zillow became and iBuyer. It was to become an iSeller. Control the inventory, control the industry.
If you think about it, listings are the key to all success in our industry. I have often stated that if you were the listing broker / agent of all 5.2 million properties that sold and closed last year, you would be a very happy person. To date, sellers of homes that have become listings have empowered our industry to be a relevant services provider. But what if all that were to change? And the seller was not a normal consumer but a company like Zillow? Would we be needed? Sought after? Any longer relevant?
“For Sale By Zillow” (FSBZ) is a new category that I see evolving in this business. Or for that fact, you could simply insert the name of any other iBuyer in that acronym.
My question for you as you look at the iBuyers is who is calling the shots here not as the buyer - where everyone is focused now - but as the potential seller. To be clear, Zillow is NOT an iBuyer just o be a “home flipper.” Buying the home is the necessary gateway to becoming the seller. And when you are the seller you are then able to call all of the other “shots” that are related to the home selling process.
If you enjoy this strategic positioning you are free to …
Open an escrow / closing on your property when it is listed, you can put a new mortgage on the property and have it assumed by the new buyer as seller financing, you can insure the property, you can place a title policy on the property, you can improve the property in advance of selling it, you can be ultimately more flexible about accommodating a buyer’s move-in date, you can put a home warranty on the property, you can be the homeservices provider forever and you can make an offer to buy it or even trade it it when the homeowner is ready to move.
Would that fundamentally change the industry in the way the host on the Motley Fool podcast eluded to in the attached show? I think so. The industry that has not changed in decades, changes.
And further, I think that is exactly where the iBuyers, including Zillow are headed now. The core objective is to become the seller by temporarily being the buyer. Once that happens, the whole game changes, and not just the rules,
Over the years in assisting companies and their chief executives to “see around the corners” I have learned a great deal. The most important thing is to be careful not to bask in the “denigration of the obvious.” That means to look beyond what is obvious, see what is not so obvious and to then act in an effort to move to where others are going, not to simply improve what you are doing now. That will ultimately not serve you well.
So today I end this article with this thought. And it is one that I have shared wit you previously. No matter what is “around the corner” today you have the advantage because today you have presence with the consumer and that is because today, you are the trusted source of what you do for the consumer. Your presence with the consumer is your means to make bold changes and to thrive as a result.
Your job as the leader of your business is to be certain that this advantage is never, ever taken from you.
Have a good day!