Zillow: to Fear or Embrace?
A once obscurely used word, disruption has become commonplace and almost cliche in the business world. Every new startup’s primary goal is to disrupt an industry or service. Every company coming out of Silicon Valley or a startup venture capital fund is in a race to become the next Uber or Airbnb. However, few ever really succeed in changing an industry or the way business is done through technology. Moreover, the chances of success become even longer in a business that’s as personalized as real estate. And yet, in the U.S., Zillow has been able to beat the odds and do exactly that.
The recent announcement of Zillow to move into the Canadian market is controversial. It’s left many Canadians and the industry fearful of a big U.S. behemoth takeover. Not to mention, the possibility of fundamentally changing the way we do business in Canada. And according to some, for the worse and at our peril. To paraphrase JFK, the only thing we have to fear is fear itself. And, what most people are of afraid is change – especially in an industry that has become as antiquated as ours.
Instead of fearing, we embrace. Fox Marin welcomes Zillow’s announcement to enter the Canadian market. We see it as a fantastic platform for consumers to use. It allows for more ways to search and research properties. Beyond this, Zillow is an excellent marketing tool to better serve our clients. It allows us to expand our reach within their listings. So yes, Zillow is a win for Canadian consumers and for our clients. As a result, we are pleased to announce that Fox Marin is one of the first boutique brokerages to become early adopters in Canada. Yes, Fox Marin is a partner of Zillow.
Who is Zillow?
In 2006, former Microsoft Executives and Expedia Founders, Rich Barton and Lloyd Frink, brought Zillow to market. In wanting to transform the way consumers make home-related decisions and connect with real estate professionals, the company launched with the intention that Zillows exists as:
“A home and real estate marketplace dedicated to helping homeowners, buyers, sellers, renters, real estate agents, mortgage professionals, landlords, and property managers find and share vital information about homes, real estate, and mortgages.”
Zillow is a publicly traded company on the Nasdaq with revenues in 2017 at $1.1 Billion USD. Its stock is currently trading on the Nasdaq at $42.00 per share. Zillow Quick Facts (as of August 2018) include, that the platform has:
- 188 million monthly users;
- 37% of visitors with an income over $100,000.00;
- 100 million homes in their database; and
- 6.3 billion visits in 2017.
Can you see why we’re excited?
How does the Zillow Financial Model Work? And, why has it Become so Successful in the U.S.?
In the U.S., Zillow’s widespread appeal began as a solution to a fragmented nationwide MLS system. At the time, all the MLS systems were privately owned, fragmented with separate rules and with little communication to one another. The idea behind Zillow is to streamline every property listing into one easy-to-access platform. It does so by pulling from over 625 MLS feeds across the U.S., and works with realtors. Notably, that’s how Zillow makes revenue – they charge the real estate agents. At the same time, for home buyers, the use of the platform is free and offers an unparalleled user experience.
In fact, think Tinder for real estate. In aggregating the data in one simple easy-to-use system, it’s the go-to housing search platform for consumers south of the border. Overtime, Zillow has come to add other additional services, such as Zestimate, claiming that its algorithm can assess the value of a property with extreme accuracy. The It is free to upload listings as well, the main way Zillow makes revenue is by charging real-estate agents a fee to advertise on listings as the agent to contact.
When is Zillow Coming to Canada?
Zillow has stated that they expect to be up and running here in Canada in the next year or so. Currently, their focus is to build market awareness, partnerships, and infrastructure. Furthermore, there are still some legal and legislative kinks that are being ironed out as a result of a recent decision by the Supreme Court of Canada. That being, the high court’s refusal to give leave to the Toronto Real Estate Board in its appeal against the competition Bureau’s order to allow for the publication of sold price on Vows (password protected virtual office websites). How this will impact the publication to non-password protected websites like Zillow still remains to be seen.
What Impact will this have on the Canadian and Toronto Real Estate Market?
Canada is in a different position than the U.S. because our system is not as fragmented. As realtors, we all belong to not just our local board but to the Canadian Real Estate Association (CREA). And, CREA runs realtor.ca which already aggregates all the listing data across Canada on one platform. In other words, we are in a different position then the U.S. was prior to Zillow. We already have a unified system working off of one platform. However, where realtor.ca falls short is that the user experience is quite cumbersome and antiquated. Certainly, it will be hard for realtor.ca to compete with a well-funded tech giant like Zillow. More so, once it is up and running in Canada, consumers will flock to the ease and sex appeal of Zillow. It’s true! You’ll want your property posted on their impressive international platform.
Why is Zillow Controversial in Canada?
Zillow coming to Canada is controversial because over here, we tend to have cause for concern about the idea that a big American company is going to overhaul. However, Canadian real estate is uniquely Canadian. After all, what could be more Canadian than our land and our homes? As Canadians, it’s in our DNA and our collective subconscious to have concerns around American value and the economic prowess that could threaten our very identity. This is not paranoia, as much as it is simply a biproduct when you are a relatively small country – in terms of population and economy, that is. When your neighbour is 10 times your size, it’s only natural. What we have to realize here is that at the end of the day, Zillow is just a website that offers a far wider audience a better user experience. If realtor.ca and CREA want to continue its dominance across Canada it will have to do what any business does in the face of a new competitor. Step up or become extinct. Either way, the consumer will benefit.
What’s Next?
Whether we like to admit it or not, the Canadian real estate industry is due for a shakeup. Many agents whose business is primarily transactional and who rely on online leads as the life source to their business may see this as a threat. More than likely, Zillow will disrupt their business model. This could mean they will be forced to either play ball with Zillow or leave the business altogether.
At Fox Marin, we embrace change. Anything that benefits the consumer and gives them greater access to information and choice is something we get excited about. We pride ourselves with working by referral and focus our attention where it belongs. That being, squarely on giving the best possible service to our clients and by serving their best interests. Our business grows and will continue to do so organically based on word-of-mouth. Rather than something to fear, we see Zillow as another tool in our marketing arsenal.
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This article is written by Ralph Fox, Broker of Record and Managing Partner here at Fox Marin Associates. Ralph is a Torontonian native who recognized from an early age that the most successful people in life apply long-term thinking to their investments, relationships, and life goals. It’s this philosophy, along with his lifelong entrepreneurial drive and exceptional business instincts that help to establish Ralph as a top agent in the real estate market in downtown Toronto.
