Listing Aggregators like Zillow, Trulia and Realtor.com can Erode the Value of your Business.

As we reflect on the end of the 2011, the big news in real estate was Brookfield’s acquisition of the Prudential real estate franchise  and relocation division stands out to me.    

Brookfield paid $110-$135 million according to news reports. 

Brookfield now franchises EVERY Prudential brokerage office, including about 50,000 agents that work for those brokers. Many of Prudential’s brokers are in fact leaders in their respective markets.

Zillow however, on the day the acquisition was announced had a market cap on the New York Stock Exchange exceeding $600 million.

To me, this re-affirms that over time, aggregators devalue the business of being a broker-owner all the while growing their own stature in the industry.

Recently Edina Realty a large broker in the no nonsense mid-west, pulled their listings from Trulia and its reported they are considering pulling from Realtor.com (I understand they never posted on Zillow).  Maybe they learned a few things about value from being owned by a Warren Buffet Berkshire Hathaway subsidiary?  I think though Edina realized that they can create value for their brokerage firm by shifting focus and dollars away from aggregators – and focusing on building local tools, local service and local marketing that centers on the Edina brand and its customers’ needs. 

Edina clients benefit from this because in the end most buyers and sellers pick a Realtor based on how strong they are locally.  My mom for example was a great broker-owner and her value started with her brand which became known for service and knowledge about high-end homes.  For those brokerages like Edina and my mom, they realize only they can control their own brand – and thus their value to clients.  

And you became a broker to make money right?  Have you ever wondered what your brokerage office is worth?  Profits, growth and the value of your local brand in the marketplace are what you have to sell.  This is a zero sum game today, the market is not expanding.  Who controls first access to the customer is key. 

Yes, it may seem to make sense to list on the aggregators for free. It’s hard to turn down “free” leads.  But certainly don’t pay Zillow, Trulia or Realtor.com. 

Even with free leads, don’t think you are getting something for nothing.  You are trading a small fraction of the value of your brand, for that lead – but it adds up.   Realogy, ReMax, Keller Williams, how much is your brand worth if you do an IPO – are your margins growing as fast as Zillow or Trulia’s? But value is value, and if the market has a higher value for real estate media companies than bricks and mortar real estate companies, then there has been a shift in value.   In the beginning, Realtor.com paid for each listing on their site, there was a value transfer

 Maybe you should reassess taking your 2012 ad money paid to aggregators, pull your listings, and plow it into your own brand, your own real estate tools and your own websites. 

Zillow and Trulia outdid the industry in terms of web-consumer know-how. Their market value clearly proves that. However, if you want to create value for your own brand, it takes hard work.  You can’t let Zillow do it for you via their brand as that only increases their brand value over yours.

By Brad W. Blumberg, CEO, Smarter Agent.  Trying to fix this mess for brokers via mobile platform solutions that promote their brand.

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