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Closely-held online real estate site Zillow.com just launched a volley of products, and as before is trying to claim that these products pose no threat to real estate agents. But the reality is different, and will impact stocks sooner or later.

Zillow's new products are as follows. First, it now allows real estate agents and homeowners to plant virtual "For Sale" signs on the satellite maps on its site. According to Zillow's blog, "an easy posting tool allows photos to be uploaded, space for home descriptions to be written -- including "What I love about my home" -- and room for ever-important neighborhood commentary." Second, Zillow now allows homeowners to place a "Make Me An Offer" sign by their (virtual) home. Even if you've not actively trying to sell your home, there must be some price that makes sense, right? Third, Zillow has launched a real estate wiki, where readers can contribute and edit articles about buying and selling real estate.

Now, Zillow bends over backwards not to antagonize real estate agents, because they can contribute to Zillow's success if they see it as a partner rather than a threat. And 250,000 of Zillow's 3.5 million monthly visitors are realtors. So the spin on these announcements is that they're good for realtors. Hey, the company says that "agents and owners can post homes for sale on Zillow", "agents who post homes for sale can publish their own contact information, upload a photo of themselves, and add links to listings on their own Web sites", and "owners and real estate professionals can “write to the site.”"

Otherwise smart commentators have swallowed the company's PR hook, line and sinker. TechCrunch wrote that "It’s a sign that they have enough traffic to sell ads and do not need user money to survive." And GigaOm uncritically reproduces the line that "Zillow doesn’t have to get in the middle of any transactions. Rather, it is getting into the content business, offering trivia, listings, as well as a new real estate wiki project (also launching today) combining expert and visitor knowledge about all things real estate."

But the realtors themselves aren't that stupid. They know a threat when they see one. And this is the real deal. First Zillow gets homeowners to upload information about their homes, flirt with selling their house ("make me an offer!"), and read and write articles that dispell the fear of handling a large transaction without an (extremely expensive) agent. Then it gets them to publicise their homes and attract buyers on Zillow's site (setting the price with data readily available on the site) for free. And then later on, when its site has become the marketplace for homes, Zillow bills them a transaction fee.

More than that, Zillow will become the repository of pricing and home related data contributed directly to its site and unavailable elsewhere. The realtor tells you this is a great neighbourhood and the house is worth $750k? But the comments on Zillow say it's a lousy neighbourhood, and the house next door just sold for $600k...

An advertising model, TechCrunch and GigaOm? Gimme a break. This is all about transaction fees, because that's where the money is.

I'd be nervous owning any stock with exposure to traditional realtors, including H, IACI, MOVE, SOLD, and ZIPR.

If I missed any, leave a comment below.

Source: Zillow to Realtors: Really, We're Not Going to Eat Your Lunch