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Zillow seeks to bypass traditional agent role

By John Adams
Updated  April 7, 2020 10:44am EDT
Real Estate
FOX 5 Atlanta

ATLANTA - The past 20 years have so fundamentally changed the way Americans think about buying and selling homes that it’s easy to forget that the way we actually buy and sell homes is the same as it ever was.

For sellers: hire an agent, do a little renovation, list, and wait. For buyers: hire an agent, traverse open houses, make an offer, and wait. If you’re selling, expect to pay at least a 5 percent commission on one of the biggest financial transactions of your life.

Nearly 9 in 10 Americans use an agent to buy and sell their homes. Last year, residential commission revenue was somewhere in the range of $75 billion. And the market remains fragmented, with even the biggest brokerages managing just a tiny fraction of the overall market - at least for now. Wall Street and Silicon Valley are infatuated with the idea that they can blow realtors into oblivion with money and technology.  The problem with their theory is that the vast majority of Americans looking to buy or sell real estate are more comfortable with a broker they can look in the eye!

How technology has revolutionized buying and selling homes

Real estate expert John Adams weighs in on how technology has revolutionized buying and selling homes.

There’s a general sense that the internet should do more than entertain window shoppers and generate leads for agents. It should actually make it easier and cheaper to sell a house. There’s just one issue: No one has figured out how to bypass the flesh-and-blood real estate agent.

A good example of this attack on traditional real estate sales is REDFIN. Their approach is not to eliminate agents, but to have fewer agents do more. In exchange, they offer much lower commissions. But most buyers and sellers have not made the move to alternative approaches. 

Zillow has a different approach. They operate the most visited website when buyers and sellers begin their search for a home or for information about recent sales. But eventually, most consumers want to work with someone local.

Traditional realtors remain suspicious.

Realtors in general resent the influx of websites like Zillow, Knock, REDFIN, and Homespace. They see these sites as attempting to replace them altogether. Many agents predict that, if current trends continue, ZILLOW will offer in-house agents, in-house financing, in-house insurance, in-house inspections, in-house closings, and in-house instant offers, all done to monopolize the real estate transaction from start to finish. Literally a one-stop-shop. But it has not yet worked.

Zillow isn’t the first mega-tech giant to try stealing the real estate industry. Microsoft tried it and gave up. Even search engine giant Google tried to bypass agents and scoop up a significant share of the home selling industry through its online presence. After a few years of less than robust success, Google gave up as well.

  • So why hasn’t the internet cut out the agent, even as houses sell to internet companies with the click of a button? In part because:
  • Consumers aren’t really interested in adding online hand-holding into the largest (and most complex) transaction of their lives.
  • Local knowledge remains vitally important. That and local contacts developed over years of service is hard to combat.
  • It’s hard to develop a long term relationship with a website. In the real world of real estate, a satisfied customer generates referrals and repeat business. 

THE BOTTOM LINE:  Silicon Valley sees itself as the ultimate solution to any and all consumer problems.  But most home buyers and sellers want someone who knows the local market and can bring local expertise to the table.  So far, the traditional real estate transaction continues to support the realtor community.