Digging Deeper into Zillow's Acquisition of Trulia
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You’ve probably heard the recent news that internet home search giant Zillow has purchased its biggest competitor, Trulia, for $3.5 billion in an all stock deal that’s designed to make the combined entity the largest of its kind in online real estate advertising.
These companies help sellers and renters find information on homes, but that is not their source of revenue. Nearly all their revenue comes from advertisements. They charge agents and professionals to place listings on the site and have key placements along the side of the page. Not every agent does it, but a lot of them do and Zillow and Trulia get a lot of revenue from those advertisements.
This is a strategic move by Zillow. As more and more people start house hunting on the web, Zillow will be by far the largest site to go to for information. A lot of people are afraid that the online industry will eventually eliminate the need for an agent’s services. Zillow already has most of the same listings that they do and more and more people are wanting to conduct all of their business online.
We feel that the relationship between Zillow and real estate agent’s is mutually beneficial. On one hand, these sites provide the same listings that agents have from the local MLS, but on the other hand, agents are profiting off these sites because they attract buyers and sellers for them. Zillow wants our listings, we want their buyers.
So will Zillow replace traditional real estate brokers? probably not. The truth is that most buyers and sellers want a professional to guide them through the process of buying and selling. The internet will forever increase the flow of info to buyers and sellers but simply can’t replace the relationship part of the process. Technology will evolve the way real estate is done, but we can’t imagine a day where a home buyer or seller will want to opt for a completely online home buying or selling experience. There is just too much complexity involved with not being able to pick up the phone and get a hold of each other and call the agent that you are working with.
If you have any questions about this buyout, or about real estate in general, give us a call or send us an email. We’d be happy to answer any questions you may have.