Matthew Ferrara, Philosopher

Has Move been OutZmarted by Zillow?

Last week a lot of noise was generated by Zillow’s acquisition of Postlets.  Is this another shot in the war for real estate listing syndication? There is an old saying that when all you have is a hammer than everything starts looking like a nail.  In his case, I think Zillow’s going to surprise everyone.

First, let me start by saying I don’t understand all of the intensity around listing syndication. To be quite honest I think syndication is stupid. It’s based upon an erroneous understanding of how customers buy homes.  And it’s simply a strategy from the days of the Sears catalogue: the more you spread it around the more people can see it, and possibly buy something from you.  But the horse has left that barn, and we have what we have. Still, syndication has wasted millions of dollars and tens of millions of dollars in this industry when one simple chart from the National Association of REALTORS Profile of Home Buyers and Sellers indicates that more people bought a home they found through their agent than they did on the Internet last year.  And yard signs were the third most common source of the home the buyer actually bought. Not listing data fertilized into every corner of the web.

Maybe syndication has some ancillary benefits, like bragging rights between competitors in the industry over who has more of their overpriced, unstaged, unsellable inventory spread it across the web.  But everyone knows that inventory is a relevant, no matter where you place it online, if your agents aren’t paying attention to leads, haven’t been trained in converting and nurturing them, and your managers never read any of your leads management reports.  That assumes those report even exist.  Image if the real estate industry put as much effort into the basics sales activities as it has in to the technology of listings syndication.  But I digress…

My friend Rob Hahn of 7dsassociates was quick to tweet that he thought the solo acquisition of Postlets was a big mistake.  He blogged that it seemed to be a counterattack to in the ongoing war for listing aggregators and syndication.  He also correctly noted that Postlets is significantly different than other aggregators, notably the RPR, because it features the ability for individuals too bad and edit their own listings.  So as actively Postlets is a very basic form of MLS system.  Rob and others seem to think that Zillow will have to turn this feature off in order to retain and MLS clients who were feeding and data.  Otherwise Zillow would appear to be a direct competitor with the MLS.

And that is my point exactly.

If I were Zillow, I wouldn’t try to compete in a space that has been largely saturated and likely their competitors have more money and political goodwill to eventually emerge the victor.  Instead it’s time to shift the playing field entirety.  And what Zillow is doing might actually be very prophetic.  I think they are building features and acquiring companies, with 500,000 users by the way, that will set up their technology to a viable, inexpensive, and established mechanism for promoting and distributing inventoried and a post-MLS world.

You see, many people in the real estate industry envision a time after the dominance of MLS Systems. We have consistently questioned the costs, restrictions, and clunky technology that frequently do more to inhibit the real estate broker’s ability to use their data and sell more homes.  At the same time, over the past 10 years, many companies have developed their own significantly more substantial data management systems in house.  It would not be that complicated for them, in the future, to share data with any website, social environment, or distribution System without any third party involvement, or costs.  Especially when that third party traditionally the company by committees of busybodies who enjoy spending their day coming up with rules that would restrict they are more capable competitors.

The acquisition of Postlets not only prepares Zillow for the possibility that fewer brokers will maintain their expenses membership in an MLS technology going forward, it also provides them with an entry point into hundreds of brokerages who currently may not have a very good technology platform.  In some ways we can imagine that many of the users of Postlets have to use their technology because their brokerage is either too small or has been unable to create and maintain a listing distribution platform, or even that their local MLS does so very poorly.  Perhaps Zillow will offer a variety of enhancements and features that now include the simple ability to add an added listing data to these brokerages in the future.  And what better way to catch the attention of the broker than through the loyalty of his agents who have been already using your technology.  It is a classic grassroots strategy for making a play for the brokers business because you already have his agents’ allegiance. It’s how “lead aggregators” have been able to sell buyer leads back to the brokers on their very own listings for years.

They are important possibilities as well.  It is possible that Zillow is envisioning a future in which the listing data does not necessarily have to flow through the broker’s technology.  There are a variety of experiments in the industry in which brokers are providing nearly the legal minimum oversight services to agents who are then working with vendors of their own choosing to implement an online marketing strategy.  Some of these agents are simultaneously experimenting with not offering compensation to the buyer’s agent; their goal is to use technology to find the buyer themselves and have greater control over the outcomes.  Likewise they are attempting to affect the cost of brokerage to the seller clients with this approach.  It doesn’t matter whether everybody jumps onto this model.  It’s simply matters that a significant group of potential customers will need a service that not only distributes inventory, but permits them to manage it using a simple interface such as the one Postlets designed. And we know it can be amazingly affordable, since Postlets was either free or $5.

So let’s recap.  It could be that this acquisition really has nothing to do with the way current aggregators are playing the game. It could be that Zillow as an strategic vision of the future that is not mired in the structures and assumptions of the past that still bind RPR and other REALTOR/MLS-influenced companies.  We haven’t even thought of ways in which the Postlets acquisition might even create new opportunities for consumers to become engaged in listing distribution.  It’s also possible that such a system would open the listing network in the United States to foreign brokerage companies who do not operate under MLS style systems, nor do they frequently have distribution technologies in place.  There are so many ways this acquisition can be envisioned to radically alter the playing field while the traditional competitors are still arguing over whether or not someone can include all water mark on their listing photos.  But, I digress….



  • Good post, Matthew — worthy of your intellect 🙂 But of course, turns out we agree on the facts: Zillow just bought itself a proto-MLS. We differ on how the MLS’s will respond, and how Zillow will fare.

    You believe that this is a smart move by Zillow. I’m less sanguine. We’ll see by how things unfold.

    If Zillow shuts down the Add/Edit feature of Postlets, then we’ll know that the post-MLS world is still a ways away. Especially if they do so under the threat of losing every single MLS feed they currently have.

    If, on the other hand, Zillow does not shut that feature off, and MLS’s continue to funnel data to their future competitor/overlord, then we’ll know that the post-MLS world is already here.

    But like I said, would you blame a MLS CEO in light of this post for drawing up plans to shut off the data feed to Zillow?

  • I think MLS CEOs don’t have the power you ascribe to them. How would the conversation go with the brokers and agents? We want to shut off your listing syndication, after spending years convincing you that you need syndication? You can now go back to your sellers and tell them their homes won’t be on Zillow any more. And your agents won’t get any more leads from Zillow, who is quoted by the Wall Street Journal more than any other company or NAR every week….

    You see my point? You can’t put the shaving cream back in the can, because brokers who abandon Zillow will be outflanked by competitors who can load to Zillow with the free Add/edit and tell consumers they are putting their listing on MORE sites.

    The post-MLS era is already here. MLS is a zombie: an undead model That most agents can’t separate from what it really means to compete in a marketplace. The offer to cooperate has been cleverly tied into the technology such that people cannot distinguish from the two. How would they cobroke without MLS! Of course, it’s a great myth-conception for MLSs to perpetuate. But it won’t stop their ultimate irrelevancy.

    And all of my suppositions about Zillows motives are merely that. They might not have thought of any of these things, and may mis-play their hand, so you could get your bad ending after all…

  • Matt, I assure you the MLS CEO’s and their Boards most certainly have that power.

    You’re making it seem like these brokers would be at a disadvantage compared to their competition. But you forget that the MLS is an organic monopoly in just about every market (there are exceptions, like Atlanta, but they are few and far in between). If the MLS decides to pull the listing, there is no competitive disadvantage, because everyone else would be in the same boat.

    Plus, if political heat is their concern, it’s a simple policy change to make it Opt-In on every listing you want syndicated to Zillow, rather than Opt-Out on those you don’t want appearing. That right there would crush the volume of data going to Zillow practically overnight. Losing that “Most Favored Nation” status is — believe it or not — pretty devastating if you want to be a publisher.

    Finally, if MLS is a zombie, why are so many people and so many companies so damn interested in getting the data from the MLS? See, e.g., RPR/LPS, CoreLogic, and Move. Methinks you underestimate the MLS and overestimate these consumer portals. If Zillow does the same thing, then I’ll be shorting Zillow’s IPO as soon as I can.


  • Joditussing

    Matthew – Couldn’t agree more….. I think : ) it seems like a lot of slight of hand craziness…. I do agree, the majority of sellers, and a lot of buyers, want to work with someone they know, or knows someone they know.

  • Rob::
    I disagree; there are lots of options. Many companies could, overnight, compensate for MLS pulling the plug. For example, just about every major franchise has a Zillow relationship on its own. One phone call and data could be back up there, if they wanted it. I’m sure Zillow would take Realogy’s call. And many market leading companies – independent and franchise – could easily feed Zillow their own data in a heartbeat.

    If a MLS CEO were to pull out, it would mostly harm the “hangers on” companies who depend upon MLS to be their technology platform; usually small, undercapitalized or underinvesting companies. And in some MLS’s some of the most active people at the MLS/board level. There’s no way they’re going to let their CEO pull out. CEO’s take their orders from their boards and shareholders, and that’s the brokers who would take the ‘heat’ from their agents and customers alike if Zillow membership were to suddenly stop.

    MLS is a zombie to its members; many companies want MLS data simply because it’s there, exists, and is up for grabs. That doesn’t prove anything: it just proves that the MLS systems are willing to resell/provide their data to organizations for a fee or other consideration. If the MLS systems were to disappear, because someone finally realized that the costs of MLS fees, and restrictive rules are WORSE than no MLS at all, Zillow, Google and others would be quick to make deals with brokers directly AND provide the technical support to make it easy for them to do so because it’s in their mutual interests. Maybe they’d have to offer better deals or advertising revenue share, but it would cut out so many layers of redundancy, wasted administration time, and kill off some pretty restrictive cartel rules, that brokers would also work hard to make it happen. Zillow has a lot of “PR” value in the minds of consumers (see earlier comment about who gets quoted more in WSJ).

    The really ironic part is going to be when RPR becomes a national MLS. It has to – it would be astonishingly irresponsible to spend $20 million member dollars and NOT take over MLS functions… but that’s another story.


  • Excellent post Matthew, my company was the first company that did syndication of listings when there was only, Microsoft and Yahoo. Back then Microsoft actually paid us for every listing because they wanted to compete with Yahoo and for the portal with the most listings.

    Microsoft threw in the towel, Google gave up trying to aggregate listings. was the National portal for all listings, but seemed to leave a bad taste in agents mouths for all the extra costs to display a listing.

    Then there was the proliferation of all these portals who wanted market share but how do they make money? I guess it seems to be, show all the listings that are in all the MLS’s and then charge agents to display their name and contact info on listings in their demographic area.

    Basically selling back the leads to agent for their own listings.

    Point 2 invested alot of time and money in making a sharing mechanism for agents to share all listings without going through their MLS’s. I don’t think that was very well received by MLS’s.
    They get taken over by another company

    ListHub probably had the most MLS’s doing syndication, we couldn’t figure how they were making any money, because they were a hard sell to upgrade if you have their syndication for free.
    They were bought my

    We have seen charges ranging from 0 dollars to thousands for a broker to access their own data from their MLS’s.

    The funny thing is that Postlets was a strategic partner of Trulia and they always used postets as an example for revenue sharing.for affiliates. Zillow money made them change their mind?

    Another page in as the Real Estate world turns

  • Agree – listing syndication is a reality now. With or without the MLS, it doesn’t matter. Brokers/agents will figure out a way to do it. MLS’ are just going to end up driving more business to Postlets if it shuts off that pipeline.

  • Mike Grady

    or it could be that Zillow really doesnt know what they are doing, thattheir current business model isnt making enough profit and they are grasping at straws as a way to appease their VC investors.

  • Matt, as always great post. Some things I would like to share. To begin, we are committed and invested in our local web presence, and for one see Trulia, Zillow and Realtor and nothing more than competitors. I know that there are many who don’t agree with that position, but the fact remains that there are only a limited number of spaces available in organic search.

    Also, when it comes to leads and searching, I continue to challenge agents to prove how many leads come from these syndication sources. The numbers are very, very few. Don’t be fooled by all the “visit” numbers claimed by and others. They are meaningless – they do not translate into leads or inquiries. When was the last time someone got a lead from “Frontdoor” or “Vast” or any of these other crazy places?

    Which brings us back to Postlets. 500,0000 users – but how many are using the free service – and how many could drop this in a heart beat?

    Zillow – $30million in sales, nearly $7million in losses, constantly burning through cash and has an inventory (listings) that could disappear at any moment. Sounds like a good business model to me. Agents are so silly. They are fearful of not having listings syndicated – because they don’t know how to tell their clients that these portals are all about advertising and not delivering leads. The best yet is Zillow’s recent move to get agent feedback and couple that with promoting agents contact information on listings that is not even theirs. This is so lame, but I read one Zillow representative rationalize this by saying they got complaints form consumers who didn’t hear back from agents – so if your profile was not complete you were out. In our own market I see agents being profiled who haven’t sold a home in several years – but how is a consumer to know. It is laughable.

    Sorry for the diatribe. We agents created this situation from our stupidity and fear.