Zillow appears to understand the market-dominating power of positioning better than many in the real estate industry. They have spent the last 10 years – and $128 million – working hard to own the position of “find a home” in the minds of buyers and sellers.
They have been quite successful. By my math, the data presented in a 2014 Inman News article gives the combined networks of Zillow and Trulia an 89% share of the total market for online real estate searches. Zillow is clearly focused on consolidating their leadership position with a substantial marketing campaign focused on positioning themselves as the best place to “Find your way home.”
Interestingly, Zillow wasn’t the first real estate industry player to market themselves as the best place to find a home online. In fact, Zillow.com didn’t arrive until November, 2004, almost eight years after realtor.com first offered to help consumers “Find a Home” online in December, 1996.
Is “Find an Agent” the Next Big Thing?
Assuming the battle for “find a home” mindshare is largely over (and I understand that not everyone in the industry believes that to be the case), what’s next for the real estate industry? I submit that the next positioning battle for the minds of home buyers, sellers and real estate agents is “find an agent.” Ask 100 millennials where they would go to find a home to buy and most will probably name Zillow. Ask those same 100 millennials where they would go to find a real estate agent and most of them will likely give you a blank look. In other words, “find an agent” is a mindshare position that is currently up for grabs.
How Much is “Find an Agent” Worth?
Not only is “find an agent” up for grabs, it could be a significantly more valuable position to own than “find a home.” Consider these numbers: 2014 generated roughly $55 billion in real estate commissions. Given that agents will typically pay a 15-30% share of their gross commission for referrals , the total market size for “find an agent” could be as much as $8–16 billion.
To put that $8-16 billion into perspective, Zillow generated revenue of $326 million in 2014 monetizing “find a home.” Zillow, or any other player in the real estate industry for that matter, could match that $326 million in “find a home” revenue by capturing just 4% of the “find an agent” market assuming a very competitive 15% referral fee.
Will the Rise of the “On-Demand Economy” Drive “Find an Agent”?
There is a generalization of this reallocation of marketing dollars that will accelerate the emergence of “find an agent.” That generalization is the rise of the “on-demand economy” where local service providers spend less time and money generating awareness and demand, and more time competing for customers who are actively shopping for their services. The on-demand economy is here to stay and online leaders from Amazon to Google are racing to own a piece of the pie.
While the on-demand economy started in the home services industry, I don’t think it will be long before consumers expect real estate agents to compete for their business too. This will further fuel demand for “find an agent” services.
How Might “Find an Agent” Work for Buyers and Sellers?
“Find an agent” assumes that agents are actively or passively competing for buyers and sellers. Obviously, the basis for competition will be more sophisticated for real estate agents – who manage complex transactions with significant financial consequences for their clients – compared to say plumbers fixing dripping faucets.
I imagine consumers will want to compare agents across a combination of factors including:
Could Agent Reviews and Videos Level the Playing Field?
While experience, service and cost are important objective factors, I believe that subjective factors like agent reviews and agent personality have the greatest potential to level the playing field in this mix. Amazon and Yelp have conditioned us all to use customer reviews to drive our consideration and selection process for many of the products and services we consume today. It doesn’t take much imagination to predict that reviews will play a major role in agent consideration and selection going forward, particularly for millennials.
The good news for agents on the personality front is that different buyers and sellers will click with the personality and communication styles of different agents. Agent videos that allow buyers and sellers to see and hear agents before committing to an in-person meeting will be a key component of successful “find an agent” services.