How Zillow and Trulia can disrupt their IDX competition

File this under crazy ideas that Todd came up with that are full of risk and not likely to happen. It’s just a brainstorm. Hear me out.

disruptionIt’s no secret that one of the few advantages that companies with IDX powered real estate search sites have over Zillow and Trulia is superior MLS sourced listing coverage. In virtually every market, brokers have to opt in to syndication before Zillow and Trulia can display their listings. In most markets, broker listings are automatically included in IDX, with an option of opting out. As a result, IDX feeds are more complete than syndication feeds. There’s a third feed. It’s a VOW feed. This is a complete set of MLS listings that every broker is entitled to. The only stipulation is that it needs to reside behind a registration wall. Zillow and Trulia spend a lot of time trying to convince more brokers to opt into syndication, but the other option is to convince brokers to opt out of IDX.

Stay with me here. I contend that a broker with a dominant share of listings in a market isn’t necessarily served by IDX. Brokers pay the MLS to submit listings. The MLS turns around and charges other brokers a fee for those listings. Those other brokers get to use those listings to generate their own leads. Sure, the IDX feed gives attribution to the listing broker, but it’s so buried that almost no one will see it. Compare the attribution Zillow and Trulia give to the listing broker to what IDX rules require; the difference is almost laughable.

So, instead of trying to acquire the long tail of brokers who haven’t opted in, Zillow and/or Trulia could go to a select number of brokers in a market, and entice them to partner with the portal in exchange for opting out of IDX.

Why would a broker do this? Z & T bring a lot to the table. They could offer white label versions of their site and apps to these brokers. They could offer them premier placement for free or for a drastically discounted price. They could even offer to build a VOW client for the brokers that moves traffic from the broker’s listings on the portals  to an exclusive broker VOW site (and app) with all of the MLS’s listings, powered by Zillow or Trulia.

See more about VOW here.

Z&T wouldn’t have any more listings than they already did, but every IDX competitor would now have 10, 20, or maybe even 30% less listings on their own sites. The concept of IDX as a gold standard would be greatly disrupted. The brokers who pull out of IDX could still build VOW sites, and would have a funnel of traffic from the portals. Zillow and/or Trulia could then argue that they have the most complete set of listings through VOW access to their premier broker partners. Suddenly IDX doesn’t look so attractive.

Is your blood boiling? Is this idea crazy? Could it work? Tell me why it won’t.

Photo: Creative Commons license via Flickr user inorman

 

 

14 thoughts on “How Zillow and Trulia can disrupt their IDX competition

  1. Robert Drummer

    The activity and data inside a VOW would be covered by the NAR Code of Ethics, correct? What effect, if any, might that have on T&Z’s tools, e.g., Zestimates inside a VOW?

    Reply
    1. Todd Carpenter Post author

      Robert, once consumers enteres the VOW layer, any un-compliant aspect could be removed. However, brokers are already experimenting with AVM’s. See Redfin.

      Reply
  2. Sam DeBord

    If a brokerage wants to be a pariah in the industry and officially label themselves “non-cooperating”, then yes, they could try this. They would have to be a huge listing company.

    Love the creativity. Hate the potential level of disdain it would create between our cooperating brokers.

    Reply
    1. Todd Carpenter Post author

      Like I said. File under crazy ideas. But I hope it starts making brokers think about the fact that it’s their data, and they should look at out of the box ways to leverage it.

      Reply
  3. Aaron Davis

    I have a file similar to your “crazy ideas” file called the “but should you?” file. Brokers and Agents ask all the time, “Could we do X, Y or Z?” to which I respond, “From a technical standpoint, sure, it’s just data + code + some man hours, but from a business standpoint, should you?” I love those discussions.

    Reply
  4. Aaron Dickinson

    Just don’t see it happening. My broker has 1/5th of the sales in our entire market and a website with 1m+ visits per month and even I can’t envision them eliminating IDX because doing so would make enemies of every other broker in town that we do need to cooperate with.

    After saying that though, I agree that the differences between IDX and syndication are quite minimal and our broker did stop syndicating. 🙂

    Reply
  5. Jason Allen-Rouman

    Hey Todd, Interesting idea indeed. In your mind, what’s the longer term financial incentive for Z & T to create/participate in a scheme like this? Would they also be alienating every broker in an area who didn’t partner with them? I’ve been around long enough to see sands shift and a 900 pound gorilla shed some weight with new management, poor decisions, or a changing economy. Do you think then new comer would be happy to step into that relationship with Z and/or T when given the chance?

    Reply
    1. Todd Carpenter Post author

      All good questions, Jason. Nearly all the risk in a deal like this is based around damaged relationships, and it’s why I disclosed at the beginning that it probably wouldn’t happen. However, a degraded IDX means less competition and that is absolutely in Z & T’s financial interest and could be in the right broker’s interest as well. This could also work from a franchise level. Or imagine one of the portals doing a deal like this with Realogy.

      Reply
  6. Jeff Burke

    There is so much here. VOW is the single best opportunity for brokerages and agents that remains in the industry. Whats old is new again. It is a competitive advantage that gives brokers the opportunity to provide a value propostion to consumers that the syndicators can not match if done properly. I would guess Trulia sees the value in the ML acquisition and what having access as a licensed broker in every state means. If I was a big brand like Realogy…Id pull the plug on all syndication and provide my own VOW for all my brands.

    Reply
  7. Jeff Burke

    and with that bring my agents back to my own platform like Redfin and start creating value again frim the point of perspective as the broker. Regain contol pver the consumer search experience then add the collaboration element.

    Reply
  8. Ron Goodman

    It’s really a matter of consumer rights and exposure of a seller’s listings in as many places as possible. As soon as sellers learn that a real estate brokerage is not aggressively advertising their listings in IDX and/or syndication sites, they will stop giving their listings to that brokerage because the brokerage is NOT acting in the seller’s best interests. And as soon as state real estate commissions and the FTC get involved, brokers will start losing their licenses for not acting in their client’s best interests, as required by most listing contracts. If I were a seller, and learned that my listing brokerage was not advertising and promoting my listing to the absolute best of their ability, I would terminate the listing for breach of contract.

    Reply

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