The Zillow Group has become a massive website with over 130,000 million consumers visiting a month. Zillow has become the most popular real estate website in the world, and many people wonder how Zillow will affect the real estate industry. I have spoken with many agents who think Zillow is trying to replace real estate agents. Others feel Zillow will start their own real estate brokerage in an effort to monopolize the industry. Today on the InvestFourMore Real Estate Podcast, I discuss these issues and much more with Jay Thompson, who is the Director of industry outreach at the Zillow Group. Jay has an extensive real estate background and even owned his own real estate brokerage at one point.
How did Jay Thompson get involved with Zillow?
Jay was working in the corporate world with Motorola when He decided he needed a career change. He had been in the corporate world for many years, but had the urge to start his own business. Jay decided to get into the real estate business. Jay became an agent and then broker so he could start his own office. Jay had up to 32 agents at one time and went from an agent selling houses to a broker managing agents. Jay had a great time, but was approached by friends at Zillow who asked him if he wanted a career change. Jay took a trip to Seattle to visit with Zillow and ended up accepted a job offer from them.
Not only does Jay have experience in the corporate world, but he has experience as a real estate agent and broker.
How did Zillow start and what was their mission?
I asked Jay what the meaning was of Zillow, where did that name come from? I was surprised to hear that Zillow came from:
“Zillions of Pillows”
The founders of Expedia and former Microsoft executives Rich Barton and Lloyd Frink wanted to created a database of information on homes across the country. Someone the idea of Zillions of pillows was brought up to represent every house in the United States and it was shortened to Zillow.
Zillow was not started with a particular mission in mind, but to fill a void. It was very hard to find data on houses, if you were not a real estate agent. You could find public information on homes, but many cities and counties did not have an easy system for consumers to get information from. Zillow was created to provide a nationwide database of information on every house.
How has Zillow evolved over the years?
Zillow started out as a web site with information on almost every house in the US. Over the years Zillow evolved to offer more services:
- Home valuations
- Real estate agent lead services
- For sale by owner listings
- Rental property listings
- Information on real estate trends and prices
I have used Zillow in many ways to research new markets to invest in. I do not personally trust the home values Zillow produces, but they have some great information on price trends. I have also used Zillow for leads as a real estate agent and we list our rental properties on Zillow as well.
Is Zillow trying to take over the real estate agent’s job?
I talk to a lot of agents across the country and see many articles about Zillow and real estate agents. Many agents are worried that Zillow wants to become a real estate broker or listing service that will eliminate real estate agents. Jay and I talk about this subject in great detail on the podcast, but his opinion is that Zillow does not want to be a real estate broker. I agree with him and wrote a previous article about this here.
The reasons I do not think Zillow will become a listing service is because real estate is so unique. Every house is different because it sits on a unique piece of land. It is not easy to value houses and that is one of the biggest reasons to use a real estate agent. It would also be a nightmare for one company to be an active broker in every county, city and state. Zillow would have to have individual brokers for each office, access to each MLS system, local offices and at that point where is the advantage over other local offices?
Jay talks openly about how Zillow makes money.
- Through advertising on their massive website
- By charging agents to advertise on the website
While Zillow may be making information more accessible, they are not going to replace real estate agents.
[0:01:32.2] JT: I’m good Mark, thanks for having me.
[0:01:34.4] MF: Yeah, I appreciate you being on. One thing I always start with, with all of my guest, I know you used to own a brokerage, obviously you’ve been in the real estate industry for a long time, how did you first get started in real estate and what attracted you to the business?
[0:01:50.5] JT: That’s a great question. I was in corporate America for decades and I’m a semi-conductor manufacturing industry, which has absolutely nothing to do with real estate. But it’s a very cyclical industry and towards the end I was in human resources in that business and the industry went through a big giant down turn and as I was an HR manager, closing factories and laying people off, I knew that it was only a matter of time until that happened to me. Sure enough it did.
So I got a really nice severance package from my employer because I had been there for 22 years and at that point I was so fed-up with corporate America that I decided, “You know what? I want to do something different, I want to run my own business, be my own boss, be in charge,” and we had friends in real estate, sales, had been in for about a year or two that time. I looked at my wife and I said, “Well, we’ve got enough to live off the severance package for a while, it’s a good little nest egg, let’s give this real estate thing a shot.” So that’s what we did.
I was in Arizona at the time so I got my sales license in 2004 and in Arizona you have to be licensed for three years before you get to take your brokers classes and sit for your broker’s exam. That was always from day one, the goal was to open a small independent brokerage. We did our three years and were pretty successful at it, decided at that point to sit for the broker’s, take the broker classes, exam, get our broker’s license or I get my broker’s license and my wife and I would open small independent brokerage which is what we did.
That would have been roughly 2010 or so, and that’s kind of how the whole real estate thing started. It was kind of a natural fit with my human resources experience in that — in real estate, often times you’re everything, right? You’re a marriage counsellor, you’re a [inaudible], you help people through very complex transactions so that HR experience, that working with people in developing those people skills was super helpful because obviously real estate is a very people intensive industry. It worked out really well.
[0:04:07.0] MF: That’s awesome. I know what you mean about being all things to all people as an agent. I’ve been communication between parents and their kids because they weren’t talking to each other during the transition. It’s never fun but you have to be very flexible as an agent.
[0:04:24.1] JT: Yes you do, yes you do.
[0:04:25.4] MF: Actually my team manager Justin was in the corporate world for about 10 years and he saw the same thing, he kept laying off people, downsizing and he’s just like, “When is this going to happen to me?” And he actually got out and joined my team before he was downsized himself but he felt the same way, kind of trapped in that world, I think he’s pretty happy he’s out of it as well.
So being an agent, opening your own brokerage, how difficult was that? Is it tough managing people, did you keep it really small? How was opening your own brokerage?
[0:04:57.5] JT: It is tough. At my job in the semiconductor business, I managed hundreds of people but obviously it’s a totally different environment. So I was used to managing people when I worked with people well. For me that was the key, number one is to be a big giant brokerage, the highest agent account we ever had was 32. The intent from day one was to kind of be a small, independent, sounds kind of hokey and cliché, but a family run type of business.
So I didn’t have to worry too much about recruiting, I didn’t have to worry at all about recruiting hundreds and hundreds of agents because that wasn’t our model. The model was to have 20 or 30 experienced, very good agents and finding them was a little tricky because we had a certain culture that we wanted to instil with the brokerage but found most of the — my initial set of agents were basically friends that I worked with as individual agents before.
Some of them came over and I never really did any active recruiting but my agents would say, “Hey, I was working with Betty Sue, she was on this cross steel and she was awesome, she’s super good, she’s nice, she would fit in well,” and then we would just kind of approach Suzy Q and say, “Hey, thinking about joining our brokerage, we’d love to have you.” So we just kind of built it through very slow, very organic growth. Not a lot of in and out, didn’t bombard emails trying to look for agents, never an agent count kind of thing, it was always to stay small.
So I think that helped a lot. It made it much easier to manage super sharp agents that were very personable. We never really had any personality conflicts because as a former HR manager, I probably have more direct hiring experience than most brokers do. Most brokers to get their start as a real estate agent, a lot of times they don’t have the academic background or the work experience to hire the right people. I was fortunate and then I had that, coming out of the HR industry. Hiring small and not trying to blow up too fast, it really wasn’t too bad, I thoroughly enjoyed it, we had great agents. It was a lot of fun.
[0:07:14.3] MF: That’s great. That’s a decent sized brokerage, 30 agents is a lot of people. Did you find yourself in your day to day, were you still selling houses as an agent or did you pretty much become a manager for the office taking care of the agents and everything else?
[0:07:29.4] JT: Really good question. Our splits were pretty aggressive and in the beginning, my wife and I both had to sell real estate because when you have five agents on a 90/10 split, you just can’t make enough money to [inaudible] the children and to eat. My wife and I both actively sold the first several years, the brokerage was in play but once we hit about roughly an agent count of 20. Then it became too much to manage and sell real estate. We didn’t really need to sell real estate anymore. By the time we hit 20, 25 agents, there’s a little sweet spot in there where the income we got from their splits was enough to offset what we got from selling real estate.
So I’d say we actively sold real estates, probably for the first two years and then once we hit that 20-ish agent count, we shifted more from being sales agents and running the brokerage on the side so to speak, to really be a full time managing transactions, managing the agents, our supplied up RH, that took a lot of time. It was just kind of a tipping point around that 20 agent point where we were able to shift from having to sell real estate into not having to sell real estate and being able to apply all of our time to the brokerage.
[0:08:49.4] MF: Yup, that makes sense. I see quite a few brokerages in my area where you have a mix, some brokers who are selling and managing and some offices where they have a broker who their only job is recruiting and management and it always seems like when they’re only job is management and recruiting that office does a lot better because they’re not scattered everywhere trying to do 10,000 things. Very cool.
One question I have too is you’ve obviously tried to build very successful agents, very high level agents. Do you mind sharing a couple of traits that the most successful agents had in your brokerage, what were you doing that made them successful?
[0:09:28.7] JT: This is going to almost sound like a cop out answer probably but honestly, hard work is the key. I use this story all the time because it’s the truth. I could take my agents, say I had 20 of them and if I sorted my agents by how hard they worked, they’re grinding it out every day, they’ll take the listing that’s a little bit further away than other people want to drive.
Agents that are grinding out the hard work and if I sorted my list of agents by, “Here is the hardest worker at the top and he was the least hardest worker on the bottom.” They’re GCI, their growth commission income would almost line up perfectly. Really, its hard work, selling real estate is hard work. You're constantly prospecting and filling that pipeline and it’s really easy if you get a couple of deals in escrow and things are going well, it’s super easy to lose track of the fact that hey, once these two or three transactions close, if you don’t have anything ready to go in the pipeline, you’re not getting paid for a month.
So hard work and dedication was probably the primary driver. Now, I say that with a little bit of caution, I think it has to be the “right kind of work” because it would be really easy — I’m doing air quotes, which you can’t see on a podcast. If you worked hard on the wrong things, it’s really not going to be that productive. By working hard, I’m talking about the ones that realize that a big chunk of selling real estate successfully is prospecting.
You’ve got to fill that pipeline with potential clients because once that pipeline runs dry, you’re out of luck, it’s going to take you a long time to fill it back up and then you got to get a closing and you got to get them, the deal actually has to close before you get a paycheck. Agents that were really good or at least understood the importance of continuous prospecting, as I said earlier, real estate is such a people based business, it’s so emotional for a buyer or a seller.
You don’t buy or sell a home very often, it’s a daunting process. Most people don’t understand it. So agents that would work hard with prospecting, that were good at communicating the sales process and keeping their clients informed during that sales process, those were the ones that tended to rise to the top and they rose to the top pretty quickly.
[0:11:58.2] MF: Yeah, I would completely agree with that. I’m not the broker in my office by operated team within our office and my broker always jokes around how it’s funny how the people who actually show up to the office and work are the ones that do the most deals and sell the most houses. But you’re right too about doing the right kind of work because I know a lot of agents who are always taking classes or working on their website or doing all this busy work that isn’t really prospecting, it’s just kind of, “Well I’m working so I must be doing something right.” But you’ve got to do the right stuff, I completely agree with you on that.
[0:12:33.7] JT: Exactly.
[0:12:35.2] MF: Cool. You had your successful brokerage, you’ve had it kind of setup so that you’re managing it, you weren’t selling anymore and then at some point, you decided to start working with Zillow, how did that happen?
[0:12:47.4] JT: That’s another great question. I was a big blogger when I was a real estate agent. My blog was generated a lot of contacts and a lot of leads for our business and because Zillow from day one, which for Zillow was roughly February of 2006, always in the news, I tended to write fairly often about Zillow as most real estate bloggers did back when Zillow first launched because it’s this new thing, what’s it going to mean? So I wrote a lot of opinion pieces about it on my blog. I got to know some of the people at Zillow through that blog and then I made conferences and things like that.
I was always fascinated by the company just because I’m a bit of a nerd at heart and technology interests me and this is, I’m talking back in 2006 and 2007 right when Zillow had first launched, there wasn’t a whole lot of real estate on the internet and it just made sense to me that that’s kind of where it was headed. So I’d always had this interest in Zillow. To make a long story short, Zillow hired me CEO of my MLS, the Arizona MLS at the time, they hired away our CEO to do vice president of in this reason and something or other.
So it was part of being a blogger and I had known the MLS CEO because I sat on the tech committee for the MLS. I did an interview with them when they left. Just, “Where you go and why you're going to Zillow, who is going to take your place?” I’m not a journalist by any stretch of the meaning. This is no crack deep investigative journalistic reporting, it was just a really simple interview with the guy, “Where you going? Why are you doing and what’s going to happen to our list when you leave?”
The CEO of Zillow Spencer Rascoff has always thanked me whenever I wrote an article, just a rea; quick message, he’d just send something, usually a private message on twitter saying, “Hey, thanks for the great article on Zillow, we appreciate it.”
He never did that with this piece that I did on our MLS CEO which is no big deal, It’s not why I wrote the article but two or three months after this transition happened, the CEO of Zillow messaged me on Twitter, he said, “Hey, I forgot to thank you for writing that article about Bob and I was like hey, it’s no big deal, don’t worry about it.” He replied to that message and he said, you should come to Zillow and join the fun. I looked at my wife and I said, “What does that mean? I should come to Zillow and join the fun?” And she said, “Sounds like he wants you to come work for Zillow.”
I just messaged him right back and I said, “Don’t tempt me,” with a little smiley face. I swear to god, five minutes later the phone rang and it was Spencer’s admin and she said, “Spencer wants to bring you up to Zillow just to talk to you, are you available next Tuesday?” This was like Thursday. I’m like, “Well,” I looked at my wife again and she kind of shrugged her shoulders and said, “What could it hurt to talk to him?” So I flew to Seattle and I was just expecting to talk to Spencer when I came in and I walked in the lobby, someone from HR walks out and goes, “Here’s your interview schedule.” I looked down and I’m talking to nine people that are vice president, one of the co-founders, some was C level executives and I’m like, “Holy crap, I’m here for a full blown job interview and I’ve done absolutely no preparation for it.”
But I got a tour of the facility, I fell in love with it, the energy here is amazing and again if you are a nerd or a geek at heart, you’ve got to love it here because there’s so much going on. So as I’m walking around, watching all these people and talking to the management team I was interviewing with, I was thinking in the back of my head, “This would be a really, really cool job.” Of course also in the back of my head, I’m like I own a real estate brokerage, I’ve got 30 agents that depend on me, and I live in Phoenix. Zillow’s in Seattle, what the heck is going to happen?”
I said, “Well, who knows, I’ll probably won’t even get a job offer.” Well I did get a job offer and then we just started thinking and personally, the timing was really good for us, our youngest child was about to graduate from high school, my father lives in the Seattle suburb and he’s getting a little older. I have always, all my life been a bit of a wanderer, I’ve never done the same job for more than a few years in a row.
To be honest, I was getting a little tired of real estate brokerage and real estate sales. I loved the real estate industry and my thinking was well, what I really love about the real estate industry is being able to teach and help agents be successful. I could do that as a brokerage owner with my 30 agents or I can come to Zillow and I can help tens of thousands of agents be successful. So it was just a good fit people wise, it was a good fit timing wise, now here I sit in this little conference room talking to you.
[0:17:25.0] MF: Wow, that’s pretty crazy how that all happened. I’m curious, so you went from the corporate world which you got sick of, do your own business which sounds like you maybe got a little tired of, back to the corporate world. Were the two corporate worlds you’re in completely different? It sounds like Zillow had probably a different environment than what you had before?
[0:17:43.2] JT: Zillow is a completely different environment. The company I worked for before, nothing against them, it was Motorola who it was, they’ve changed names a half a dozen times since then. That was a big giant conglomerate, 180,000 employees worldwide, big giant corporate bureaucracy, Zillow, I come to Zillow and I distinctly remember, I told the cofounder in my second interview, the last thing I ever want to do is work in a corporate environment.
He walked out the next interviewer came in, I said, “You know I think I just blew it because I told the cofounder I don’t ever want to work at a company yet here I am sitting in a company’s headquarters.” But Zillow’s very different, it’s very — it’s like what most people envision Google and Facebook being like. It’s very casual office environment, there’s not a lot of — there’s no really politics or bureaucracy. If you want to make a change in Zillow.
If you’ve got data to show that your change makes sense, they’ll let you test it out. I’ve seen things happen at Zillow in — changes happens here in hours that in my previous corporate life honestly would take months to get through all the bureaucracy to make some changes. Here, we move so fast. Yeah, we all wear a badge and there’s 2,000 Zillow employees now but it’s nothing like working in corporate America, it’s very much an entrepreneurial driven. The management team has done a remarkable job of trying to kind of keep that startup attitude and atmosphere. It’s totally different than working corporate America.
[0:19:19.4] MF: Oh very cool. Speaking of Zillow I have a few questions I know most everybody knows what Zillow is now. Some of the things they do. I have a couple — One, hopefully you know this, I won’t put you on the spot but I just thought of it. What does Zillow mean, where did that name come from?
[0:19:35.5] JT: That’s a great question. It actually comes from a conglomeration of the phrase zillions of pillows. It’s kind of silly if you think about it but Zillow is a made up word but it came from originally the founders thought, “We’re going to have this big, giant website, it’s going to be filled with data,” right? Data on homes and neighborhoods and everything housing. So we’ve got tons and tons of data points, pillows are kind of a home thing so zillions of pillows became Zillow. That’s where it started.
[0:20:14.0] MF: I had no idea on that one, that’s interesting.
[0:20:16.6] JT: Most people don’t.
[0:20:18.7] MF: Very cool. So Zillow began around 2006. What was it meant to be when it first started, was it… were they going to list properties online?
[0:20:29.7] JT: Yeah, that was the big thing. Here’s the story that the cofounders tell and the cofounders are two incredibly bright guys by the name off Rich Barton and Lloyd Frank. They had worked together forever at Microsoft, which is also headquartered in Seattle. They ran Expedia, the travel conglomerate. It was actually — a lot of people don’t realize this, Expedia actually started as a Microsoft whatever, subsidiary division group, whatever they called it.
Then Expedia spun off into a public company. Rich and Lloyd, this is the story they tell and it’s fascinating, they were looking, one of them, I don’t remember which one, was looking to buy a home and he was on the phone with an agent and he could hear her typing, see the same things like, well, I’m interested in four bedrooms, three baths, this part of town, you could hear the agent typing and Rich and Lloyd are both the kind of people that are like, what is she typing? What is she seeing? I want to see what she, the agent is seeing and why can’t I see this information? I want my hands on the secret database.
So Rich and Lloyd, the cofounders are very big on bringing data out to the public, they kind of did that with Expedia, right? They’re like, “Okay, here’s all this travel data and we’ve got this big giant databases of planes that can go from point A to point B. Why not k the people see that? They care about the same way about the real estate stuff. When they were looking to buy a house.Nobody really knew when they heard that agent typing on the other end of the phone, “What is it that they’re looking at?”
Really, Zillow really just kind of started that way, want to bring this data out, data with the internet, data wants to be hokey, data wants to be free. They wanted to kind of free the data and when Zillow first launched, they didn’t even have listings, they have enveloped the Zesttimate which is kind of an algorithm to make a guess at the value of a house, there weren’t any listings on Zillow for the first couple of years.
It was really just kind of a property database, they would go in and what’s the right word I’m looking for, you’re going to public record sources and extract information on properties. They basically decided to build a huge database that in theory would have every property in the United States on it and all the public information that’s available. Beds, baths, when it was built, large sized construction type, all that kind of thing. Basically started as a big giant database. Like any startup, at some point, someone goes, how are we going to monetize this? How are we going to make money off of it?
We can’t just all work in a big giant database and give everything away for free because capitalism requires and life requires you to have a salary. That’s when putting listings on the site, selling advertising to agents on those listings kind of grew out of that. That’s what we’ve got today, roughly 110 million properties on Zillow which is just about every property in the country plus listings, plus fisbo’s plus where we do agent training, we’ve got apps, we’ve got all kinds of stuff. Fundamentally we’re at advertising company that sells real estate agents, kind of the today’s version of the classified ads in the Newspaper.
[0:23:50.7] MF: Right, nope, that makes sense, we have been Zillow premier agents as well, so we’re very familiar with how that works and the advertising. What are some of the challenges that Zillow has had? I know in our office, there’s been debate about not letting Zillow have our idea IDX from MLS because we feel like we might be left out if we’re not paying for advertising, there’s been some discussion on that. Has Zillow had some pretty big challenges getting those listings?
[0:24:17.0] JT: Yeah, I think so, I think that’s fair to say. Listing data by its very nature, agents tend to kind of hold listing data close to their chest. They want to protect the listing data, which is totally understandable because for decades, at least years, that was kind of the real estate agent’s secret sauce, I’m talking way before the internet and long before I ever bought a house but you hear all the stories.
You used to have to physically walk into a real estate office and somebody would slide a big three ring binder across the table at you and say these are the available houses, let’s flip through his thing, find a couple of houses that interest you and go off and see them. Real estate agents and brokers really had control of the listing data. Would that be clean free when that got out…
By free I don’t mean zero cost, I mean, it became out there where anybody could access and be a bit of an internet connection could access listing data. I think what happened is a lot of agents felt some fear and some angst and this company is coming in here and they’re taking away my thing. My thing being the control of the listing data. The simple fact is, agents do so much more than just have listing data right? That’s the easy part.
Finding the house is the easy part, it’s getting through the real estate transaction that where good agents really are worth every dime that they’re paid because again, real estate transactions are complicated, there’s a ton of paper work, most people would, I think the NARA says what most people buy a home every seven or eight years. So it’s not like you’re going down to the grocery store and buying a six pack, something that you're used to doing all the time, this is something that you do once every seven, eight, 10 years.
It’s very cryptic, there is tons of paper work. That’s really where the agent’s job is, we think. It seems to be coming true, rather than being the keeper of the data, the real estate agent now for incorporate the data for the consumer, there’s tons of data out there. Just because there’s listings and copies of contracts and I mean I guess you could say all the data and all the stuff you need to do a real estate transaction is available online. You got to have an expert help you get through that process and that’s what agents do now.
To the original question, one of the issues, one of the areas of concerns that we’ve had at Zillow is how do we do what we want to do and that is to sell agent’s advertising without them being afraid that we’re trying to take their job which we’re not .That’s the last thing we want. We don’t want to become a brokerage, we certainly don’t’ want to be an MLS, we just want to sell ads to real estate agents, we want them to be wildly successful and part of that is completely selfish because if a real estate agent or broker is wildly successful with Zillow advertising, what do they do? They buy more of it. They write bigger checks.
So we want to partner with real estate agents and in the beginning that was a tough pill for a lot of agents to swallow. Particularly the counters come in from Expedia, travel agents kind of went away after Expedia and some more sites came out. So I think it was a natural thing for agents to feel, these guys disrupted the travel agency business, they kind of helped usher travel agents away. They’re going to do the same thing to real estate agents, that’s not the plan, that’s the more successful agents are then the more successful we are.
That’s probably our biggest challenge that I was trying to demonstrate to real estate agents that, “Hey, we’re really partners in this, we’re not antagonists, we don’t want your job, you don’t want our job and take our skills and merge them with your skills and make us all more money.:
[0:28:04.5] MF: That makes sense and I’ve talked to a lot of agents and heard a lot of opinions online about the value of agents and what they really bring now and it’s funny that Expedia was started by the same companies because that’s kind of my example. Real estate is so different from travel because every single piece of real estate in the world is different. It sits in a different piece of land and valuing it, knowing the state and local laws, all of it is different. From city to city, neighborhood to neighborhood and it’s just not something like a car or a vacation that…
[0:28:40.8] JT: Right. Yeah, exactly. Computers are really good. If I flew down to Phoenix the other day for my daughter’s college graduation and all I need is a database that will say, “O kay, I’m in Seattle, I want to get to phoenix on this date at this time for the cheapest amount possible.” That’s what computers are really good at, sifting through a bunch of data and saying, “Oh, you need flight number 762 on Southwest, that’s the best option you have. That is totally different from buying a home.”
It’s completely different from buying a home. I don’t think you’ll ever be able to log onto a website and buy a home online. I just can’t see it happening, there will be some efficiencies that are gained, I would love to see. I’m sure, you’re an agent, you’ve walked into a title company before and really seeing stacks of paper, six feet deep on a desk. That’s kind of crazy in this day and age if you think about it.
So I can see technology streamlining some stuff in the real estate industry but there is no way that a website or an app is ever going to be able to get a human being through a real estate transaction. I just don’t see it happening.
[0:29:54.0] MF: Right, I agree with you. Yes, the title companies are kind of crazy in that way with their paperwork and I’m a listing broker with HUD, with them, you’re still overnighting packages, original documents to them. A few things that can be improved in the industry.
[0:30:12.2] JT: Absolutely. That won’t take the place of the agent, that’s just going to make the agent more efficient if anything else or when you will sell more houses which is…
[0:30:20.4] MF: Right, exactly. The point you said about Zillow becoming a brokerage as well and taking over, I don’t know if people realize it, there’s so many different MLS, there’s so many different state laws and regulations and the sheer — I don’t know what it would take for a company to take over the entire country, listing houses and trying to sell them, it would be a nightmare. Then they would take on a liability as well that comes with that of knowing all that and basically they’d have individual brokers in every cit y which would just be what there is now. I don’t know.
[0:30:58.2] JT: Then you’ve got to monitor all that, you got to make sure that all the compliance is done and the state rates are followed, it would be a logistical nightmare. It’s just not what we’re good at, if I walk around the halls of Zillow, there’s probably seven or eight people here including myself that have a real estate license, They were either a sales person or broker before. Those seven or eight people out of 2,000 right?
We’re good at building apps and building websites, we’re not good at selling real estate, it’s just not what we do. We hire 90% of these 2,000 employees to code and develop and build applications and websites, that’s what we’re good at. Most real estate agents aren’t so good at developing websites and apps, they’re good at working with people and closing transactions.
You guys being in the agents and the broker community, you need to go off and do your thing and we need to go off and do our thing. If we can connect these two and could help each other, then all the better. We have no zero, none desire to become a brokerage or an MLS, it would be a logistical nightmare.
[0:32:07.7] MF: Yes, I agree. Speaking of Zillow and agents, maybe you can give some tips or some insight on how agents can work with Zillow to help them make more money, what tools Zillow has for agents to use.
[0:32:20.1] JT: Sure, the first thing I do is I encourage people to use our training, it’s all free, we’ve got very good trainers, that’s probably where we actually tap true real estate experience, so there’s a handful of people in our sales group for example that used to sell real estate. We have a really good training program, it’s all online, it’s Zillow.com/academy. It’s called Zillow Academy, it doesn’t cost anything, some of our training classes are geared towards very Zillow specific things like how to ask for reviews, how to build a stronger profile. I’m not trying to sell or pitch Zillow but I think you’d be crazy to be a real estate agent in today’s world and not at least have a profile on Zillow.
It’s free, it doesn’t cost you anything, there’s no question, no matter what you think of Zillow as an entity or a company, we get a ton of consumers looking at our site, which includes listings and agent profile, I talk to agents every day that never spend a nickel on Zillow advertising but they have a very strong profile on Zillow and they’ve gotten calls and leads on listings from people finding their profile on Zillow so why not have one of those?
Build that free profile, take advantage of our trainings, a lot of our training while it may be kind of geared towards Zillow is still very generic and by that I mean converting leads. I don’t care where get your leads from, well I care, I would rather you get your leads from Zillow from realtor.com but let’s be honest, there’s a lot of people who use both, they have their own website, a brokerage website.
They do farming, however, they get a are. When you get a contact as an agent whether that’s somebody the gas station exchanging business cards or it’s an online lead. Converting that lead into a customer is really important, you can have all the leads in the world but if you can’t convert them into commission checks then what good do they do.
We have lots of training on how to do that, it won’t just be Zillow specific. Take advantage of the free training, take advantage of the free profile, I’ll probably get in trouble for saying this but Zillow advertising probably isn’t for everybody. You need to have good systems in place, managed lead flow, you need good systems in place to follow up with context because the internet leads in general can be a little further up the sales funnel.
Now, we do get agents that will say, “Hey, I got a call yesterday from some guy that said hey, I saw your profile on Zillow, I read your reviews, come list my house. I’m not talking to anybody else, I’ve already decided you’re the listing agent for us, can, now you come over tomorrow at 2 o clock?” That’s a really cool phone call to get.
It does happen but you can do things to make that happen rather than just rely on random chance. Again, that’s having a good rich profile, put all your past sales on there, I think reviews are super important because I think consumers may value reviews more than they should. There’s all kinds of reports up there, the consumers believe online reviews more than they believe word of mouth advertising which is hard to believe but it’s true.
Everybody on the planet uses reviews, I have yet to run into somebody, anybody, anywhere that has never looked at a review either of a typical restaurant books and movies but now more and more people are looking for reviews for service professionals, mechanics, doctors, lawyers, CPA’s, real estate agents. Get those reviews, what else can you do? It’s important again to have systems in place. I want people to be successful with Zillow advertising. That makes sense for us as a business right? We’d much rather have an advertising agent be successful because then again they keep writing this checks.
The success agents, we don’t have to worry on a six month contract, are they going to renew at the end of it? Well if they’re killing it, they’re going to renew which they just are. Take advantage of our training, if you are a Zillow advertising agent, really important to have a good working relationship with your sales rep. What we call a business consulting because that’s really what they are more than just a sales guy, they are business consultants, they’re there to help you understand the inventory, advertising inventory that we have, how you can best utilize it.
Our best business consultants are just that, they’re consultants, I’ve had so many agents tell me, hey, I look at my consultant at Zillow as part of my team. This is a guy or gal that understands what’s going on at Zillow, they call me when inventory is available, the good ones which they’re plenty of will say yeah, there’s a bunch of advertising impressions available and this is the zip code that I don’t think that really needs what you're looking for. I would go over here.
Have a really good relationship with your business consulting, that’s super important. Then have the systems in place to follow up on your contracts. Just the nature of the internet consumer, they want information right away. So when they start a forum on Zillow says contact an agent, they click the button, “contact an agent”, they click the button, contact an agent. They expect you to reply within minutes.
There’s ways to do that, we have some systems in place and we have a CRM. It allows you to setup auto response like that. Really understanding the tools, I am always amazed at how many agents pay Zillow for advertising but don’t really understand or use all of the tools that we hit the support type tools that we have. To help them convert those leads because again conversion is key right? Again, if you have 10,000 leads and not a single one of them converts then what good does that do you? I’d rather have 10 leads than have two of them convert.
[0:38:17.4] MF: Right. Working with Zillow, we’ve setup those auto responders where emails come out right away, it’s made a huge difference and it’s funny because I’m in Colorado and I invest here a lot with rentals and flips but I’ve been looking to invest in Florida just because the market’s so much easier to buy down there and I started contacting agents and using Zillow and one out of three of them might respond. It’s crazy. I’ll send an email, I’ll tell him I’m looking to buy, who I am, all this stuff and they don’t’ even respond to me every. I was like, “Wow.” Then people wonder why the average income for agents is so low.
[0:38:55.7] JT: Again, this is going to sound hokey, I used to tell my agents this when I was a broker and now I tell Zillow’s advertising agents. The best thing you can do to improve your business is answer your phone. It really is. We get an unbelievable number of consumers will call Zillow, believe me because we get 130 million consumers a month on our sites. We don’t want to get a call from a consumer that says you know what? I clicked contact an agent six times on Zillow and nobody ever replied to me,” and these are people that are paying for the leads.
They’re writing us a check to get these phone calls and then they don’t do anything with it and then they say your leads are bogus. Well, you can’t possibly know that because you never contacted the lead, you’ve got to answer the phone or email or follow up. Do that and you’ll be miles ahead of a lot of other people.
[0:39:50.7] MF: Yeah, for sure, very cool. Great information. Now I have one last question and I’ll let you get out of here. Are there any goals, is there anything Zillow is looking to add or bring into the future or are they just kind of focused on their core business right now?
[0:40:05.4] JT: That’s a really good question. This question comes up a lot because I hear it a lot. I’m out in the social space a lot, that’s what I do is put out my job. I hear questions like, “When is Zillow coming to Canada? When are you going international? When is it going to get bigger?” Our answer to that is, you know what? We’ve got so much work still to do on what we’re working on right now, we’re US focused. Will we go to Canada and Europe and Australia? I don’t’ know, probably at some point.
Commercial real estate comes up a lot, we’re going to get into commercial. What we really want to do is focus on our core business and get it super solid before we look and go off and start branching out. Now, that’s not to say that we’re just kind of sitting back on our heels and watching stuff happen. We do so much testing on Zillow.com it blows me away. Again, I’ve said it before, I’m a geek and I’m a nerd at heart.
When I talk to our developers and we do what’s called AB testing where we will present a webpage of one version to a million people then present a different version of the webpage to a million people so that we can figure out which pages work best. We test everything, down to the placement of the contact and agent button, what color that button is.
Because internet leads is a big volume driven business, it’s a numbers game. If we can change a button that says contact an agent from blue to green and see a 2% increase, that may not sound like much but when you're talking about 130 million visitors a month, 2%, that’s a lot of people. We test the crap out of everything, we’re constantly tweaking the site, tweaking the tools that we have and we will continue to do that. But I think we just got an awful lot of room left to grow just in the US, there is still so much to go.
We figure that we have about — We being Zillow group and Zillow group is primarily Zillow Trulia, there’s a site New York City call 3D’s, making apartments, those are subsidiaries of ours. Zillow group as a whole, we figure, we capture about four to 5% of what agents spend in online marketing. So if you think about that, that’s an awful lot of room for growth because this is a lot of times people say, you’re going to have to become a brokerage because that’s the only way you can make more money, now, we’ve got like a four or 5% market share of online advertising.
That means we have 95%, now we’re never going to get it all of course. The point being, tons and tons of room to grow domestically just by improving our systems and our process before we even start to go wider. That’s what we focus on is building the right tools to help agents be more successful converting the leads that they get from us.
[0:43:06.2] MF: Yes, that makes sense, with a 130 million consumers a month, that can keep you very busy and there’s a lot of opportunity there. It’s funny because I do AB testing on my site as well. Now, I wish I had a million people to test but unfortunately I don’t, I’m not there yet but yeah…
[0:43:23.5] JT: That allows us so much flexibility just that volume is a huge thing because I had a website too as a broker that did pretty good. I AB tested things too, But you can’t do it at the level that we can do just because of the traffic that we have.
[0:43:37.9] MF: Right. That’s awesome. Great, well I think those are all the questions I had, any advice, any parting thoughts you want to give to agents out there who are looking to get in the industry or maybe they’re struggling a little bit in their career before we head out of here?
[0:43:54.7] JT: Answer your phone, and part of answering your phone is make the phone ring and honestly, there’s lots and lots of ways to do that. Sure, there’s Zillow advertising but there’s so many geo farming a neighborhood. Gosh, door knocking, not really my thing but I know people that are wildly successful with it. Point being you don’t necessarily for particularly for new agents or struggling agents, I’m sure there’s someone’s going to hear this and go, “I don’t have $2,000 a month to spend on Zillow advertising.”
First of all, you don’t have to spend that much but do something else. Join your chamber of commerce, join your HOA board, get yourself out in front of people, sponsor a little league team. All these things, put your name on a bus bench. That stuff still works. There’s a reason that works, it always has worked. Get out there and get in front of people you got to meet people.
I am a big fan of using a site like Zillow to meet people electronically but if you're new and just starting out and struggling and don’t have those kind of systems in place, then go out and meet people the good old fashioned way. Walk up to somebody at the gas station and shake their hand and say, “Hey, I’m a real estate agent, here’s my card, let me know if you’re interested in buying or selling the house.” If you did that 10 times a day every day, you’d probably be a very successful agent. More successful than most others.
[0:45:20.4] MF: Yup, great advice and yeah, there’s so many people who I think use technology and trying to bring in these leads but then they don’t answer their phone or they buy the computer, they don’t go out there and take advantage of those leads. Awesome. Well Jay, love having you on the podcast, lot of great information, I learned a lot, myself including zillions of pillows meaning.
[0:45:48.1] JT: There you go.
[0:45:49.1] MF: Yup, thank you for being on the show, hopefully we can keep in touch and great job.
[0:45:54.1] JT: Absolutely. Thank you, let’s do it again sometime.
[0:45:56.5] MF: All right, sounds good, thank you Jay.
[0:45:59.0] JT: You bet. Bye-bye.
[0:45:59.5] MF: Bye.