Get to Know the Millennial Buyers and the CAR Panel Discussion on the Portal Wars

Good day MAR members!

Let’s Go Giants! Let’s Go Giants! Giants fever is so all-encompassing that when Heather and I attended a concert in the City on Friday night, midway through the concert during some banter by the band the whole Masonic Auditorium joined in a “Let’s Go Giants!” chat for about 30 seconds. It’s another amazing time to be a Giants fan!

Between biking, hiking, kids’ games and the ever-present backdrop of “Let’s Go Giants!”, we’re all enjoying another beautiful Indian Summer here in Marin. Looking at people bundled up in other parts of the country, I’m reminded how blessed we are to live and work here in Marin. Keep your Orange and Black Giants gear handy, and let’s settle into another terrific week of beautiful warm days and evenings of World Series baseball. Come to think of it, I’ll try to get some Kansas City BBQ on the grill this week too.

MORE FROM C.A.R. AND THE MILLENNIALS

Thank you for all your positive comments on last week’s Monday Memo. Lots of you were very happy to hear how much your Millennial children love their parents! I’ll touch on a few more random items on our new first-time-homebuyer generation:

-This is the first generation that you will have to “adapt” to. Otherwise you’ll be out of business down the road.

-We probably all know this, but they make decisions based upon recommendations from friends, and nothing remains “cutting edge” for long.

-From East Bay Gen-Y Sothebys broker Andrew Greenwell, who is a Millennial himself, 5 Rules for Communicating with Gen-Y:

Tell them to read the whole email…otherwise they just read the subject line

“The Pointier the Bullet the Better”…meaning, net out your bullet points for an easily distracted generation.

NEVER put critical instructions at the end of the email…Millennials won’t read it.

Group communication is important…why have a meeting or phone call when you can solve the world’s problems with a group email or text?

MOST IMPORTANT: Millennials don’t like phone calls. He seriously said that people of his generation find a phone call to be an invasion of privacy. Seriously.

Andrew also said that Millennials don’t have a “personal life” and a “work life”…just “one life”. He encouraged us to be transparent, because Millennials can sniff through a lack of transparency, it’s in their DNA. Also, because they love their parents so much, it’s very important to engage and appeal to “Mom and Dad” with a Millennial client…Mom and Dad will be involved every day.

Finally…Andrew suggested that we “Focus on their future, not your past…make me understand why this is important to me right now.” And: “Millennials wonder where YOU will fit into their life story.”

I couldn’t get over the feeling of a self-indulgent generation, but we need to get over that as they are the most important generation for our industry right now. C.A.R. is correctly dead-set on understanding and accommodating this important group of young buyers.

THE PORTAL WARS

At C.A.R., we collectively spent a LOT of time talking about Zillow/Trulia “Zulia” and Move/Realtor.com. The Strategic Planning Forum on Friday was a packed panel discussion with Zillow, Trulia, Move/Realtor.com…and one old-school broker for levity sake.

Prior to the panel discussion, at Wednesday’s Member/Director Forum, C.A.R. CEO Joel Singer had some comments about Zillow in general as a primer for Friday’s panel discussion:

-Zillow is now the market “opinion leader”

-Zillow claims 80 million unique users, if you can believe that.

-Zillow’s market cap is $4.3B. While staggering, this number is way down from the $7B they had right after the Trulia acquisition, and their market cap has been steadily dropping since the acquisition.

-Zillow needs to “get some profits” to justify this huge market cap.

-News Corp just acquired Move.com/Realtor.com. Joel compared Zillow’s $4.3B market cap with News Corp’s $73B market cap, and rhetorically asked which one has the bigger war chest going forward.

-The consumer has better info than we do. He showed some slides of Zillow/RedFin/Truila listing pages, and compared that data with what we see in our MLS. It was pretty comical.

But the Friday panel was the most illuminating. Zillow sent Curt Beardsley, their VP of Industry Development. Trulia sent Alon Chaver, its VP of Insustry Services. Realtor.com sent Russ Cofano, SVP of Industry Relations. And the old-school broker I mentioned was Tom Kuntz, VP of North America of brokerage Engel and Volkers.

I had heard the three portal guys several times earlier this year at various panel discussions at CAR, NAR and the Inman conference. My main takeaway was the same as it was earlier: they don’t want to share much. Yet, we keep packing these forums, looking for magic nuggets of info to glean.

Beardsley of Zillow said that Zillow’s focus has always been and will be on the consumer. He said they are an advertising-based media company. And he said that 50% of the interaction with Zillow is now via mobile.

Cofano of Realtor.com described its philosophy and mission as being “aligned with Realtors”. He identified that “there are a lot more online leads than buyers.” So true. Realtor.com does not believe in putting up valuations, and they also don’t believe in putting FSBO listings right next to your listings.

Chaver described Trulia as “being similar to Realtor.com”. No valuations (at least not anymore…probably thanks to Zillow buying them); No FSBOs. He claimed a Realtor-friendly approach, and proclaimed “we’ve transformed the customer experience and expectations over the past 8 years.”

Kuntz the broker was resigned to the changing environment of customer access to data. He correctly talked of the disconnect that “our industry has not yet delved into Big Data” like the Big 3 portals have. They know an awful lot about our customers. He also worries that “Realtor value is being replaced by Big Data.”

Then the banter began.

Beardsley said that Zillow is “central to the consumer” by adding in Big Data. Consumers typically search online for 12 weeks before they reach out to a real estate professional. We as an industry are not engaged yet at that time and the Big 3 are. People want a “general idea of values” during those 12 weeks, they don’t want to talk to a Realtor yet, and Zillow is addressing those needs with listings and Zestimates.

Cofano of Realtor.com then produced the zinger of the forum: Over the past 5-6 years, the number of licensed agents nationwide has stayed relatively static at 1M agents. Nationwide sales have stayed relatively static at 5M sales. But the number of online leads has zoomed up like a hockey stick. Monumental growth of online leads. Why so many more leads if the sales are remaining the same? What is the definition of an “online lead?” He said all that those leads are doing is creating more work for everyone.

And on it went, with everyone’s opinion about the general state of “online leads”. Joel Singer of CAR, who was moderating, asked the panel “Are leads becoming more valuable?” Beardsley of Zillow acknowledged the “huge growth of online leads”, but stuck with his contention that Zillow is a media company: “We don’t sell leads, we sell opportunities for you to be in front of your customers.”

Cofano of Realtor.com came back again with “leads are becoming less valuable”, and “leads cost the same whether they’re really good or crap”. He directly asked Beardsly of Zillow whether “online leads are becoming less valuable?” Beardsly stammered for a minute or two and didn’t answer the question. Cofano asked him again, and Beardsly finally relented that “yes, online leads are becoming less valuable” and that they need to fix that problem.

At that point, MAR President-Elect Matt Hughes, who was sitting across the room, summed it up best for me via a text he sent: “They are not creating leads. They are creating contact info of window shoppers.”

Amen to that.

The wise sage of the meeting, broker Tom Kuntz, told us that someone with way more money than Zillow is going to come in and change the playing field again in a way that we don’t know about yet. He talked about Napster and online music being a cute little unprofitable business until Apple and iTunes stepped in and effectively monetized it. Someone big, who we haven’t even thought of yet, will come in and make Zillow obsolete.

I’m not sure about that yet, but this sure is a fascinating conversation.

That’s it for now, next week I’ll share some of the action items we voted on at the CAR Board of Directors meetings.

I wish you a safe and prosperous week.

Blaine Morris

2014 President