Tag Archives: Zillow

[PREMIUM] Move, Trulia, Zillow: Q1/2013 Report – The Narratives Take Shape

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diverging-paths-cropped

The narratives take shape, and start to diverge in Q1/2013.

When I began writing this report, I did not think that a mere update on quarterly results would reach over 12,000 words and require so much work. After all, the annual report is the really important one, and the quarterly reports are mere milestones along the path.

But with all of the changes going on in real estate today, it turned out that there were some really significant signs and developments in Q1 of 2013. The three companies – Move, Trulia, and Zillow – have begun to diverge from each other in not just performance, but in their overall strategic narratives. Each has made important strategic decisions and has begun to execute on them, and the first quarter of 2013 provides glimpses into what the future holds.

Move, the veteran, actually showed revitalization across the board. But it is unlikely to get much credit for its strong performance because the two upstarts outperformed Move on virtually every metric. Nonetheless, the narrative for Move has shifted subtly, but importantly. The content to connection to close story is a good one, and Q1 suggests that perhaps, that strategy is working. At the same time, there are some hints that perhaps Move is undergoing a far more fundamental change in who they are and what they do.

In the case of Trulia, of course, it isn’t merely a glimpse. With their $355M acquisition of Market Leader, Trulia has more or less set its strategic path for the next couple of years. It was a bold move, probably a necessary move, and one filled with high risk and high reward. Coming on top of an extremely strong quarter, where Trulia beat out Move handily and either outperformed or kept pace with Zillow on almost all key metrics, the acquisition sets Trulia’s strategy and narrative for the foreseeable future. If I wrote in the last report that I wasn’t sure what Trulia’s strategic vision was, well, consider that corrected. It is now obvious what Trulia’s narrative will be.

Zillow’s Q1 results and the important management discussion that followed can be described with a word: confidence. Having announced in the 2012 earnings call that Zillow plans to start heavy TV advertising to take over the “brand whitespace” that is real estate, Q1 gave us some results and some glimpses into how that is working. This is a company that knows it has the lead, knows it’s winning, and has decided to start building enduring competitive advantages. Trulia won the quarter, but it will take more than one quarter to catch up to the frontrunner, who knows he’s out front, and by quite a lot.

All of these developments will have deep strategic implications for everyone in the real estate industry, from brokers to agents to franchise companies to MLS and Associations to vendors and other technology companies. Some of the implications will be obvious, and others less so. What I have tried to do is to tease out details on the one hand, while taking a step back and looking at all three companies and their narratives to get a sense of the overall shape of things to come.

For all of you who have subscribed to access this Premium Report, my deepest gratitude. For those who have not, please click on through and you’ll get to page where you can purchase access to this, and other, Premium Content.

This report is provided for informational use only, intended to assist professional investors and industry professionals. The information contained herein does not constitute investment advice and may be subject to correction, completion and amendment without notice. 7DS Associates assumes no duty to make any such corrections or updates. While the information contained herein contains opinions and projections, it is not our intention to state, indicate or imply in any manner that current or past results are indicative of potential future results. As with all investments, there are associated risks and you could lose money investing. Prior to making any investment, a prospective investor should consult with his own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment. 7DS Associates disclaims any and all liability relating to any investor reliance on the accuracy of the information contained herein or relating to any omissions or errors and as such disclaims any and all losses that may result in an investment in any company mentioned in the report.

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NAR Mid-Year: Cry Havoc, and Let Slip the Dogs of War

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I have been asked for a recap of the events at NAR Midyear, but as I did not attend the Board of Directors meeting, and as I was busy doing other things, I felt it wasn’t really my place to give a recap.

It is, however, my place to offer some thoughts — high-level, unusual, and either prophetic or batshit crazy depending on your point of view — on what I heard, saw, felt, and read this past week. And my overall impression right now is that war within the real estate industry is inevitable. It is a question of when, not if, and how, not why.

The “why” has already been answered by the Greek historian Thucydides, who wrote:

The growth of the power of Athens, and the alarm which this inspired in Lacedaemon, made war inevitable.

Similarly, the growth of the power of the Internet, and the alarm which this inspires in various circles in real estate, makes war inevitable. While I hope to see the minimum of conflict, and will work to make peace wherever I can, at this moment, I remain darkly fearful that we will need to fight in order to resolve the only question that matters: who shall rule?

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Estately Quietly Proves a Business Model

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estately-ss

The Pacific Northwest, where denizens created a religion out of worshipping coffee to overcome the gloom of the rainy months, has somehow become the mecca for technology-based innovation in the real estate industry. Everyone knows about Zillow, of course. Most folks know about Redfin. MarketLeader, and its portal, RealEstate.com are also in the Seattle area and made noise recently within the industry.

Far fewer people know about or think about Estately. But it’s time to give them some thought, because they’re quietly proving out a business model in the ongoing portalization of real estate that’s worth considering.

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[PREMIUM] Followup #1 to Strategic Analysis Report: Zillow, Trulia, Move

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Since publishing the Strategic Analysis on Zillow, Trulia, and Move — as well as prepublication, from comments — I’ve gotten some further information and clarification from all three companies that could be useful and interesting to consider. They “add color” in the language of Wall Street analysts.

I don’t believe that this new information changes the major conclusions of the Report, but they might provide you with further things to consider. Let’s get into it.

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[PROMO] Zillow, Trulia, Realtor.com: A Strategic Analysis Report

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The 2012 results for the Big Three publicly traded real estate portals — Zillow, Trulia, and Realtor.com (Move, Inc.) have been filed, and their senior executives have endured the grilling by Wall Street analyst types. There have been volumes of words already written about them, by financial analysts, by finance bloggers, by real estate industry people, and so on.

But I got interested in doing a substantial treatment of all three companies, since these three in some ways drive the real estate industry into unknown territory. Now that Trulia is also public, and reporting on full year results, I thought it time to take a close look at all three companies, see how they’re doing, what they’re doing, and what they’re planning on doing.

As I got into the project, however, it became quickly obvious that this was no mere blogpost. I couldn’t do justice to the topic just going off the top of my head. I ended up spending dozens of hours reading through their SEC filings, listening to the earnings calls and reading their transcripts, and really having to think about what these things mean. The result is a Full Report on their 2012 results, as well as what strategic insights we can get on all three companies, as well as on the shape of the real estate industry as we go forward. It’s weighing in at over 10,000 words, 26 printed pages. I spent a ton of time on it.

And I realized, I can’t just give it away like one of my blogposts, because this wasn’t “fun” to write. It was interesting, but it really was work.

So I’m charging for it. That may mean that only three of you will end up reading what I spent so much time on. You know what? I’m comfortable with that outcome. Because it will tell me in no uncertain terms who values my analysis and opinion, and how much they value it.

But let me provide you with some of the topline insights so you can at least get a sense of what you might find if you do pay for it.

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Seven Predictions for 2013: The AKUS Experience

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The Greatest Band in American Music

Once again, it is time for the world famous (in my own mind at least) annual tradition of making predictions for the coming year that are Guaranteed to be Wrong, or Your Money Back! This year, I thought I would pay tribute to the greatest musical act still working today: Alison Krauss and Union Station. If you haven’t experienced AKUS, please click on the embedded videos; you will become a fan. If you are not a fan, you should be. “But I hate country music” is no excuse when it comes to the awesomeness that is the Hall of Fame lineup of Alison Krauss, Jerry Douglas, Dan Tyminski, Ron Block, and Dan Bales.

My 2012 Predictions turned out to be mostly wrong, which is great news, since many of them were dire indeed. Here’s to hoping that my 2013 predictions will perform about the same.

Let’s get into it.

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When Life Hands You Citrons, Make Citronade: In Which I Differ With Smart Analysts

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A cool refreshing drink…

I’ve gotten more than one request from readers to discuss the brutal analysis report on Zillow by Citron Research. I didn’t think I’d have much to add to a stock analyst’s report that tends to be heavy on financial metrics and such, but it turns out that the Citron Research report is indeed worth reading. And opining about. Seeing as how I don’t own any Zillow, haven’t shorted Zillow — or anyone else, and no one is paying me for this post… you may value my thoughts at what you’ve paid for them.

Fundamentally, Citron’s report isn’t an attack solely on Zillow; it’s an attack on the entire business model of Zillow, Trulia, Realtor.com, and everyone else in the “aggregation” business:

We can all agree the internet is not a new technology. Internet-generated leads to realtors have been getting sold for close to 15 years. Zillow itself has been around for seven years. If, after seven years and hundreds of millions of dollars of Wall Street’s money, all it has generated is a $100 million revenue run rate, why should the future be exponentially better than the past—especially with a plethora of well capitalized competition? That Zillow has captured a whopping 1% of real estate ad spend after seven years, definitively reveals a history of rejection of their model by their core market. This is not a broken business model; it is a business model that has never worked. (Emphasis in original.)

I think that’s going a step too far, and ignores some of the real simmering fault lines bubbling under the surface in the real estate industry. Since Citron isn’t new to covering the real estate technology business (“yes, we are veterans in this space”), I would have thought they’d be more aware of those fault lines. If they’re not, I invite them to subscribe to this here blog, since I often discuss them.

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Key Metrics of the Big Three Portals: Move, Trulia, Zillow

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First of all, congratulations to Pete Flint and the team at Trulia for their successful IPO. Trulia is now TRLA on the NYSE. The environment wasn’t necessarily looking friendly for a real estate related IPO, but Pete and crew navigated it. So a heartfelt congratulations to you all.

Second, the thing that’s great for a blogger/commentator/bigmouth like me about Trulia going public is that we now have some real data to compare the three major portals on. (Well, sort of… see below for details.) Public companies have to make public filings, and tell the world how they’re doing. So I decided to take a look at some topline numbers, without a whole lot of detail, looking into the discussions, etc. There are some interesting things that pop up when you compare Move, Trulia, and Zillow across the board. Continue reading →

How Do You Like Me Now? On RealEstate.com and IDX

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Photograph: Amy Hahn (no relation to your truly)

Yes, I know, I know. Nobody likes a “I told you so”. It’s obnoxious and childish. But… I just can’t resist! So forgive your humble scribe as I do a victory lap around the Tree of Nostradamus.

About what, you ask?

Well, it appears that RealEstate.com is relaunching as a lead generation website using a very particular model of data harvesting that has various folks up in arms. To take as one example, Brian Boero over at 1000watt:

So, you have what I’m calling a “paper brokerage” leveraging IDX to grow their “lead-to-close marketing system.”

It gets richer:

Unlike Zillow, Trulia and Realtor.com, which have spent gazillions negotiating for voluntary access to listings from MLSs and brokers, Market Leader, by virtue of its brokerage licenses, simply grabs the IDX feed.

I’m surprised that Brian is surprised. This was so obvious that I’ve made it one of my Seven Predictions for 2012. And the implications of this is also obvious: End of IDX As We Know It.

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Transparency For Thee, But Not For Me

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(I’m going to try an experiment with this post and a couple others in the future. This post will be under 600 words, period. Then I’ll track site stats.)

Over on Facebook, Danny Dietl writes:

…why don’t they [Zillow] just put a disclaimer on the front page that says something like “we are working on having updated and accurate data on properties listed for sale. For now, please understand that many homes listed are not currently for sale or have the wrong list price.” Without something like that YES all day they are deceitful. Jay Thompson [Zillow's industry relations guy], why not do that if transparency is the goal?

Of course, we’re talking only about transparency as it comes to data accuracy, as opposed to business practices — such as using listings as bait to draw in buyer inquiries — but let’s stick with transparency vis-a-vis just data accuracy.

Danny’s idea is that agent websites, powered by IDX, are transparent in ways that Zillow.com is not. I don’t see it from the consumer’s point of view — and as some folks are so fond of pointing out, I am not now nor have I ever been a real estate agent. So the only thing I can really offer is the consumer’s perspective.

A consumer going to a website is not thinking, “I hope I get to see all of the listings in the MLS that is timely and up to date.” The consumer is simply thinking, “I want to see all of the houses for sale.” That happens to include FSBO’s. Most websites powered by IDX (actually, all of them that I know of, but who knows — some MLS might allow FSBO listings that I don’t know about) do not include FSBO listings.

ALL of the properties for sale may very well include pocket listings that the agent is keeping private, whether because the seller doesn’t want it shown on the Internet (luxury sellers sometimes demand this), or because she knows she can get better results for her seller by working through her personal network. Should that fact be disclosed in a disclaimer?

Under Danny’s rule of transparency, all broker and agent websites should have a prominent disclaimer right on the front page saying:

Please understand that the homes listed here do not include FSBO’s or private listings. This means that our market stats may be incorrect, as it does not take off-MLS sales into account.

That is, to put it mildly, going a step too far.

When contacting an agent, the consumer might want to know if she has ever had any issues with past clients, if she has ever had an ethics complaint filed against her, etc. Under Danny’s rule of transparency, one would have to demand that every agent profile page on a broker or franchise website should list every ethics complaint filed against her ever, no matter how frivolous, as well as all comments/reviews about her no matter how negative and how unfounded.

Again, that is asking far too much. Transparency does not mean committing to marketing suicide. Consumers certainly don’t expect it, although if you choose to be radically transparent, that may yield results. That’s your call just how transparent you want to be.

However, the idea of holding other people accountable to a standard of transparency that you are not willing to be held to strikes me as the kind of thing that eco-activists living in 40,000-sq.ft. mansions and flying private jets to environmental conferences do.

Refrain. Tap the brakes. Transparency is not the goal; effective marketing is. Act accordingly.

-rsh