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Big fish (in real estate) eats small fish

Zillow to acquire Trulia, but still account for only 4% of real estate agents’ marketing budgets

 

Last Monday, after six weeks of secret negotiations, Zillow and Trulia announced a plan to merge in 2015. The motivation for the merger is to lower costs for development and delivery of real estate search services. While the two brands will remain separate in their external appearances, at least initially after the planned stock merger, they will combine operations behind the scenes.

The two brands currently have limited consumer overlap; approximately half of Trulia’s monthly customers also visit Zillow while approximately one-third of Zillow’s customers also visit Trulia. Zillow already powers real estate search at Yahoo Homes, AOL Real Estate and MSN Real Estate and will keep the separate Trulia brand after this merger is complete, according to Inman News. It’s never been “either/or” for Flagstaff real estate listings published through the Northern Arizona multiple-listing-service. The Flagstaff MLS feeds into all these services and over a hundred more, including the best Flagstaff real estate website.

Currently, Zillow has 83 million unique users and Trulia has 54 million, including users on both mobile and desktop platforms, according to Aaron Kessler and Ben Cohen, in a research note for Raymond James. “While we believe the deal could receive some [antitrust] regulatory scrutiny, Zillow noted that combined the companies represent less than 4% of the estimated $12 billion real-estate professionals spend on consumer marketing,” they wrote, as quoted in Amy Hoak’s MarketWatch column.

RE/MAX Chairman and Co-Founder Dave Liniger, who recently met with Zillow CEO Spencer Rascoff at RE/MAX World Headquarters in Denver, welcomed the news. He called the two portals “partners in our success.” Liniger added that companies such as Trulia and Zillow have the capital and technology resources to build sophisticated search platforms. Brokerage networks like RE/MAX have thousands of agents who have established personal relationships with buyers and sellers in their local markets.

“Some people in my industry panic and think the Internet is going to put Realtors out of business,” Liniger said. “But we don’t sell a commodity. We sell unique properties; each one is different. The value of someone to guide you through a [home] purchase is far more important than simply viewing homes online. We look at the portals as our friends,” Liniger said. “We wish them success.”

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