Sunday, December 17, 2006

Why Zillow Will Never be the National MLS

There’s been a lot of discussion around Zillow’s latest announcement and there have been a lot of people asking for Point2’s perspective. This is my personal perspective on the issue and why I’m not that concerned about Zillow adding listings to its portal.

Much of the discussion sparked by Zillow’s announcement has been around the emergence of a national MLS or a portal that will replace the current MLS systems -company that all real estate buyers and sellers will use.

Why I’m not waiting for Zillow to be ‘THE’ place.

The September 2006 monthly internet portal statistics from claims the total traffic to the real estate vertical was over 40 million visits. The list contains 25 portals in the vertical. The highest trafficked portal is with 6.1 million visitors, accounting for roughly 15% of the total. But there are many noticeable exceptions to this list: real estate sites such as,, busy media sites like the,, major classified search sites such as, Craigslist,,, vertical search engines such as Google Base and Edgeio, large regional brokerages such as

Give the above,’s share of the real estate vertical traffic is much smaller than 15%. In fact it’s infinitely smaller if you want to include all of the thousands of brokerage websites and all the personal websites from over 1.2 million REALTORS®; 80% or more have a site they market. You see, real estate is a local business and that’s why there isn’t one national search site with all the data and all of the eyeballs. All those REALTORS® don’t have for sale signs with the url on it and they won’t be advertising either. I’m not saying that Zillow can’t or won’t ever operate a wildly successful portal. But being the one spot for real estate is more than a challenge.

Why Zillow is NOT the national MLS

The exercise above is all academic. More importantly, the issue around an MLS replacement is moot if we are talking about Zillow. Zillow is a consumer search portal gathering data, making it freely accessible for buyers and sellers. They are now allowing sellers to post homes for sale, will allow buyers to search and contact the poster of the listing directly.

An MLS on the other hand is NOT a consumer search portal. An MLS is a system that facilitates the cooperative sharing of information and the cooperative marketing of listings between real estate brokers. Marketing is the most important part of that definition. While the cooperative sharing of information may change as times change, because more information is being made universally accessible, the cooperative marketing is key. Organized real estate adds value to consumers because you can have hundreds or even thousands of local professionals working together to sell homes. Real estate is a local business that involves the sale of complex capital assets. Those assets can’t be purchased over the Internet. Homes need to be seen and it is preferred by most home owners, that the transaction is further facilitated by a real estate professional.

While commissions may change, and brokerage models may change, and methods of marketing may change, real estate brokers will continue to be essential by cooperatively marketing listings and offering to share compensation. Consumers will become more informed, new real estate portals will come and some will go, but the real estate professionals will remain essential. An MLS system is required to allow real estate professionals to cooperate.

It would appear that Zillow’s focus is on the consumer and not on building a system that facilitates brokerage cooperation. Bottom line: a consumer search portal is not an MLS.



Condo Blog said...

We couldnt agree with you more. Zillow will become a powerful tool for FSBO and thats it.

Joseph Ferrara. Sellsius said...

Well written post. You make excellent points.

Jay Thompson said...

Great post Jeff! I know a lot of agents fear Zillow. But I think they fear the unknown, not Zillow itself. This post should help clear up some of the unknowns.

Tony Sena said...

I couldn't agree with you more. Zillow is not a National MLS site. Zillow provides a base for consumers to get an idea on property estimates, but ultimately they need a real estate professional to give them an accurate idea of what a property's market value is.

FRANK LL0SA Va Broker- said...

Now with the REMAX signing to give all their listings to Zillow, they are one step closer to being the national MLS. Just give them another year.

The MLS better go Open Source or they will be eaten alive.

As for the cooperation, just wait. Zillow will incorporate a back end that includes coop data and once they have it all, the rates will skyrocket for getting your house on the MLS, or as I heard, the MLZ

Anonymous said...

you said it frank. as a home buyer, i don't need an agent to "market" homes to me. I need DATA, not an agent jumping up and down kissing my ass and feeding me a line of info that i don't know whether is true or false (the only way to know what's really going on in the market is to look at the data and the streets yourself, not listen to an agent who has vested interests that may differ from mine).

Zillow puts data in the buyer/sellers' hands. If that data is accurate and if there is enough of it provided to understand the dynamics of the market, i can't see much place for agents other than to go the way of the dinosaur

total12 said...

Base and Edgeio, large regional brokerages such as mobile homes for sale