Zillow, Zillow, Zillow! What Happened?

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Anthony Lamacchia: Zillow, Zillow, Zillow, Zillow. What did you do? People are in disbelief. “Oh my God, what did Zillow do? I thought Zillow was going to push realtors out of the business, push brokerages out of the business.” That’s what they said, right? Yes, I never believed it for a minute. Never believed it for a minute, and I’m not at all surprised at what happened yesterday with Zillow. Here is why. Here is why. I am a deep believer in capitalism. Capitalism doesn’t fail.

No company, I talked about this over the weekend in the Crush It video that I did literally over the weekend from my car. I said, “Companies can lose if they can afford it and if they plan appropriately, they can lose money temporarily. They can lose money for three months, six months, maybe a year if you have investments lined up or a bank on board.” I said if you’re a tech company, maybe you can lose money for a few years but you cannot lose money forever.

Zillow, constantly, every quarter was losing millions and millions of dollars in their home-flipping business, in the business that they had, where they were buying homes and selling them. The numbers weren’t making sense. It wasn’t adding up. Anthony Lamacchia here with Crush It In Real Estate. I decided to come in the office this morning early to catch up on a few things. I want to talk to you all about what has happened here. What has happened here is somewhat of a historic happening in the real estate space.

I was at Inman last week, and as I told you all in my video over the weekend, there was a lot of talk about, “You can’t make money in the brokerage space, in these tech companies, in tech this, tech that.” My friends, look what happens when a tech company tries to play in the people business and in the construction business. Really, that’s what happened. Flipping homes involves construction, it involves contractors. It involves having an understanding of homes beyond just what their value is from some algorithm. Okay. Literally, it involves more.

When tech meets the people business, when tech meets the construction business and tries to dominate it, this is what happens. It’s not surprising to me at all. Now, I feel for some of my realtor friends, some of my team leader friends, broker-owner friends around the country who have decided to get in bed with Zillow, and sell their properties and bow down, and oh my God, Zillow, Zillow, Zillow, and do everything that they ask.

There was a time that we did a lot of business with Zillow, and they provided us a lot of good leads. They still have good home buyer leads, there’s no denying it, but in the summer of 2018, we made the business decision to say, “Bye, Zillow, good luck,” because they were starting to get cocky. They were starting to be too much with their pricing. They were insisting on having us get into their system and all kinds of things.

Let me tell you a story, please. Let me tell you a story. 2010, we were two and a half years into working, selling foreclosures for various banks. In those days, the market was so bad. If you weren’t doing some short sales or some foreclosures, you were not growing. You weren’t. We were doing it, and I distinctly remember in the spring of 2010, telling my ex-business partner, “I’m not loving this as much as I thought.

I feel like we are kissing ass,” I’ll never forget, “to people in Texas who are in control of these properties, but what’s going to happen when we get to the other side of this and there’s no longer foreclosures, what’s going to happen? We’re going to have these friends in Texas. This small group of friends, nice people.” Actually, one of them is still a friend to this day. Some realtor friends I made during those days are still friends to this day. I said, “What’s going to happen?”

Fast forward to May 2010, we got fired. Yes, fired. We made a mistake on one property. We worked very hard for this company, made a mistake on one property, sent a letter to the wrong property. Someone knew a congressman, feathers get ruffled, we got fired. I was distraught. I was so angry. Then about nine days later, I remember waking up one morning saying, “This is probably the best thing that ever happened to my business because we got too dependent on one single source.”

Whether you are a realtor, a team leader, or a broker-owner if you are watching, I am here to tell you, do not make that mistake I made. When I made that mistake years ago, I committed to never ever, ever, ever allowing my business, our company here at Lamacchia Realty, never allowing it to become dependent on one single source ever again, and I never ever did.

Sure, we’re in the relocation space. We have various relocation management companies that refer us business. We receive leads from various sources like [unintelligible 00:05:04], but you know how much of our business that is? About 20%, 22%. The majority of our business is relationship-based. It’s working by referral. It is teaching our agents, training our agents, encouraging our agents, providing incentives for our agents to work by referral.

I actually have a training on it this morning. I’m doing a training from 10:30 to 11:30 on working by referral, building your sphere, building up your database, and growing your business. Lennox Scott from John L. Scott talks about getting as many people attached to you as possible. Now, the people that have been working with Zillow, they’re going to have a hard time, they got dependent on seller leads. They got dependent on seller leads.

See, folks, the real estate business as a whole is a relationship business. Yes, of course, we enjoy providing some leads to our agents. We have various ways that we produce leads. We do television advertising, billboard campaigns, all kinds of things to drive some leads in, but at the end of the day, this is the relationship business. Now it’s breaking news in the real estate space, Zillow gives up the home-flipping business after losing 180 million in the last quarter, 200 million the quarter before. I just read they’re going to write down $550 million in losses in Q3 and Q4.

Rich Barton’s a billionaire, he’ll be totally fine. I don’t know if he’ll continue to be a billionaire over the next six months to go through this with his stock price falling, but he’ll be fine. 25% of their workforce is out of a job, and that’s frustrating and disappointing for those folks who have to now get new jobs, but they will. We’re in a very strong economy. This is capitalism. These folks will get out and they will find new jobs and there’ll be just fine, but folks, do not be surprised at what happened here. This is not surprising. It’s not.

You cannot tech your way through the real estate business. I did a video– I’m pointing as if you all can see it, down in Cambridge, two months ago. I was walking along the edge of the Charles River, and Boston was behind me, the skyline, and I said, “Realtors will never be out of jobs, it will not happen.” I explained how it’s a relationship business and buyers and sellers need at least one intermediary in between and a realtor. Oftentimes, two realtors, one representing buyer, one representing seller.

I talked about how we don’t need to be concerned about getting pushed out of this business. It’s not going to happen. All these tech companies– There was an article last week, I think it was in Inman that said, “Could Redfin and Zillow buy all the homes? Could they do that?” I’m reading, I’m like, “This is ridiculous.” All the sellers are not going to sell to them. They would like to think that– hey, I’d like to think that all the home sellers out there are going to sell through my company, not going to happen. Not going to happen.

I’d love to. I’d love to have every home seller come to us and end up in court being charged with a monopoly. Great, not going to happen. Consumers have choices. This is a relationship business. We’re not going to be able to recruit every realtor, we’re not going to be able to get every home seller, that’s how it goes.

I talked about this over the weekend, and I talked about how businesses can’t lose money forever. I don’t know where you may be sitting in this. You may be a realtor that’s unaffected by this. You may be a realtor that is dependent upon Zillow leads, that may be the case, and if that’s the case, reevaluate your business. Do not be totally dependent on any source of leads, Zillow, or anyone else.

In the beginning of getting into the business, it is normal to be much more dependent on some type of lead sources, that’s normal, but your goal is to wean off that as soon as possible. Stay in touch with past clients, work your sphere, work referrals, and grow your business. Get people attached to you. Okay, like I said, I’m doing a training on that this morning at 10:30. It’s one of our trainings that we have. If you’re a team leader, so I just talked about what to do if you’re a realtor.

If you’re a team leader, and you were dependent on Zillow, and you were working with Zillow, this is not the end of the world. I was where you were one time. I put too many, not all, too many of my eggs in one basket and it caused us a setback for six months. It started in the May of 2010, we recovered. Best thing that ever happened. Believe me.

If you are one of those people, you’re frustrated right now, you’re disappointed. You’re thinking, “What am I going to do?” Here’s my recommendation, folks, to your team leaders out there, your broker-owners that are dependent on these Zillow listings, put all that energy and all that focus that you put into serving Zillow and bowing down to them, take that focus and put it into growing your agent’s businesses. When you get out of bed in the morning, and all you focus on is growing your agent’s businesses, you know what happens? Your business grows. That’s my number one focus.

I did a video 19 minutes long in the Real Talk with Anthony series that I’m filming. I talked about how our main focus is to grow the agent’s businesses. When we put that first, the company then grows. That’s what you have to focus on. Broker owners and team leaders that are focused on Zillow, that maybe got the rug pulled out from underneath them, you’re frustrated, you’re aggravated, put that energy, put that focus into growing your agent’s businesses. Teach them to work by referral, provide incentives for them to work by referral.

Help them, help them market, teach them to market and watch what will happen. You’ll all be better off. I hope that’s a good summary of what happened with Zillow. No one should lose any sleep. I’m sure some will, unfortunately. That’s a silly statement for me to make. You might lose sleep in the short-term, don’t lose sleep in the long-term, okay?

This is a relationship business. As I said over the weekend, brokerages are going nowhere. Anyone who says you can’t make money in the brokerage business and you can’t do well in the brokerage business has given up on it in my opinion. The brokerage business, the realtor business is alive and well. Keep all of this stuff in mind, stay focused, happy home selling, my friends. As you can see, I got to get home and shower, get dressed, and get my butt back here. Have a good day, folks.