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Many realtors are panicked about Zillow acquiring DotLoop; is the alarm merited?

Is DotLoop’s acquisition Zillow’s backdoor into private consumer data, or a kick ass tool to add to advertisers’ toolboxes?

Yesterday, Zillow announced that they are in the process of acquiring DotLoop, a real estate transaction management startup out of Cincinnati.

The once-small startup has grown admirably since its 2008 launch, led by the press-happy, charismatic Austin Allison who created a product worthy of an acquisition for an undisclosed amount, by one of the largest and most recognizable names in the real estate industry.

But why wasn’t this acquisition universally celebrated? Because Zillow is the acquirer, and real estate professionals’ distrust of the brand was more evident in the last 24 hours than we’ve seen in some time.

Is Zillow one step closer to being a broker?

The immediate response in some circles was that this puts Zillow one step closer to being a broker (which they’ve publicly pledged is not their intention, as they’ve said for years). One agent told us that the mantra “the road to hell is paved with good intentions” is ringing in their ears with this news.

As a publicly traded company whose stock is down by half in the last year, if buying or becoming a brokerage increases profits, they may have to add a brokerage layer to keep stockholders happy.

But let’s be realistic – Zillow has not brokered deals to date, and they’ve sworn on their grandmother’s grave (figuratively) that they never will, so this fear is not founded on anything other than an inherent distrust of Zillow.

Giving Zillow sensitive data upsets many

To be honest, the acquisition makes perfect sense, as the media companies are in a race to be the real estate professionals’ business backend. They already offer IDX, marketing tools, and lead management, so why not contract management? It’s just not that simple.

What some real estate practitioners believe is dangerous about this acquisition is that it gives Zillow a window into their private conversations with their customers, highly sensitive contract information including clients’ finances and contact information, and internal communications.

No one seemed to have a problem with DotLoop having this information, but Zillow having access to it has bred alarm, again, due to the undeniable friction between Zillow and so many practitioners. “Zillow is not the industry’s friend,” one realtor told us.

The point has been made that Zillow is an advertising company, and so is Facebook – no one seems to mind giving Facebook endless sensitive data points, but the difference here is that realtors aren’t putting their information into the DotLoop machine, it’s consumers’ most personal information, and some simply don’t trust Zillow with it.

Lastly on this point, several told us that their rejection of this acquisition is that this is just more data that will be sold back to them. Data in, dollars out.

The nature of the data being shared with a third party that some have trust issues with is why some panic is merited.

Best case scenario, Zillow offers one more valuable marketing tool for Realtors, worse case scenario, they profit from the use extremely sensitive data that is none of their damn business. Which scenario you see when you close your eyes depends on how you felt about Zillow on Monday before this was a blip on the radar.

No one has noticed the elephant in the room

With this acquisition, Zillow has unprecedented access to data on listings – why not add a data field to a listing that shows how many offers have been made (and for how much), or failed transactions? Couldn’t they add the average credit rating or mortgage rate of homebuyers in a condo building (or hell, a single listing)?

Why not scrape private conversations, scrub names, and give homeowners the unfiltered opinions of agents and shoppers about a listing they’re transacting (for a fee, of course)? They could immediately have insight into the intentions attached to transactions.

But that’s child’s play – what this really does is give Zillow a back door into sold data in non-disclosure states, the shining Holy Grail they’ve been seeking for years. They just happen to have all of the sold data by having a private transaction management platform.

Maybe some panic is merited.

Moving forward, what will happen?

Long ago, we predicted that DotLoop would be acquired, and we guessed that Move would snatch them up, but Zillow makes the most sense to us, based on a cultural fit between the two. In other words – this news was no surprise.

Realtors that already hated Zillow were panicked by this acquisition, and some of the apprehension is merited, while reactions are borderline conspiracy theories. If it truly is a tool the brand paid big bucks for to be altruistic and just help their realtor buddies that keep their doors open, then some of the distrust could be repaired. Honestly.

That said, if the tool is in any way a backdoor way to get private data, the skepticism many have of Zillow will be irreversible.

Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

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