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Research firm says Zillow/Trulia have potential anti-trust blood on their hands

While the industry reflects on Zillow’s acquisition of Trulia, one research firm cites potential anti-trust blood that could be on the companies’ hands.

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I know, I know – you’re probably sick of hearing about Zillow. It’s been one week since the jawdropping announcement that Zillow is buying Trulia and it seems you cannot log onto Facebook or read an industry news site without reading one more opinion of the proposed stock buyout. While some have questioned if the federal government will allow the plan to move forward, citing potential anti-trust issues if real estate portal giants number one and number two combine forces, another anti-trust issue surfaced this week.

Recently, HousingWire published an article stating that Citron Research shows that the combined super syndicator may not be all it’s cracked up to be from a financial investment standpoint. The article calls the new entity a “Potemkin village” built to impress and exaggerate how good things are in Zulia-ville, and not a true superpower destined to dominate the real estate portals.

In “Zuliagate – The Big Secret,” Citron Research states that “the combination of Zillow and Trulia is supposed to give the combined entity the power to triple ad revenue from real estate agents. Nothing could be further from the truth — and we have the proof.”

Citron Research’s smoking gun

Citron’s smoking gun is a 60-page slide presentation originating from a Coldwell Banker office (Coldwell Banker Pacific Properties in Hawaii) encouraging its agents to sign up for a special marketing package called Fab Plus.

For a ridiculously low price ($350 per year, and only $175 for the first year if you signed up by an April 15, 2014 deadline) agents would receive “Featured Agent Branding” which includes (from slide 52):

  • tools the competition cannot touch
  • listings fed to the largest web portals
  • agent contact information is displayed next to listings (not office contact or competitors)
  • featured listings branded to the agent, promised ranking higher in search results on Trulia, Homes.com, Zillow and Yahoo! Real Estate

Agents were promised from $2100 (agents with only a few listings) to a $23,000 value in advertising (for power listers with 100 listings) – for $175 for the full year. If you’ve bought any featured listing packages on these portals, or paid for upgraded marketing status, you know that you aren’t likely to buy even a fraction of a low scoring zip code in most areas for the pittance these agents were promised for that price.

Citron’s article states that Coldwell Banker is not the only real estate franchise offered such steep discounts on marketing packages. Sotheby’s, ERA, Century 21 and Better Homes and Gardens – all of which operate under the Realogy umbrella – received the same 95% discount off book rate. Realogy operates the five brands as separate franchise, with almost 6000 offices and over 170,000 agents. To say Realogy has some pull with negotiating marketing deals with the listing portals would be a major understatement.

Note from the Editor: Realogy includes the residential real estate brokerages Better Homes and Gardens Real Estate, Century 21 Real Estate, Coldwell Banker, ERA Real Estate, Sotheby’s International Realty, Coldwell Banker, and Corcoran Group Real Estate.

Citron asserts that Realogy is the true danger

So, while people opined last week (me included) about the pitfalls of a giant Zulia controlling the market and potentially raising prices for agents and brokers, Citron asserts that Realogy is the true danger in this scenario, as it was marketed to their agents specifically to “Block competitors from advertising on your listing details page.”

For less than $15 per month, Realogy agents can assure they are the only point of contact on their own listings. The flip side is that Zillow/Trulia cannot sell those buyer leads to any other agent in their system. Meanwhile, Citron states that Realogy is investing serious dollars in their own real estate portal, as the company realizes that the best leads – most qualified – come from the corporations own sites, not outside portals.

If Zillow/Trulia try to raise prices on featured listing status, using their pricing power as feared, Realogy could terminate the agreement, throw its support towards its own portal, and even pull their listings with few repercussions.

Wall Street has not done its due diligence

Zillow stock is up 87% in the past 6 months ($144.81 close on 8/4/14), while Trulia is also up 87% in the same time period (yes, a freaky coincidence – and close of $60.98 today). The paper asserts that Wall Street has not done its due diligence with this deal, and instead of jumping on the Zulia bandwagon and driving the stocks higher, analysts need to dig deeper.

The paper ends with a scathing assertion: “Citron could publish volumes regarding internet traffic overlap, regional MLS strategies to adjust to / compete with Trulia/Zillow, customer backlash, and every other red flag raised about this company. But none of it matters if you have an undisclosed business practice, one that you have been hiding from Wall Street, that just torpedoes your own business plan.”

UPDATE: Zillow tells Realuoso, “Citron is a firm run by a short seller that publishes self-serving propaganda. We don’t engage with unethical practices of this type. As for Realogy, we have an advertising deal with them. We don’t get into the specifics of individual deals – we never have. The math in the Citron report is not correct.”

Erica Ramus is the Broker/Owner of Ramus Realty Group in Pottsville, PA. She also teaches real estate licensing courses at Penn State Schuylkill and is extremely active in her community, especially the Rotary Club of Pottsville and the Schuylkill Chamber of Commerce. Her background is writing, marketing and publishing, and she is the founder of Schuylkill Living Magazine, the area's regional publication. She lives near Pottsville with her husband and two teenage sons, and an occasional exchange student passing thru who needs a place to stay.

Real Estate Corporate

Zillow’s patent game is strong – they just got 3 for IBM’s creations

(CORPORATE NEWS) This company was just granted not 1 patent but 3 on tech more than twice their age! What does it mean for you? Nothing good…

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Welp. They did it.

We’ve been watching Zillow for some time now, and in the midst of even the strongest of OP Eds saying how terrible an idea it is, Uncle Sam officially handed them multiple patent keys to tech they didn’t invent.

How big do you have to be before you can clout jack with this much impunity?

I’m used to seeing this with small artists. Forever21’s Etsy spies find a cute, simple design, maybe do the work to alter the pallate a smidgen and rely on the ‘Matilda’s Dad’ strategy of “I’m smart, you’re dumb, I’m big, you’re little, I’m right, you’re wrong, and our lawyers will argue the same, peasant’.

But with technology, you can literally trace the code back to a source. It’s not like using teeth as a motif, it’s real, it’s definite, and it’s definitely really shocking that the government signed off on this.

Zillow’s not exactly startup sized, they’ve been in business since 2004. They’re a big name. Their competition probably can’t muscle their way in and out like they can. Matter fact, a company you may have heard of fighting them on patents has only been doing their doings since…wait, since 1911. Must be a tiny outfit, that was in some other business for over a century right?

It’s IBM.

What le freaque?

We all need to be concerned about this level of government sanctioned patent jacking, no matter what field we’re in.

I’ve heard before that if you’re just starting out, and low on funds, paying for your inventory and manpower are more important than filing anything with the government. Now we’ve got fresh, bloody proof that that’s 100% not true.

Your or your company’s intellectual property can be deeded off with a factor no more elaborate than whether the patent office likes your face that day, regardless of what kind of trail you’ve left, and as far as being run into the ground or laid off goes, that’s hardly a non-factor.

This decision represents a higher financial barrier to entry for everyone from Amazon entrepreneurs to realtors daring to use tech as basic as texting in their business.

Yes, literally.

Zillow’s patents, condensed for readability, are on:

Taking panoramic images for 3D walkthroughs

Multi-criteria search engines

And superimposing images scaled for size onto an area of land

Do all of those sound familiar? They should. We’ve been using that tech for years. And Zillow’s no Microsoft.

As always, we’ll have to see how this plays out. But if your New Year’s resolution was to take more bold steps in your business, maybe see if you can patent the idea of putting your picture in your email signature?

Apparently it couldn’t hurt.

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Real Estate Corporate

Conductor buys their company back from WeWork (that’s a good thing)

(CORPORATE NEWS) In an effort to refocus, co-working giant, WeWork, is looking to offload many of its recently purchased assets which may work in the small companies favor.

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Once upon a time, WeWork, the popular, ever growing, co-working space giant, was valued at $47 Billion. But on August 14th, 2019, everything changed.

In August, WeWork submitted its first IPO paperwork for the company, not realizing it would almost immediately face incredible scrutiny from various entities, such as investors and the press, in regards to its finances. Although the company’s revenue doubled in 2018, Business Insider found that the company wasn’t actually earning any profit. In fact, reporter Rebecca Aydin reported on July 3rd that the company was losing $216, 000 every hour of every day.

But that’s not all. Since WeWork went public, the company has witnessed an incredible devaluation, from $47 billion, all the way down to $8 billion. Now, since we’re talking about billions of dollars here, the devaluation may not seem like a big deal for the future of the company, but I can assure you it is.

This devaluation resulted in Softbank, WeWorks’ biggest investor, taking over, and offering $1.6 billion to then CEO, Adam Neumann, in exchange for stepping down.

Throughout their growth, WeWork acquired more than 20 businesses, such as Spacious, a small co-working space in Manhattan, New York. Spacious’ CEO prior to the acquisition was Preston Pesek, who launched the firm in 2016. Pesek had a background in real estate and founded the business to leverage and monetize abandoned buildings and restaurants.

Customers had easy access to these spaces for a nominal fee, but because of WeWork’s recent decisions with finances, it made the decision to offload quite a few of its previously acquired businesses, including Spacious. They’re also looking to liquidate Managed By Q, which was purchased by WeWork from founder, Dan Teran in April.

In light of this news, Pesek anounced that Spacious will close its doors at the end of the year, alluding to WeWork’s refocus on its core workspace business. But while Spacious is set to close, Teran has decided to fight to re-acquire his company. In a article on The Real Deal, writer Rich Bockmann states that Teran said he’s actively looking to buy back his company.

Conductor, another company WeWork purchased more than 2 years ago, has already been successful in purchasing its company back, and it looks like it may be a better setup for its employees than previously. Co-Founder, Seth Besmertnik, stated in an interview that, prior to the sale of Conductor, he actually only owned 10% of the company. But with the re-acquisition of the company, Besmertnik and his partners, investors, and employees will be in full control. He says that under the company’s restructuring, employees will have “more than four times what they did when we sold the company”, which is clearly a better deal than what they had before.

But WeWork isn’t just liquidating co-working assets they’ve acquired. They’ve also laid off 2,400 employees in an effort to cut costs. Additionally, they’re also considering selling and/or shutting down other ventures, such as Meetup.com, a web platform that makes meeting up with like-minded individuals as easy as possible (purchased in 2017 for $156 Million). WeGrow, an elementary school in Manhattan, is also on the chopping block.

At the end of the day, WeWork just wasn’t as strong as users, investors, business partners, and the general public thought they would be. At a current valuation of only $8 billion (again, down from $47 billion), and with a $9.5 billion bailout from Softbank, the company will have to get really smart with their remaining finances. It’s obvious that the company is still in a state of flux, reevaluating their options and their main focus, but the question remains – can they still be saved? Maybe even more importantly, are they worth being saved? Only time will tell.

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Real Estate Corporate

Redfin launches their Job Opportunity tool – gimmicky yet brilliant move

(REAL ESTATE) Redfin has launched a new tool that at first glance is a PR stunt, but at second glance is useful and pretty damn smart.

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According to the National Association of Realtors, 90% of people searching for new homes will turn to the internet in their hunt. It’s why real estate sites like Zillow, Trulia and Redfin exist. With competition growing tighter every year, Redfin has created a new feature to stand out from the rest of the pack: a job opportunity tool.

No, this isn’t specifically for job hunting. You’re going to have to look for specific employment opportunities elsewhere.

Instead, Redfin has collected information from sources like the Bureau of Labor Statistics, the US Census Bureau, and even the IRS in order to provide an informed look into the job climate for those looking to relocate.

Not only can users get an idea of how many jobs are available in an area, they can take a look at median salaries, and how these salaries add up against the cost of living.

Redfin’s tool calculates average housing, transportation, and tax prices, among other things, which can give people an idea of how far their salary will really go in a new home.

Plus, they’ve also created a tab for employers to research data regarding hiring prospects, expanding usage of the tool to those considering starting, expanding or moving a business.

On its own, the job opportunity tool is pretty neat. There are plenty of colorful visuals to make the information engaging and easy to digest. The tool also boasts a decent amount of variety, providing insight about jobs from bakers, floor sanders, midwives, and anything in between. It’s sure to provide interesting insights to anyone looking to relocate.

Primarily, it’s a smart business move on Redfin’s part.

The tool sets them apart from other real estate sites, giving them a traffic and brand boost with the markets they were already targeting. Many people looking to buy homes are, after all, making significant relocations. It also diversifies what Redfin offers, though, which might help them garner attention from other industries and break out of real estate in a creative way.

Above all, it’s a smart PR move for Redfin, to creatively present their data to news outlets and have their name in as many media mouths as possible.

Online real estate is still a budding industry despite being two decades old, and this is just one of many ways the industry is evolving. Still, kudos to Redfin for making something that is both an interesting gimmick and a useful tool for job and home hunters alike.

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