Recently, a US company called dotloop was bought out by another company, Zillow. This news follows the February announcement that Zillow was acquiring another business called Trulia. 

Over here, most agents wouldn’t have even heard of these companies. But despite the lack of reporting in the Australian media, the move has interesting implications for the US real estate market as it may well have for our domestic market.   

In very simple terms, we’ll start by describing Zillow as the US equivalent of realestate.com.au – the dominant player in the portal space.  If Zillow is realestate.com.au, then in this story, Trulia is domain.com.au. So effectively, the largest US portal has bought out the second largest portal, giving it around 90% ownership of all portal traffic. The big just got a whole lot bigger. Then comes the latest piece of the puzzle. 

There’s no equivalent yet to dotloop here, but essentially it’s a company providing a back-end transaction platform that allows all the different players in the property equation to interact in one place – whether it’s the agent or the conveyancer uploading documents, the financier accessing information, the buyer or seller signing documents on-line, or even the inspector uploading pest and 

So now we have one player who owns most of the portal space as well as a transactional platform. In this scenario, what protection does the agent have? Or where does the agent’s role fit? And going forward, will the agent’s involvement be marginalized, or even become obsolete?

Of course, the US model of real estate sales is quite different to Australia’s. Commission rates are significantly higher at 5-6%, and both buyer and seller is represented by an agent – and usually different agents. In the case of different agents, the fee will be split. 

In the ideal scenario for the agent, as well as representing the seller, they’ll also source the buyers, hence effectively receiving a fee on both sides of the equation. US agents therefore don’t just list all properties for public view – they use what’s known as a multiple listing system (MLS), which keeps listings in silos that are not accessible except by agent subscription in that specific area.  

If there are growing fears over who can access and hold information and hence who owns the customer here in Australia, you can imagine the risk is tenfold over there.

While conspiracy theories abound and are on the whole probably baseless, there are some interesting evolutions closer to home that might give rise to some legitimate concerns in the future. How about the “free”’ agent rating website, that heavily encourages agents to get their own customers to rate them on the independent site? After building enough credibility and capital, who’s to say a significant fee might not be required for the agent’s information to be displayed – with those who refuse failing to appear at all.

In recent times, the term “disrupter” has been frequently used, in industries varying from transport to travel. Is the real estate industry soon to face its own disrupters? Who are they? What do they do? Do we already know them? 

Westpac is currently losing $1 million a day, just because it didn’t initially build the capacity into its current systems to charge different interest rates on loans to owner occupiers and investors. It’s a good reminder to all businesses of the importance of foresight – and the potential cost of failing to have it. We all know what the term “caveat emptor” means. Maybe we also need to think about the Latin term for “caveat agent”, too.