Possible Zillow-Trulia Merger: Zillia? Trullow? Good for Real Estate?

InmanConnect7.11DeidreWPeteFlynn-007There’s more insight over at Inman News about the possible Zillow-Trulia merger that still is just based on a solid source lead over at Bloomberg News. (That’s Pete Flint, CEO and co-founder of Trulia, above with me back in 2011.) Merger talk has been everywhere, even last week over drinks at Inman Real estate Connect. Inman’s Paul Hagey says such a merger would not really affect agents that much, with the exception of a possible increase in ad prices that could pinch agents a little more — and I am thinking about all the folks who work for both companies: will they be absorbed as well?

Forgetting about the fact that Zillow and Trulia hate each other, a merger would make it easier for brokerage firms to stop working with them or squeeze them on featured listings programs,” Safalow said.

There were also rumors in June that Trulia might be interested in acquiring realtor.com operator Move Inc.

Other experts say the agent ad and software market the three public portals are going after is not as big as many think, so a merger maybe makes sense.

“The rumor mill has been grinding on this subject for the last six to eight months, but nothing’s hit yet,” (Brian) Boero (1000watt) said. “We’ll see. If the Big Three, in some combination, became the Big Two you’d lose some of the competitive energy in the space, which may cause prices to drift up for agents, but, again, this is all speculative.”

Others, including your’s truly, wonders whether the U.S. Federal Trade Commission would even allow the deal to go through.

Steve Murray from Real Trends says that even though online advertising costs would go up, the resulting spike in viewers would be more than worth the cost.

Costs for online advertising would go up, but the resulting colossus would also attract more viewers, which would theoretically make the advertising worth more to brokers and agents, Murray said. Murray says he sees room in the future for two separate portals that get 100,000 agents to each pay $1,000 per month to advertise on their sites. A merger between the two biggest sites simply unites that estimate, he said.

But again, not everyone on Zillow or Trulia is actually a lead, a potential home buyer. A lot of the traffic is pure voyeurism. Talking to York Baur of MoxiWorks.com, a division of Windermere Reality (stay tuned, stay very tuned), I learned that 82% of real estate sales are to people the agent knows or has a relationship with. Trying to think of the last time I was somewhere where I didn’t know an agent, it was actually ten years ago in San Antonio when we bought a home there while my son was in College, a home we still own. We didn’t have an agent at first as we “got the lay of the land”, and we met agent upon agent, with every house, who wanted us to sign a buyer’s rep agreement, of course. I didn’t want to sign up with a perfect stranger.  I wanted to do some research and know more about the agent before we committed. Who would do a major financial transaction that divulges personal information with someone who’s name pops up on a computer screen? I wouldn’t even work with the guy who shook my hand!

Real estate is a local business, and I think most buyers look for a connection, a relationship, with their agent. They want someone they can trust.

The poll at Inman has 476 votes, 54% saying the Trulia-Zillow merger would be bad for the real estate industry. What do you think?