Zillow, Realtor.com: “Checkmate!”
Have you noticed? A funny thing has been happening in the real estate lead generation space over the last few years. Consolidation. Consolidation is where companies merge with or acquire other companies. After several years of consolidation, there are now only two major players and most of the small players have been either bought up or closed down. The two behemoths that remain are Zillow and Move, Inc. (Realtor.com).
If you think this doesn’t affect your business, then keep reading. The sequence of events we already see unfolding will impact every member of the real estate industry. And I’m not talking five years down the road either. Many of you have already felt the effects of what’s happening.
From the Washington Post – Bloomberg website, “At stake for Zillow and Realtor.com is the share of marketing spending by real estate agents, estimated by Goldman Sachs Group Inc. at $9.7 billion this year.” Wow! There are currently 1.1 million Realtors so that works out to an average of $8,825 per-agent in marketing this year alone!
And don’t count on that number going down either. Zillow’s quarterly revenue growth is at an outrageous 92.1%. PER QUARTER! Realtor.com is growing revenue at a less but still outrageous 50% PER QUARTER! We’re not talking about an oddball month — that is their quarterly growth rate, year-over-year. When markets move toward a monopoly, prices always increase. So much so that Rupert Murdoch’s company News Corp, (Wall Street Journal, New York Post, Harpercollins, 20th Century Fox, Zondervan, Fox News Group, Fox Broadcasting, etc.) recently spent $952 million IN CASH to buy Move, Inc. that was only valued at $841 million.
Why do you think they would spend that premium paying over 10% above market value? Why would a very successful billionaire even purchase a company that was floundering and losing market share every quarter? And why would he pay a premium for it to boot? Here’s why: He saw a huge financial opportunity. Face it, the nearly ten billion dollars this year in Realtor spending for marketing is a large prize. He wanted a big slice of that pie.
|“At stake for Zillow and Realtor.com is the share of marketing spending by real estate agents, estimated by Goldman Sachs Group Inc. at $9.7 billion this year.” – Washington Post-Bloomberg|
Just in case you haven’t noticed, the cost of online marketing and lead generation is going straight up. We’d heard reports from agents that Zillow has tripled their prices in a year but until we began to study the numbers we thought those might have been isolated cases. But now that the numbers are in, we are beginning to believe it is widespread.
Think about it… How else do you think Zillow can grow revenues at 92% per quarter? They only sell to us agents. Their consumer products are all free. Same with Realtor.com. So if you are starting to feel like you have a big dollar sign on your back, welcome to the new age of real estate. And it isn’t about to get any cheaper, you can bet.
I’ve talked to agents, many of whom are spending as much as $3,000 per month or more with Zillow or Realtor.com. Sadly, even with that huge investments, the leads they receive are not exclusively theirs. Instead they soon realize they are only one of several agents calling back the same lead. And if you are only one of an army of agents calling your lead back, that makes converting those leads even harder. But there is a better way.
What if instead of buying high-priced, low-quality leads from Zillow or Realtor.com you actually made your own? That’s what guerilla marketing is all about. What if instead of spending well over $100 a piece for leads only to be one of many agents to call them, instead you were the only one calling and you made your own leads for less than $2 each? Sounds too good to be true, doesn’t it? Well it’s not. It’s absolutely true when you make your own leads for wholesale instead of buying them for retail.
The average agent using our Ultimate Website spends less than $2 per lead — $1.39 to be exact — and that includes the cost of the whole system — their website, their blog, their call capture hotline, their text lead capture service, their CRM, mobile application, social media integration, web hosting, and coaching. The whole system makes leads for less than the price of a footlong hotdog at Wiener Works!
Let me give you an example. Michael TenEyck, an agent in Costa Mesa, California, has been using my Ultimate Website for about a year. Before that he was spending over a thousand a month with Realtor.com with prices going up. Still he was doing most of his business from referrals of friends and past clients. Not only did he drop his marketing bill, but he quadrupled his business in the process.
Prior to using the Ultimate Website my real estate business was limited to 3-4 transactions a year. Mostly word of mouth. I tried Realtor.com but monthly fees for my zip code was over $1,200.00 a month. My mortgage side carried the transactions.
After getting the Ultimate Website I have discontinued Realtor.com and I’m now generating 5-8 leads a week and I’m closing 2-3 transactions a month. In addition, the Ultimate Website has been a great purchase lead source for my mortgage company.
The year prior to using your system, my annual revenue was $300,000. This year I am on track to exceed $1.2 million in commission revenue — May 2015 alone was approximately $115,000.
I have to tell you that the setup and training was the easiest I’ve ever experienced. I did a web training with Levi who was awesome and explained how the software works and tips on implementing it. I just hired a personal assistant to respond to and set listing appointments for me. She also took the online training and was on her way in less than a day.
I want you to let agents have my email and direct phone number in case they don’t believe me or have any questions. I am happy to speak with anyone who is truly serious about improving their business.
Michael decided he was not going to be dependent any longer. He was going to take the steps to become independent from the lead generators and take his marketing back, spend less money, and do a much better job. Let’s face it — nobody cares about your marketing more than you do.
Let me to give you another example. Craig Moncreiff, an agent in the San Diego market, decided to become independent over three years ago. He was buying leads from a handful of companies, some of which have now been gobbled up by larger companies. Anyway, not only did Craig take control of his own lead generation, but he got really smart about it. He partnered with a mortgage company and reduced his marketing costs to nearly nothing while increasing his number of leads.
Hey guys, I wanted to share my success story with you. I hope you can use it to help other agents who are struggling or looking to increase their business. As you know, I’ve been using your system for 3 years now.
Before using your Ultimate Website I spent a lot of money on leads. I bought leads from Homegain, Reply, zBuyer, and several others. Either the leads were coming in from further and further away or they just got a lot more expensive. The “supposed” best leads in my area are now $315 EACH! And the leads often would say they were just looking or just thinking about selling.
Now I get lots of leads. Sure they’re not all listings or ready buyers, but it’s lots of good conversations. And I don’t have to worry that I’m the tenth agent to call them. Usually, I’m the only agent calling. And yes, I do get both listings and buyers from my Ultimate Website.
Your system was easy to set up both for myself and my lender. I now use a service to place Craigslist ads and I have a partner pay for it. What a difference! I now make 3-4 leads a day and only have to pay for my Ultimate Website. My best other former lead service was about five shared leads a week and cost $299 a month.
One of the things I like best about Craig’s example is that when he decided to take control of his own lead generation, he was ruthless about it. He took total control, cut his costs huge, then split the bill with a partner, and all the while getting a fivefold increase in his number of leads. That is Guerilla Realty at its best.
I don’t want to “beat a dead horse” as my grandfather used to say, so I will only give you one more example, although I could give you case after case after case. My final example is Matt Mouser. Matt’s practice is in Belmont, Michigan, a suburb of Grand Rapids. One of the reasons I really like Matt’s story is that unlike the other two examples, he was starting at square one. He needed to make something happen immediately and had no base of referral business.
He had been dependent, not on Zillow or Realtor.com, but still just as dependent. He worked as an assistant on a large real estate team who handed him business. One reason I mention his story is that many agents today are working on teams or for companies, accepting very poor commission splits, and making much less than they should, because they feel trapped.
I’ve talked to many an agent who is working in their company’s relocation department, paying 40% off the top to the Relo company for the lead, then splitting the remainder with their broker 50/50. It might not be Zillow but it’s just as dependent. Matt’s story is great because it illustrates what an agent can do when he decides to become independent and start generating his own leads.
Dear Levi and Support Team:
Two years ago I was starting from scratch. I had worked for years as an assistant to another agent until I finally decided to branch out on my own. The trouble was: I had no pipeline and no leads! But, I knew from reading the books from Matt Jones that I would be successful, because I could generate my own low cost leads.
Now only two years later, I feel like I am living the dream. I generate over 100 leads every month on the Ultimate Website System. I work from a home office and I’m able to follow up on all these leads as my schedule allows from home.
My income has doubled two straight years in a row by simply using the business plan provided by your system. I now have a virtual assistant who handles all of my transaction coordination and listing coordination duties. I’ve never had more freedom and free time, yet I’m earning more money than ever before. This system has allowed me to literally change my family tree.
The funny thing is that I was generating new leads within 5 minutes of my orientation coaching call! The process couldn’t be more simple and it’s so easy a cave man (ie: real estate agent) could do it. Over the last two years I’ve had many agents call me from around the country to get feedback on your Ultimate Website System. Some of them were current users and some were newbies.
The main thing I would tell them is, “Follow the training to the letter. Quit trying to tweak the craigslist ad or ad lib your follow up script. Model what Matt Jones has done first, because he’s more successful than you.” Thanks a lot!
What I like best about Matt is that he is optimistic, teachable, and hard-working — a great combination. And not only did he survive going independent, but he more than doubled his income each year while working fewer hours and having more freedom. It doesn’t get better than that. I think Matt is a perfect example of someone who came to a place in his life where he simply made the decision to become independent and then, just did it.
Maybe you are like lots of other agents today who are saying, “Enough!” If so, I encourage you to at least give it a shot. The freedom, the additional income, and the personal satisfaction of being independent are truly worth the effort. In very little time you will be wondering why you didn’t do it sooner. Think about it… What do you really have to lose? The worst that could happen is you fail and become dependent again. But if you are like Matt Mouser and are optimistic, teachable, and willing to work hard, you can break free forever.
Buy Leads or Make Your Own? You Decide.
|Market Capitalization||$5.26 Billion||$841 Million||What’s that?|
|Quarterly Revenue||$387 Million||$154 Million||Less than that!|
|Quarterly Revenue Growth (YoY)||92.1%||50%||Prices lower than they were in 2004!|
|Cost per Lead||$100-300+||$100-300+||$1.39 average|
This year Zillow and Realtor.com are planning on carving up that $9.7 billion pie. It’s time for a feast. If they have their way, next year it will be even more. They are currently gobbling up competitors as quickly as possible. When there are no longer any other companies to buy leads from, it will be “checkmate” for most agents.
If you have ever dreamed of breaking free and becoming independent — independent of lead generation companies or independent of your company or team — now is the time to go for it. Now is the time to take control of your own real estate future. Now is the time to take control of your own income, and now is the time to take control of your own life.
Not sure exactly how to go about it? Check out this followup article.