How Billie Eilish helps explain Zillow’s current struggles | Rochester Realty Review

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Admit it. After hearing of the last eye-popping real estate sale in your neighborhood, you’ve logged onto Zillow to find out what your property was worth. Three days later, you did the same. It didn’t matter that the information was often imperfect, checking one’s Zestimate has become an American pastime. It’s the adult equivalent of your teenager’s TikTok obsession. Different screen. Same rabbit hole.

The perceived increase in the value of your home confers status, a sense of security and, perhaps, when gathered with friends at the neighborhood barbecue, bragging rights. Millions of Americans are addicted. That’s why the current pressures on our country’s favorite real estate app — and the near-certain changes in the way that real estate data will be delivered — are so interesting.

Back in 1990, if a consumer was interested in purchasing a home, they would often call a local brokerage and ask for a referral. Century 21 and Nothnagle were among a handful of powerful local middlemen playing this central role. If you were an agent who was particularly well-networked, you would secure clients who would call you directly, but the real brand remained the brokerage, itself.

Six years later, the central role of the brokerage was challenged when the National Association of Realtors launched realtor.com, making information that was once the private currency of licensed agents available to anyone with a computer and a modem. In 2006, Zillow made its debut, ushering in a whole new category of entertainment and creating further distance between homebuyers and agents. The only way for many real estate agents to successfully bridge that moat was to pay the tech giant fees totaling thousands of dollars every month. In exchange, a salesperson would purchase the right to have their name and phone number advertised on their site. Today, artificial intelligence may be ushering in a third chapter in the ongoing story of the public and its relationship with real estate data — this time with several significant changes.

The Innovator’s Dilemma suggests that many successful companies lose dominance as a result of disruptive innovations or business practices. Within the past several weeks, two large regional Multiple Listing Services have discontinued their data feeds to Zillow (a dispute that will ultimately be resolved in court). Meanwhile, Google is reintroducing individual properties as part of a consumer’s search query. At the same time, recently merged brokerages are experimenting with the concept of private/off-market listings played out at massive scale. And chatbots are providing robust, hyper-focused information to buyers and sellers in a manner that would have been incomprehensible to imagine 18 months ago. While all of this disruption is currently focused on Zillow, there are larger issues at play impacting hundreds of industries, audiences and creators.

On the surface, it seems as though Zillow’s predominance is weakening. Recent news certainly tells a compelling story; however, two fascinating metrics dramatically underscore the size and scope of these underlying shifts:

• In the past year and a half, Zillow has gone from a market cap 5.5x larger than Compass (the nation’s largest real estate brokerage) to just 1.3x today.
• During this same period, Compass’s market cap has increased about $3 billion, while Zillow is down around $8 billion.

Wall Street may be recognizing something that Main Street America hasn’t yet realized.

More broadly, the barriers that exist between agents and consumers are being dismantled. For decades, large brands — real estate brokerages, realtor.com, Zillow and others — acted as an intermediary between consumers and realtors. Supplanting this dynamic are individual agents who are steadily becoming the brand. Artificial Intelligence is the tool that enables them to break the gatekeepers’ control of marketing, information and reach. Blogs, podcasts, reels, videos and sophisticated graphics have democratized attention itself, enabling talented agents to build trust, credibility and market share without relying on gatekeepers to amplify their message. Technology hasn’t just changed real estate. It’s also changed who controls access to audiences. Ten years ago, Billie Eilish was strumming her guitar in her bedroom with her brother, Finneas. They released a few recordings on SoundCloud and today she’s an international sensation. Joe Rogan, Justin Bieber and countless other creators followed a similar path, bypassing traditional gatekeepers and building audiences directly. Real estate is beginning to experience the same shift. Increasingly, agents are no longer borrowing the audience of a brokerage, portal or media company. Instead, they’re building their own.

Meanwhile, the way that people discover homes, neighborhoods and professionals is undergoing profound changes. Until recently, if you had a question, Google would provide you a homework assignment: Here are 65 websites that might possibly answer your concern. Today, AI provides you the answer; the passive search is being replaced by an active conversation. How much has property value increased in a particular zip code during a specific period of time? What are the best school districts in a particular geographic region? What agent sells the majority of homes in a particular neighborhood?

I’ve personally benefited from the arrival of this strange new phenomenon. At least once a month, I’m receiving a call from somebody who tells me that they’d like to engage me to sell their house because ChatGPT told them that I was the best match for their particular needs or circumstances. If AI can evaluate thousands of signals simultaneously and one agent rises to the surface, then visibility, expertise, reputation and content matter more than ever.

For 30 years, technology democratized information. Now, AI is democratizing expertise. If that trend continues, homebuyers and sellers won’t simply have more data at their fingertips. They’ll have better answers. And after decades of promises about technology creating a more transparent and informed marketplace, that future may finally be arriving.

Mark Siwiec is the CEO of Elysian Homes and co-host of the Rochester Living podcast. He can be reached at 585-330-8750.