Trulia Files to go Public – Raise $75 Million

Trulia is one of the big real estate search engines that has seen rapid growth in traffic over the past several years.  They, along with Zillow and Realtor.com to some degree, are seen as third party aggregators in real estate search. I’m a fan of Trulia and believe they have been very innovative in pushing the technology as well as usability of real estate search across the country.

Today Trulia filed for an IPO to raise $75 million.  The ticker will be TRLA. No news yet as to what the overall valuation of the company is when they raise $75 million.  JP Morgan Chase and Deutsche Bank are the lead underwriters.  Accel Partners and Sequoia Capital are the private equity firms involved in originally funding the company.

According to the Associated Press story running on Yahoo! Finance:

Trulia, which operates both a traditional website and mobile apps, allows people to research home listings and neighborhoods, while helping real estate agents market their listings. In the six months ended June 30, the site had 22 million unique visitors. And as of the same date, it had more than 360,000 active real estate professionals, with 21,544 of those paying subscribers.

The company’s searchable database includes more than 110 million properties, including 4.5 million homes for sale and rent. Listings are supplemented with local information on schools, crime and neighborhood amenities.

It will be interesting to see the reception to Trulia’s IPO.  Zillow, it’s biggest competitor, had a successful IPO a year ago and Zillow now has a valuation of over $1 billion.

Is Zillow Continuing to Mislead Real Estate Consumers About What Homes Are For Sale?

Image representing Zillow as depicted in Crunc...

Image via CrunchBase

There has been quite a bit of news lately about many real estate brokers discontinuing their relationship with third party aggregators on the web such as Trulia and Zillow…even REALTOR.com.

Here is a blatant example of why what you see on Zillow cannot and should not be trusted.  This is a technology company that happens to play in the real estate space.  Their business model is designed to get in between the REALTORS® and consumers.  It’s not in their best interest apparently to make sure that the information they have on their web site is current and accurate.

Take a look at this listing on Zillow.  A client of mine just sent it to me to check out.  Zillow is showing that the home is still for sale (today’s date is February 6, 2012).  However, I went in to our MLS to check the status and it turns out the home sold and closed on November 22, 2011.  (Note the link will expire in 90 days).  The listing broker was Independent Brokers Realty, LLC and the selling broker was RE/MAX Action West, Inc.  It has actually been OFF THE MARKET SINCE OCTOBER 17, 2011.  That’s 113 days that this home has been on the market FOR SALE on ZILLOW and yet the MLS in the Minneapolis area (NorthstarMLS) shows that the home went off the market on October 17, 2011.

I understand that many people don’t like REALTORS®. I get that, but you have to know that we at least have rules and regulations we are bound by and if we are found to be breaking them, we can be fined or even have our licenses removed.  REALTORS® are obligated by the Code of Ethics to be truthful in our advertising and communications…and that of course includes the marketing of property and whether or not it is still available.  Below is from Article 12 of the REALTOR Code of Ethics:

Article 12

Realtors® shall be honest and truthful in their real estate communications and shall present a true picture in their advertising, marketing, and other representations. Realtors® shall ensure that their status as real estate professionals is readily apparent in their advertising, marketing, and other representations, and that the recipients of all real estate communications are, or have been, notified that those communications are from a real estate professional.

………………………

  In marketing properties, Realtors® use advertising to inform the public about listings and to induce interest in them. Realtors® are obligated to present a “true picture” in their advertising and in all representations to the public. A “true picture” is truthful, accurate advertising, and nothing less.

Third party real estate web aggregator sites are not obligated the way that REALTORS® and brokers are.  If you want a true and accurate picture of the local real estate market place and what’s for sale, then you really should be using a local broker’s site.  In the Twin Cities, all the real estate brokerages agree to reciprocity which means that every other broker’s listings also show up on every other broker’s web site.  You don’t have to go to 3 or 4 or 5 different web sites to see what’s for sale.  You can pick whichever one you like the best and that will display what’s for sale.  If you go to Zillow, Trulia and REALTOR.com then yes, you need to go to a variety of sites and even after you’ve done that, not only will you not have seen everything that is actually for sale in the Twin Cities market, but you will be mislead in to believing that certain properties are for sale.

Zillow is a public company worth $875 million as of today.  Perhaps some enterprising reporter or even Wall Street analyst might ask the executives some questions about their business model.  Is it their intention to purposely mislead real estate consumers in order that they can sell more advertising and lead generation programs?  Someone please tell me how this is an ethical business model.  And REALTORS® who are advertising on their site hoping to attract unsuspecting buyers with misinformation, is this really something we should be participating in?  We are perpetuating the problem.

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Are Third Party Real Estate Aggregator Sites Using Black Hat SEO Tactics to Block Real Estate Brokers?

Anyone who pays attention to internet marketing and specifically SEO (search engine optimization) strategies knows that black hat tactics are frowned upon in the business.  The big battle in real estate right now has to do with the web.  Over the past 5-6 years, the rise of third party real estate aggregators has been the cause of concern for real estate brokers.  The risk has been that the third party aggregators would disintermediate the brokers and real estate agents by being the first point of contact for real estate consumers on the web.

Real estate brokers lost control of their listings many years ago.  I think they were fooled by the allure of the web and getting additional exposure for their listings. They gave the listing information away for free in hopes of more eyeballs seeing their listings.  Many did not realize they were giving away the store when they did that.  More recently, real estate brokerages are fighting back and no longer allowing their listings to go to many of these third party aggregators such as Zillow, Trulia, and REALTOR.com.

Now these third party aggregators are being accused of using black hat SEO tactics to cut off links that go back to the original brokers site.  If this is true, that’s quite a stunt these sites have pulled off.  Let me get this straight, real estate brokers send their information to these third party sites for free, the third party sites use the listing data to generate tens of millions of dollars in advertising revenue, banner sponsorship sales, and then possibly lead referrals, and they are inserting “no follow” on the links back to the original brokers?  If that is true, why are we doing business with these firms?

Check out the story from AGBeat on what the CEO of VHT is accusing the third party aggregators of when it comes to black hat SEO for real estate.

If you are a real estate agent or broker reading this, I recommend that you share this post with others in the business so that they can understand the ongoing challenges the real estate industry faces with these third party aggregators.  In case you missed my last post, you’ll want to read about ARG Abbott Realty in San Diego pulling their listings.

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ARG Abbott Realty Group Pulls Listings from Real Estate Syndicators – Hammers Zillow, Trulia and REALTOR.com

I’ve come around on this issue and now agree with Jim Abbott, President and Broker for ARG Abbott Realty Group in San Diego.  (Edina Realty pulled its listings from the syndicators about two months ago and were one of the first of the larger regional brokers to pull the plug).

Jim Kelly’s 7 minute video absolutely shreds Zillow, Trulia and REALTOR.com as ripping off REALTORS as well as misleading consumers.  I find this all the time with these sites.  Over and over again the data is not accurate and up to date on Zillow or Trulia.  (I’m not quite as familiar with REALTOR.com and how good they are at keeping data accurate).  Zillow and Trulia will often lead properties listed for sale even though they are no longer on the market.  I see this time and time again.  I suspect they will contact me and tell me I am wrong, but I can back that up within 5 minutes of searching right now.

It is now time for ALL BROKERS to PULL THEIR LISTINGS now from Zillow, Trulia and REALTOR.com.

I encourage you to watch Jim’s outstanding video of clearly explaining what is going on.  Thank you Jim!

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Finance & Commerce: Edina Realty’s War on Trulia and REALTOR.com

Finance & Commerce has now picked up on this story that Craig Kamman broke last Tuesday afternoon regarding Edina Realty’s decision to no longer send its listings to third party real estate web aggregators.  This really is setting up to be a significant battle in the real estate industry.  It’s brokers vs. web site aggregators.  Home sellers and buyers are caught in the cross-hairs.

Coldwell Banker Burnet, the second largest real estate broker in the Twin Cities by agent count, came out and stated that they are not pulling their listings from REALTOR.com or Trulia .  No word yet from the company I work for, RE/MAX Results or from corporate RE/MAX International.

If you’re getting to this debate late, then start with Craig’s original post (as noted above) then I have posts here and here….and of course, don’t miss Edina Realty’s press release on the matter.

Confirmed: Edina Realty Pulls Its Real Estate Listings from Third Party Aggregators Trulia and REALTOR.com

It’s been officially confirmed that indeed Edina Realty has decided to pull its listings from third party real estate web site aggregators.  Trulia and REALTOR.com are specifically mentioned.  Here’s the official Edina Realty press release.

Details from Edina Realty’s press release:

We’re confident that our decision to pull our listings from Trulia.com and Realtor.com is the right one for consumers as well as our agents and brokerage,” said Bob Peltier, president and CEO of Edina Realty Home Services. “Our clients are number one. And we have an obligation to represent them according to a specific code of ethics and state law. That means we are invested in the integrity of the information we publish on their behalf. The inaccuracies we’ve seen on third-party aggregator sites give us cause for alarm, and the reality is that we are no longer willing to surrender our business – or the consumer’s real estate experience – to third party aggregators, who are not required to operate under the same rules and laws as brokers.

Edina Realty has put its stake in the ground and in some ways has posed a challenge to other brokers not only in the market, but across the country given the reference to its interpretation of the REALTOR® Code of Ethics which all licensed REALTORS® and brokers are bound to follow in in our real estate practices as members of the National Association of REALTORS®  (NAR).

Edina Realty’s move caused quite a stir in the real estate industry this week when Craig Kamman, an Edina Realty agent, posted the news on his blog Tuesday afternoon.  Since then there has been a lot of traffic, discussion and debate within the blogosphere and various social media channels.  (Check out the comments on Craig’s blog post). When I heard the news, I posted this story about Edina’s decision.  No doubt Edina Realty’s decision to remove its listings from Trulia and REALTOR.com will be picked up by the national real estate media next week.  Perhaps the Star Tribune will jump on the story as well.

Stay tuned as I suspect this is not the last time this topic will be covered.  And while it may seem like too much inside baseball, this decision may have a big impact on how consumers find their real estate information online.

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MOVE Inc.’s Stock Dropped 8% Today – Social Media Picking Up on News Edina Realty to Drop REALTOR.com

MOVE Inc.’s stock was hammered today down by 7.78% to $1.54.  Many people do not know this but REALTOR.com, while the official site of the National Association of REALTORS® (NAR), is not actually owned by NAR.  The web site is owned by MOVE Inc., a publicly traded company, which is traded on the NASDAQ Stock Exchange under the symbol MOVE.  (I do not own any shares of MOVE).

With the news that broke Tuesday afternoon this week on Craig Kamman’s blog about Edina Realty’s decision to no longer send its listings to Trulia and Realtor.com, one has to wonder, how much of an impact this will have on Realtor.com.  Social media circles are certainly picking up on it and it is a hot topic especially amongst fellow REALTORS®.  My initial thoughts on the matter are that there will be little impact in the beginning in terms of traffic to REALTOR.com.  However, the bigger issue becomes if more brokers decide to do the same thing and take back more control over their listings.  I have not heard anything yet regarding other brokers possibly following in Edina’s footsteps so perhaps they will end up being the lone ranger on this…I don’t know.  Edina Realty is a large regional broker in the upper Midwest and does about 20% of the transactions in the Twin Cities.  It is owned by Home Services of America, Inc. which is owned by Berkshire Hathaway – i.e. Warren Buffett.

As of this writing, there has been no office news release from Edina Realty regarding their decision to end their current business relationship with Trulia and REALTOR.com on a corporate level.

Move’s stock price has seen better days.  The company is currently valued at $237 million and a P/E ratio of 192 according to the data published this evening on Yahoo Finance.  While it was a difficult day in the markets for most companies, MOVE got pounded down nearly 8% to a closing price of $1.54.  Zillow, which is now a public company closed down today by 3.8%.  Zillow’s market cap is $773 million.  Looking at the trends in the marketplace, REALTOR.com has an uphill battle against the upstarts Zillow and Trulia.  I know REALTOR.com touts that they are the number one real estate search site in the U.S. and that may well be true right now.  However, Zillow now has a war chest of money available for further investment to making them the top destination for all things real estate.  Move Inc certainly has the REALTOR® brand behind them, but is that enough in today’s web driven world?  Below is the chart from Big Charts MarketWatch for Move as of 11-17-11.

MOVE Inc

Will MOVE be able to continue to be a force in real estate search?  Only time will tell.  But in the event MOVE does not fare well in the battle with Zillow, Trulia and sites like Front Door from HGTV, what impact will that have on the REALTORS®?  Has the National Association of REALTORS® (NAR) thought about this?  If MOVE fails, and I have no information that would lead me to believe they will fail, but IF they do, what will the public think if the REALTORS® own web site fails?  (Note: I suspect if MOVE were to fail NAR would just figure out a way how to sell the rights to another web site operator).  Interesting times.

There is no greater brick and mortar business than real estate and yet we find out entire business now at the center of a battle in the digital space that will forever impact our business.  The future of real estate is being defined today.

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Has Edina Realty Just Declared War on Real Estate Web Site Aggregators – Trulia and Realtor.com?

Craig Kamman just posted this big news story on his blog about Edina Realty pulling the plug on sending listings to real estate web site aggregators Trulia and Realtor.com.  Please read Craig’s post for all the details.  (Note, there is nothing official yet from Edina Realty on their news page). Needless to say, as a REALTOR and web publisher myself, it has caused me great angst when I’ve seen sites such as Zillow, Trulia and Realtor build themselves in to $500 million to $1 billion companies and yet the data is coming from the REALTORS.  Now that said, I don’t know what Edina Realty was getting paid to provide the data feed for its listings to go to Trulia and Realtor.com, but my guess is those two companies are deriving a significantly greater value from the listings than Edina Realty was getting paid.

Apparently there is no word yet what the plans are with Zillow.  It’s also unclear if this means that these sites can’t scrape Edina Realty’s listings.  That may be difficult to track as listings are populated on many sites beyond Trulia and Realtor.com and perhaps those sites can still pull the data from elsewhere to grab Edina Realty’s listings.  I hope that Edina Realty follows through and does some continual data checking at Trulia and Realtor.com to see if indeed those sites are still somehow getting Edina’s listings.  My sense is they are not doing this in a vacuum.  Perhaps other big regional brokers have started to do the same thing across the county.  I’m not sure.

I do not know the background technical details on this to know does this action by Edina Realty truly shut Trulia and Realtor.com out from getting their listings. I’m not sure.  If it does really shut them down from receiving those listings then consumers in the Twin Cities are going to need to make sure they are using a local broker’s web site to make sure they are getting ALL the listings in the market.

My initial take on this is to root for Edina Realty on this one.  That said, I don’t know the full back story on this nor some of the technological work-arounds that the web aggregators may employ.  There’s also part of me that is wondering if this is too little too late.  We won’t know for some time.

UPDATE as of 11/18/11: Confirmed: Edina Realty Pulls Listing from Third Party Aggregators Trulia and Realtor.com

Trulia Releases Beta of Trulia Estimates – Competes with Zillow’s Zestimate

Image representing Trulia as depicted in Crunc...

Image via CrunchBase

Trulia, one of the top real estate search sites, has announced that it is releases a beta test of their new service called Trulia Estimates.  So far it will just be used in the San Francisco Bay Area to work the kinks out.  Zillow has their Zestimate which has been in use for years.  My personal experience with Zillow is that far too often they are way off.  The challenge for consumers is you don’t know exactly which way they are off – is it +10% or -10%.

On thing that will be nice is that will all this auto valuation engines, it’s one more metric we can use to try to come up with fair market value for a particular property.  For example, right now, for most properties, you can go to Eppraisal and you’ll see two estimates – one is from Zillow and the other is from Eppraisal.  Another important, but not perfect data point, is the estimated tax value or assessment value in some counties.  In the Twin Cities right now, every city has a slightly different metric, but quite often we are still seeing properties sell for less than 90% of their 2011 tax value.  (Check with your agent, or contact me if you’d like that analysis for a particular city or suburb).

Agents Responding on Trulia.com to Upside Down Homeowner – Use Your 401(k) Money to Bring Your Mortgage Current – Good Idea? Not!

It’s always intriguing to me to talk to real estate agents about homeowners who are upside down on their house and what they should do.  I would say more often than not the typical response is the homeowner signed a contract and they should keep their word.  They do not believe it’s a business decision.  I guess the National Association of Realtors along with HUD have done such a great job of convincing Realtors that somehow mortgages are different than other types of loans.  Yes, in a sense they are because they are secured against a home, but you have to know, from the bank’s perspective, whether or not they give you a loan is not a personal decision…it’s a business decision. So this discussion I happened to stumble upon on the real estate web site, Trulia, caused me to post this blog post I’m writing.

So, many homeowners suck every dime they have out of their retirement accounts, savings accounts and investment accounts to try to “save” their home.  Let’s say for example your home used to be worth $300k at the top and now it’s worth $210-$220k but you have a mortgage of $280k and you’re struggling to make payments.  Should you drain your 401(k) to make the mortgage payments?  How are you going to magically make that $220k home become worth $280-$300k again?  It’s not going to happen.

I’m not sure why Realtors even care, but their self-righteousness is a bit much sometimes…are we that special that we must ignore what’s best for someone’s family – and yes, it’s a business decision.  Nothing personal.  Businesses, including banks, make decisions about walking away or letting investments go all the time.  They don’t want to chase bad money with good money…but some of these Realtors would like to see you do that.  Think twice before taking their advice.