I have no problem with a company trying to earn money. As the founder of a niche and successful NYC real estate marketplace (leasebreak.com) and with another more comprehensive one about to launch, I understand full well the challenges of “monetizing” these kind of platforms.
It is fascinating to watch how companies evolve as they try to monetize. For example, recently Zumper became a real estate brokerage which now receives “broker fees” and Renthop decided to expand nationally.
But how is Zillow trying to monetize with StreetEasy? Well, Zillow did what it does best: Achieve monopolistic power (i.e bought Naked Apartments, StreetEasy, then launch a multi-million dollar ad campaign). Then, take advantage of consumers and brokers, making things less transparent and more deceptive in the process.
To be clear, capitalism – when done right – is a wonderful thing. If you want to sell leads, fine. If you want to charge for your services, fine. We have no problem with that.
But capitalism without transparency is disastrous. Generally speaking in a true capitalistic environment these deceptive firms would just get weeded out in a truly competitive market. But when there is a monopoly power, you can’t rely on this to happen.
Google and Facebook to a large extent have set transparency standards by disclosing “paid” ads (See screenshots below, respectively). Zillow’s StreetEasy has done nothing of the sort.
In fact, Zillow’s StreetEasy has reset the bar of transparency so low with its Premier Agent program, we can safely call this another name: DECEPTION. The terms “sponsored” or “paid ad” are nowhere to be seen.
Quick recap on the Deception: In order to contact an agent, the buyer see a “CONTACT AGENT” button. We have provided video evidence (See episode #3) of just how misleading and deceptive this is by interviewing random consumers on the streets of NYC. Buyers wind up contacting a buyer’s agent who is paying big money to get that “lead”, instead of the expected listing agent. This summarizes what is at the heart of the deception on Zillow’s Premier Agent Program.
Believe it or not, even many real estate agents who represent buyers find this so deceptive, they refuse to participate in the Premier Agent program. They refuse to start off a relationship with a potential client (buyer) in a less than genuine way.
Easy Solution They Will Never Implement: Label Premier Agent a “Paid Ad”
But there is an EASY solution. All Zillow has to do to alleviate this incredibly damaging “Deceptive” practice is to make it crystal clear that this is a paid ad. My Instagram post two Fridays ago, February 2/16/2018 (pictured here) shows an example of what this could look like.
But I would bet money Zillow never implements this, unless they are forced to do so by the Federal Trade Commission or NYS Attorney General Eric Schneiderman (These are real possibilities by the way).
Why wouldn’t Zillow make such a simple change which would make things much more transparent?
Because most of the revenue achieved by the Premier Agent program hinges on deception. By being more transparent, they would lose almost all revenue for this lucrative revenue generating program. For example, if buyers understood that they are contacting a “paying” buyer’s agent, most of them would choose instead to simply contact the the listing agent (who is posting for free). And Premier Agent’s revenue would crumble.
One other thing we would be remiss if we did not point out. What really has angered so many in the real estate industry, as well as consumers who are following this closely, is that everyone in NYC knows StreetEasy would never have become a dominant player in the industry if it had started initially with this deceptive Premier Agent program. But they are able to make money from the program now because StreetEasy implemented it after gaining monopolistic power in NYC, and currently consumers have few other choices (We promise. This will change)
In other words, they are only able to make money from their deceptive Premier Agent program because they built their near monopoly first.
So, does it get any shadier than this?
I am 100% confident that honest and transparency will prevail. We want to be part of the solution, and we think most of you do as well. The new website we will launch will be founded on these principles. NYC real estate needs to be forever protected with a real estate marketplace which flows freely. A pure and honest marketplace is the only way.
And as always, I LOVE to hear from you and I always respond. EVERY voice is important in this battle for transparency in NYC real estate.