Zillow’s expansion may further disrupt residential realty in Northeast Ohio

Zillow, the home listings portal eponymous with the Seattle-headquartered real estate technology giant, is on the verge of shaking up Northeast Ohio’s residential market.

One gambit is clear. Look for Zillow Offers, its take on online instant home-buying services, to surface soon in the northernmost of Ohio’s three biggest cities. It’s already active in Cincinnati.

The other is the question of when the indispensable online real estate portal will directly expand its business into brokerage with its meaty commissions.

Legally speaking, Zillow could be conducting brokerage now in Northeast Ohio but does not choose to do so.

That’s because offering its instant buyer service in the Queen City means that Zillow registered its Zillow Homes, the parent of its instant offers platform, as an Ohio company in February 2020. Licenses for its brokers and agents were filed Sept. 8, 2020. Both are visible through the Ohio Department of Commerce Division of Real Estate website, although Zillow said it uses independent agents in Cincy.

Carl DeMusz, president and CEO of MLS Now of Independence, said in an interview that having such licenses technically makes Zillow a broker up this way, too.

Zillow also joined MLS Now on Oct. 9, DeMusz said. That means it is a member of the International Data Exchange, known as the IDX, which enables members of a multiple listing service (MLS) to integrate real estate listings from the MLS database into their own website.

The MLS was the inner sanctum of the residential real estate business since the days it was developed with mainframe computers. Members of the dominant realty trade association, the National Association of Realtors, lead it here and most places.

However, DeMusz thinks the only reason Zillow is not in the region now is because of the impact the pandemic had as real estate learned to cope with it.

Overnight, open houses, a mainstay of the industry, went virtual. Pre-pandemic, virtual searches were more the domain of tech-savvy agents. And wearing masks became as important as having a smartphone.

“COVID-19 threw a monkey wrench into the whole thing,” DeMusz said.

He knows firsthand. He said he met with Zillow representatives in late 2019 and was told they would set up shop in the Buckeye State in 2020. So, he feels it’s a year later and only a matter of time.

Ryan Young, CEO of the Young Team of Keller Williams real estate agents and co-founder of FlashHouse of Pepper Pike, doesn’t quibble about the details. FlashHouse is a quick-turnaround buyer that issues rapid offers to buy homes, fixes them and vends them again.

Young said he is excited about Zillow innovations.

“I’ve said from the beginning that big companies would be here for the iBuyer (or quick-offer) market,” Young said. “That’s why we are working on taking FlashHouse to Columbus and growing as fast as we can.”

Getting “roots in the ground,” as Young calls it, is designed to allow FlashHouse to grow in an area before bigger tech companies with their coastal focus set foot in the Midwest. He said it’s also key to the future of the 24-agent Young Team, which will sell about 600 area homes this year.

“Trust me,” Young said. “They are coming. It is a trillion-dollar industry (in terms of cost of homes sold nationally). They are coming everywhere. We welcome them a little bit. We think it’s a case of having to build your own business better.”

He said that’s because of a fundamental factor.

“They and other tech companies are investing millions of dollars to identify what is important to the consumer,” Young said. “They are listening to what the consumer wants. It’s similar to the way Rocket Mortgage has changed home lending. If Realtors don’t adapt, we are going to be the Blockbuster of the real estate industry.”

David Sharkey, president of Progressive Urban Real Estate in Cleveland, said he thinks constantly about what Zillow means to residential brokerage.

“I remember sitting at a table with buyers and looking through a book of MLS listings,” Sharkey said. “Zillow (the cyber portal) is a huge positive change. I can see they are lightly stepping around the brokerage world. At the same time, agents are important to Zillow. We buy their leads because of the dominance of the site. Most of my business is by referral. But I still want to advertise on Zillow.”

At the same time, for all the technological changes Zillow and others are making, nothing so far has changed what Sharkey considers the essence of residential brokerage. That’s the relationship between an agent and a buyer or seller.

The Zillow role is of apiece with other things roiling realty. The company owns Dotloop, a popular Cincinnati electronic property transaction closing service.

Zillow also is pursuing plans to buy or invest in ShowingTime. The Chicago online company helps agents schedule home showings, among other services. Escrow services in the title area and mortgage loans are also offered. It’s easy to see how such a one-stop-service approach could make brokerage inevitable.

For its part, Zillow media contacts, who asked not to be identified by name, said the company does not expect to enter brokerage broadly.

Zillow, they say, has only launched Zillow Homes in three markets: Atlanta, Tucson and Phoenix. It has staff brokers there to service its instant-buyer operations, where it takes title to houses. They are not allowed to do third-party brokerage outside Zillow Homes. In Cincinnati, they said it uses a local broker as its agent.

As for bringing the instant-offer business to Cleveland, Zillow media people confirm it is on its way, someday. The program is national in scope, growing market by market. Zillow Offers is now in 23 metropolitan areas.

Selling leads generated by Zillow’s website and assisting agents with the “Premier Agent” program are the company’s major sources of revenue, a spokeswoman said. Agents are crucial — now.

But corporate directions and business models change. Those who preach technological disruption should know that best.