For years, the biggest online real estate companies have battled for the hearts and minds of homebuyers, home sellers, brokers, agents, Realtors and more. And in the last few months, the landscape of online real estate has experienced several seismic shifts.
Now, the two largest players in the space are about to be become one and the company that used to be number one is about to have the backing of one of the largest media conglomerates in the world at its disposal.
It’s safe to say that a revolution is taking place, and it began with a shocking development.
First, the two largest players in the space, Zillow (Z) and Trulia (TRLA), elected to stop competing with each other, instead choosing to team up in an effort to dominate the entire online real estate market.
The two companies announced in July that they had entered into a definitive agreement in which Zillow would purchase Trulia for $3.5 billion in a stock-for-stock transaction.
The two companies will remain separate entities, though real estate agents will be able to advertise on both sites and gain access to combined tech efforts, the company's CEOs said when the deal was announced. The deal is still awaiting regulatory approval.
And just when the industry began to catch its collective breath, another bombshell announcement was dropped, this time by Move (MOVE), which operates Realtor.com for the National Association of Realtors.
On Sept. 30, News Corp (NWS) announced that it agreed to purchase Move for $950 million in cash.
Under the terms of the acquisition agreement, which was announced on Tuesday, News Corp will acquire all of Move’s outstanding shares for $21 per share.
What wasn’t initially clear when the Move deal was announced is just what the News Corp acquisition means for Realtor.com, NAR, and the industry as a whole.
In an exclusive interview with HousingWire, Move CEO Steve Berkowitz shares the details of how the deal came together, what it will mean for Move and his thoughts on the future of real estate.
Berkowitz told HousingWire that he views the shifting landscape of online real estate as a positive for Move.
“We see Zillow and Trulia coming together as an opportunity,” Berkowitz said.
“What you will have now is two vigorous competitors vying for the hearts of the consumers,” Berkowitz added. “The industry will benefit from these moves. This will help the consumer understand the role that the Realtor plays. The difference between our competitors and us is the humanity that the word Realtor brings.”
Berkowitz said that despite the increasing popularity and acceptance of online real estate sites as a part of the real estate transaction, he doesn’t anticipate the human element ever disappearing from the home buying process.
“Humanity is something that we don’t think will ever move out of the transaction,” Berkowitz said. “Zillow is a cold, calculated estimate. It’s just numbers going into a database. A home is more than that. The home is the center of its own social network.
“There are roughly five million transactions a year. Those are transformational for the consumer. The role the agent plays is much more than just facilitating the transaction. They’re offering that sense that the transaction is life-alteringly important.”
Berkowitz said that he views the timeline of the Zillow/Trulia deal as another positive for Move.
“The ambiguity and timing of the Zillow/Trulia deal is an opportunity for us,” Berkowitz said. “Our competitors promised cost savings in 2016. I can promise that you will see the impact of (the Move deal) in 2015.
“I think you’ll see us look for ways to get off the ground running. We’ll take this runway we have and focus on building our constituencies.”
Click below for more of Berkowitz's thoughts on Zillow/Trulia and the future of real estate.
Berkowitz said he anticipates the Zillow/Trulia to have its issues, which will present an opportunity for Move to grow. “You have two hated competitors now saying they love each other,” he said. “That’s a challenge that I wouldn’t want to have.
“Any time you bring two companies of exactly similar organization together, you’re doing the deal because there are financial benefits. But with that comes the duplication of assets and something I call the ‘synergies as a cost’ effect.”
Berkowitz said that the News Corp deal presents the “synergies as a multiplier” effect, because Move and News Corp’s audiences are similar but don’t overlap, unlike its competitors.
“Their (Zillow and Trulia) two audiences are really the same audience,” Berkowitz said. “Our audience is very transaction-ready compared to our competitors. This is an audience that News Corp would love to have access to. Plus we get access to the News Corp audience. Our two companies coming together represent an opportunity for growth.”
Berkowitz said that some of the specifics of how the deal will manifest itself are still to be worked out, but anticipates that Move’s listings will be seen throughout the News Corp network of media platforms.
“We’re going to be looking at the best ways to bring their content to our customers and vice versa,” Berkowitz said.
“This deal is transformational for Move. We now have the backing of a major corporation that’s a media company, not a transaction-focused company. This is really important for Realtors as well. The integration benefits the entire industry.”
Berkowitz said that while the operational component hasn’t been fully worked out yet, he anticipates Move to continue to run as it did before the News Corp acquisition.
“We’ll continue to deal with the content and manage it appropriately,” Berkowitz said. “The Wall St. Journal still runs itself. Harper Collins still runs itself. They’re going to focus on letting us do what we know how to do, which is build an industry platform.”
When the deal was announced, the two companies said that they anticipate the deal to have several “key benefits”, including:
- Broadened reach for Move through News Corp’s robust platform including WSJ Digital Network (approximately 500 million average monthly page views) and News America Marketing (nearly 74 million households)
- Increased sales and marketing support to drive higher brand awareness and traffic
- Cross-platform promotion and audience monetization expertise
- Boost traffic and digital dwell times with high quality News Corp content
Berkowitz also said that despite some assertions that the News Corp deal was done as reaction to the Zillow/Trulia deal, the dialogue between Move and News Corp was ongoing for a “long period of time,” prior to the Zillow/Trulia announcement.
Berkowitz said the acquisition was borne out of initial discussions to share Move content with the Wall St. Journal.
Berkowitz cited Realtor.com’s data accuracy as another reason why he feels Move can capitalize on the Zillow/Trulia deal.
“Our core mantra is that accuracy matters,” he said. “We believe we have the most accurate leads because we get the data directly from the MLSs. Anyone can post on their sites. Realtor.com stands for accuracy in the entire transaction.”
Click below to read more of Move's plans for the future.
In the immediate aftermath of the News Corp announcement, several shareholders rights law firms announced investigations into whether Move breached its fiduciary responsibility to its shareholders by accepting $21 per share in the sale to News Corp instead of a higher valuation.
As part of the acquisition agreement, shareholders of Move will receive $21 in cash for each share they own. The firms each suggest, based upon analyst predictions, that Move could have received at least $23 per share if it had “shopped” the company around more.
Berkowitz said that this sort of investigation is par for the course when deals of this magnitude are announced.
“We think the price we got is the right price,” he said. “This is just ambulance chasing.”
When the deal was announced, News Corp said that as part of the deal, REA Group Limited, which is 61.6% owned by News Corp. and operates realestate.com.au in Australia, will hold a 20% stake in Move.
News Corp will hold the remaining 80%.
Berkowitz said that the prospect of taking Realtor.com international hasn’t been discussed yet, but that they do plan to talk “best practices” with the Australian site.
Berkowitz also said that they plan to distribute U.S. listings to China as well.
“That’s all going to be good for our Realtors and our consumers,” he said.
Once the deal is officially closed, which Berkowitz hopes happens in the fourth quarter, Move will continue to focus on the future.
Berkowitz predicts that the presence and popularity of online real estate will continue to grow in the future. “There will be increased innovation because of these two large companies,” he said.
“Mobile is and will increasingly become an incredibly important vehicle. We’re also going to focus on the quality of the lead not just the quantity,” he added. “We need to give our agents smarter leads. There’s going to be a lot of efficiency that gets built into that. I see this as a hugely innovative space. There’s still a lot of productivity that needs to come into the system.”
Berkowitz also said that he thinks the economy and the prospect of homeownership are headed in the right direction. “The aspiration is still there,” he said. “We’re seeing less investment and more homeownership. That’s a good shift. We’re in a significantly better place.”
And with the News Corp deal, Move should be well positioned to take advantage of the improving market.
“Our goal is to bring buyers and sellers together through real estate agents,” Berkowitz said. “We want the word Realtor to be more known and trusted by the public. Buying a home is a life-changing moment. There are certain things that don’t change.”
