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You are here: Home / Opinion / Zillow Just Bought DotLoop: Does it Matter?

Zillow Just Bought DotLoop: Does it Matter?

July 26, 2015 by tracy weir 12 Comments

Zillow Buys DotLoop

In 2013, over cocktails at a Real Estate Connect function, I asked Austin Allison, DotLoop’s founder and CEO, whether the company was a secure document management platform.

“No,” Allison replied. “We’re about collaboration and ‘peoplework,’ not paperwork.”

DotLoop, Allison continued, was a platform dedicated to managing people, discussions, tasks and documents that happen to be related to a real estate transaction. He built DotLoop to get people to effectively work together in “loops” and quit wasting time on tedious paperwork.

The company was (and continues to be) focused on collaboration.

DotLoop wasn’t trying to be the be-all and end-all of document security, although that was an important part of DotLoop’s solution. Though DotLoop has since substantially beefed up its security on documents and secured its loops, document security and collecting big data was never the primary focus of the company, nor its unique selling proposition.

Why take pains with this definition? Because it’s meaningful for everyone who is worried about Zillow’s acquisition of DotLoop.

For brokers and agents (whether they’re on the DotLoop platform or not), I believe that Zillow’s acquisition of DotLoop is a move designed to expand their advertising offerings — not to solely suck up all the juicy sold data in agents’ transaction files. I also don’t think Zillow is angling to become a nationwide brokerage, or is out get rid of agents.

Spencer Rascoff, Zillow’s CEO, said it himself in response to a comment from Steve Mallet, a broker associate at Keller Williams in Austin, on Brad Inman’s post about the acquisition:

Spencer Rascoff on Facebook

Why would Rascoff say this? It’s because he’s under pressure to boost revenue. I also think it’s true. He’s got another play in mind, and that’s to get more agents to use DotLoop because it’s likely to become another advertising channel for Zillow.

 

Trusted Service Providers = New Adverting Revenue

Consider this: One of the jewels in DotLoop’s crown is its service providers platform, launched in December, 2014, which enables “trusted” affiliated businesses (like attorneys, moving companies, title concerns and others) to advertise right in someone’s loop.

DotLoop Trusted Provider

While it is possible for those who use DotLoop on a paid or free basis to select which, or if, providers appear in their loops — those who don’t will have selected service providers appear at DotLoop’s suggestion, and by default.

How many trusted service providers are in DotLoop’s network?

Some 11,000 as of this writing, with some of those listings are coming straight from Moving.com (which is owned by Move). Sure, Move might cut Zillow off once the acquisition clears (see the ListHub kerfuffle for a playbook), but there are still thousands of vendors already on DotLoop’s platform, and Zillow also has legendary and aggressive sales force to replace those local vendors who might leave as part of Move’s actions.

When you stack up the numbers, 300,000 users on DotLoop, 100,000 paying accounts on Zillow, 11,000 service providers in a market worth billions — it all of a sudden becomes a tasty advertising opportunity, and Zillow is well-equipped to gobble it up.

 

Putting Ads in the Middle

The point is that Zillow sees an opportunity to sell more advertising to all of the vendors connected with the real estate transaction — right in the middle of the transaction. It joins a long list of others who are also keen to sell advertising and leads to those who are connected to a home sale, like Amitree and HouseHappy.

Zillow also acquired Retsly a little more than a year ago. It’s another component necessary to build a dynamic transaction marketplace, because Retsly allows companies to synch with Zillow’s platform using the company’s Tech Connect Services. These acquisitions are about building a comprehensive media platform — although doing so will be fraught with challenges and competing priorities from organized real estate, brokers and agents.

I believe Zillow cares a lot about what brokers and agents think, and that it really is a media company. It’s built its business on selling ever-more ads and services to more real estate professionals, but it needs to grow. Its stock has fallen by nearly half over the last year, and Wall Street expectations are brutal.

That’s why it makes sense that Zillow believes it will build advertising revenue if it touches the actual transaction. It doesn’t hurt that DotLoop brings an audience of 500,000 people every month who are accessing the platform, signing documents, and generally going about the business of buying a house.

But my question is simple: Will everyone who’s on DotLoop now stay on DotLoop once this deal closes in the third quarter?

 

What will Brokers and Agents Do?

It’s easy to look at all of the social media hoopla about this deal, and surmise that many are upset about Zillow’s perceived intentions. Many say that Zillow only acquired DotLoop for access to the platform’s detailed and accurate transaction-level data, such as sold prices that are available nowhere else (particularly in non-disclosure states). But these are the most vocal — it’s hard to know what the rest of DotLoop’s user base is worried about.

Despite the hue and cry, I believe Zillow is just too savvy to use all of this proprietary data without some sort of permission-gathering exercise.

After all, user agreements really do exist between DotLoop and its customers. While the California Association of Realtors and others have pointed out that those agreements pretty much give DotLoop the right to do whatever it wants with that data, I think it’s absurd to think that Zillow would tinker with it given the general environment that favors data security and protection of personally identifiable information for consumers.

It just seems like a boneheaded move from a really smart, capable and public company to use or take this information without permission.

So where does this leave brokers and agents?

 

The Future: Dedicated Transaction Management Platforms

The real estate community needs to assess what it wants from a transaction management platform, and think clearly about the future of the real estate transaction. Consumers are going digital. Paper is going the way of the do-do. Agents expect and need a secure mobile solution. And brokers want visibility into their pipelines, clients and agent activity.

That’s good news for companies like DocuSign and SkySlope, who are dedicated to digital transaction management.

DocuSign, the goliath in digital signatures, has gone so far as to create a global “Trust Network” that’s all about protecting data and signatures. It acquired Cartavi to enable agents and brokers to manage the people, tasks, forms and other documents in the transaction within a secure transaction room.

Other transaction management providers are equally as dedicated to providing a secure and robust environment for agents and brokers to do business. But if you want to use an ad-free, robust and secure transaction platform in the future, you’re going to have to pay for it — just as you do today.

The unfortunate bit about this acquisition is simply this: It puts a lot of agents and brokers at a crossroads. They can wait to see what happens, or they can transition now to a different platform, which will most assuredly be painful.

Either way, these are tricky times.

 

[FULL DISCLOSURE: DocuSign is a client of Eight11’s sister company, August Partners.]

 

 

 

 

Filed Under: Opinion, Tech & Gadgets Tagged With: Brad Inman, dotloop, Retsly, SkySlope, Spencer Rascoff, Zillow

Comments

  1. Scott Lauri says

    July 26, 2015 at 8:51 PM

    Tracy,
    I agree with you zillow won’t mess with personal privacy data but is more interested in selling ads in their ever increasing business verticals. I am a broker currently using the dotloop system and I am concerned about not having control over what ads show within the system I pay for. I dont believe Zillow has not acted in the best interest of those that bring them the ability to advertise.

    Another concern should be for zillow shareholders should be the same concern that homestore shareholders should have had years ago. That a real estate site based on the majority of income from an agent/Broker advertising model has not had a successful one yet. But zillow moving it advertising mindset into the transaction might change this past cycle website failure.

    Scott Lauri, Broekr/Owner
    ERA Central Levinson
    Scott@LevinsonERA.com

    Reply
  2. tracy weir says

    July 26, 2015 at 9:04 PM

    Hi Scott,
    Thanks for the comments. I agree with your concerns.

    But, I have to say this — as of now, according to DotLoop, you have the power to select which vendors appear in your loops whether you’re a paid subscriber or not. You may not be seeing them yet, because the functionality hasn’t been rolled out in all of DotLoop’s markets. It will be interesting to see whether Zillow maintains your control over which ads appear in your transactions going forward.

    Tracy

    Reply
  3. Matt Dollinger says

    July 26, 2015 at 10:11 PM

    Hey Tracy,

    Great post and I mean GREAT. Excellent way to look at things differently than the masses who have hammered the conspiracy theory to the hilt. And where I believe that there might have been some ulterior motives at play – this is a really good way to look at things.

    I commented on another post last week that I truly believe that Z’s goal is (and should be) to own the brand mindset of the consumer from beginning to end. From rentals – to purchase – to decorating and rehab (digs) – to sale (zestimate and the every elusive listing lead) – to purchase once again. If they can control this lifecycle (or help the agent to control this) the cost of Premier Agent goes through the roof. If they can do that, there’s no stock price worries that should ever cross someone’s mind. I believe that DotLoop can help them do this.

    Again, great post!

    Reply
    • tracy weir says

      July 26, 2015 at 10:50 PM

      Thanks Matt! I think it will be interesting to see if Zillow can lay claim to the consumer mindset … it sure seems like they’re going to try. Thanks again!

      Reply
  4. Jon Kolsky says

    July 28, 2015 at 3:49 PM

    Hi Tracy, I really like your post, it is on point and very thought provocative… I wish I could understand how Zillow, which loses money hand over fist, is still able to buy companies? Anyway, Zillow has a hard time getting agents to sign up a second time around… Most agents not only won’t sign up for a second time around, but they also end up cursing Zilllow and are very upset they got suckered into buying garbage leads… Zillow is pulling out all the stops, but at the end of the day their current business model is a loser… Eventually, their bad reputation and attrition will catch up to them and be their downfall…

    Reply
    • tracy weir says

      July 28, 2015 at 5:21 PM

      Hi Jon, thanks for the compliment — I appreciate it. Zillow has a giant war chest and it will be interesting to see where the company finds growth next. The sure thought DotLoop was tasty enough …

      Reply
  5. Justin says

    July 31, 2015 at 7:50 AM

    Nice article Tracy! We are excited to do more for agents and brokers so they can wow their clients. Lots of new features in the works!

    Reply
    • tracy weir says

      July 31, 2015 at 9:10 AM

      Thanks Justin! I wish you and the team much success at DotLoop!

      Reply
  6. Jack Girvan says

    August 31, 2015 at 6:55 PM

    I find that consumers are fed up with all the advertising that takes place on Zillow. If Z’s intent as you describe is to advertise to all those involved in the transaction it will be reason for agents to discontinue using Dotloop. My clients take my suggestions and generally contact the service providers that we have had great success with. Zillow is going to try to clutter up the transaction and for that reason my team will be using another electronic signature platform exclusively.

    Reply
    • Paul says

      October 18, 2015 at 12:54 PM

      That’s the thing though – Zillow isn’t going to do anything that would drive away Dotloop users. That wouldn’t be in their best interest, obviously, so I don’t think there’s anything to worry about.

      You have to think about it from both perspectives. You don’t want to have to stop using Dotloop, and they don’t want you to stop using it either. Why would they implement changes that drive away users, which would lead to lower profits for them?

      Reply
  7. Matt Mortensen says

    September 16, 2015 at 12:41 PM

    Thanks for sharing this! Zillow group is doing what any large corporation does. And with their various real estate purchases it has streamlined my online accounts. They all link up and sync and in my opinion it’s helping a lot of people in real estate! Thanks for sharing!

    Reply
  8. Matt berman says

    June 17, 2016 at 10:59 PM

    Great article. I think the bigger Zillow is able to get the more smaller companies they will snatch up. They will buy out competition and gain all their subscribers. This will also increase there reach and charge us realtors more for a lower quality service.

    Reply

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