Ummm….What? That was my first reaction to the big news that came out yesterday from the Real Estate Investment community giants. Zillow will be purchasing Trulia for 3.5 billion in stock. Let me repeat that. 3.5 BILLION DOLLARS. This could be the biggest merger in the history of Real Estate Investment.
My first thought when I heard this was the consquences. Was this just a simple buyout? Are they looking to start some kind of monopoly? What does this mean for me as an investor, and for the Real Estate Investment community in general? The end of an era?
Well, those questions are not easily answered. This merger was only announced yesterday, and there is a lot of speculation as to the long term ramifications of this kind of acquisition. But we have a couple of clues to give us at least an inkling of what could be in the future.
First off, Zillow purchased using stock. That’s nothing new. A lot of large acquisitions are made in this manner, but it does give us a little idea as to what the future may hold. If Zillow wanted to just dismantle a competitor a cash purchase would have been better. But if they’re looking to make this a new venture with possibly some restructuring, this is a great way to do it.
Secondly, these are two companies with very similar structures, formats, listings, and content. The “Zestimate” has become a standard in recent years for those who don’t want to wade through a lot of paperwork to find out the actual value of property. While Trulia has their own version of this, it doesn’t quite have the brand recognition. But Trulia has some very interesting search parameters that put Zillow to shame. But with a lot of realtors “double listing” on these two sites, this could be a huge win for Real Estate Investment. This could allow realtors and investors to get all of their research in one place without having to hunt around and see who has the most up-to-date info. The flip side is that it could allow this new site to enforce a subscription for the best and most current knowledge. But that has yet to be announced.
This could also mean some restucturing to one, or both of these companies. Imagine if Zillow wanted to make Trulia more business to business focused? Having a dedicated site with that kind of power streamlined for large-scale investments could be the kind of thing that the industry could seriously benefit from. With dedicated listings tailored to a wholesale community, Zillow could turn this acquisition into one of the best business-facing Real Estate Investment models around.
At the end of the day, we have no idea where this could lead. It could be the dawn of a new age in online listings and investment. It could be the beginning of the end for online giants and a return to the local MLS style. Either way, this represents something new and different that could quickly become the roadmap for how to do online Real Estate Investment in the 21st century.
You can find some more information on the merger here, here, and here.