Zillow homepage 300x225 What the Zillow   Trulia merger means for real estate There’s a new celebrity couple in town–Zulia, or Trullow, or whatever you want to call the Zillow Trulia merger. This alone is not news to anyone that follows markets or who is in the real estate industry. However, the more interesting question is what this merger means for how people buy and sell homes, and what role real estate agents will play in those transactions. Will this be the disruption that online travel sites cast upon the travel agent?

The realities of consumer behavior

90 percent of home buyers now search online as part of their buying process, according to a 2013 report from the National Association of Realtors and Google. In the last four years, real estate related searches on Google more than tripled.

Trulia will remain its own brand. Spencer Rascoff, Zillow’s CEO, said in a CNBC interview that keeping the brands separate “will grow our audience all that much more rather than absorbing the Trulia audience into Zillow.”

It’s no secret that people turn to online channels for researching and/or purchasing everything from toilet paper to Teslas. It’s also no surprise that home buying research would also follow these trends. Together, Zillow and Trulia had more than 85 million unique visitors in June, accounting for about 89 percent of all traffic to the 15 most-visited real estate sites tracked by ComScore. Despite this amount of traffic, industry spending is still enormously fragmented. Currently, only 4% of Realtor spend is on the two sites and the other 96% is using other channels, including offline.

How this will affect ad pricing

Wall Street is accustomed to acquisitions of companies with complementary offerings but it’s rarer to see two competitive companies with the same dachsunds 300x199 What the Zillow   Trulia merger means for real estatebusiness model merging. This can be seen much as GrubHub’s acquisition of Seamless last year, and is reminiscent of IAC snatching up many of the online dating sites (like Match.com and OKCupid). In both mentioned cases, the brands remained independent to expand audience appeal and brand integrity.

Rascoff cites that the merger will result in $100 million in cost avoidances by 2016. Speculations naturally rise that advertising prices will increase. As online dating popularity increased, and the industry consolidated, the monthly subscription rate tripled. If a similar thing is to happen with the Trulia/Zillow deal, this may squeeze out the low-producing real estate agents who sell 2- 4 homes per year. For higher producing agents, they will likely need to start appropriating more funds to those portals and take that budget from other media.

The data play

The two companies have small overlap in current user base so this can also be seen as a large data play. Both Trulia and Zillow have come under fire in the last few years for having out-of-date information. A report showed that, in some cases, more than 30% of listings were either no longer available or new listings were not shown. On the other hand, Zillow and Trulia do show many rental properties, for-sale-by-owner, and foreclosures that might not show up on the MLS. In response to inaccurate listings, Zillow and Trulia both turned to brokers to offer incentive programs for direct access to their listings.

Disrupting the real estate industry model

For consumers, the presence of Trulia and Zillow hasn’t changed the game at this point. Most consumers still use real estate agents and that business is trulia 300x140 What the Zillow   Trulia merger means for real estatedriven more than 80% based on referral.

To date, the two companies have yet to touch transaction fees. There is speculation that this might be a way that they will increase revenues instead of just bumping up ad pricing.

Zillow and Trulia have changed very little about how people actually buy homes and that is completely by design. Both were founded about 10 years ago and have relied heavily on real estate agents for their revenue model. Don’t bite the hand that feeds you. This merger may actually change that as speculations increase that there may be a disruptive opportunity to realize revenues from actual transactions.

What do you think this merger will mean in the short term? What about in the long term of how people buy and sell homes?