Citron Research out with its latest ‘hit’ report regarding the Zillow Inc (NASDAQ:Z) and Trulia Inc (NASDAQ:TRLA) merger, below is the full report.
Citron Research is at it again with another great “find” We have confirmed that Zillow Inc (NASDAQ:Z) and Trulia Inc (NASDAQ:TRLA) both are held captive to way below market rock bottom pricing to the largest real estate agency in the United States. If competition takes notice, these 2 can merge in an internet graveyard.
The stock market and the real estate industry are all abuzz about the possible merger of Zillow(NASDAQ:Z) and Trulia (NASDAQ:TRLA). The media is now filled with stories proclaiming that the combined company will instantly become an internet advertising juggernaut that wields pricing power over the entire internet real estate industry.
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You cannot read a single article or analyst commentary that doesn’t invoke the magic phrase “Pricing Power”. Without the slightest thought whatsoever, the combination of Zillow and Trulia is supposed to give the combined entity the power to triple ad revenue from real estate agents. Nothing could be further from the truth – and we have the proof.
Without the slightest thought whatsoever, the combination of Zillow and Trulia is supposed to give the combined entity the power to triple ad revenue from real estate agents. Nothing could be further from the truth – and we have the proof.
Citron Research now exposes the big lie that has never been discussed by any sell side analyst, mainstream media pundit, and most importantly NEVER DISCLOSED by Zillow or Trulia.
Zillow/Trulia already have in place a rock bottom deal with Realogy, the largest real estate agency in the world, that prohibits ALL OTHER agencies from advertising on their listings … and for this they pay a fee 95% less than any other agency pays.
Not only is this deal unsustainable in the industry, we’re not at all sure if it’s even legal from an anti-trust perspective.
But incredibly, it falls to Citron to publish the documents that no one from either Zillow or Trulia has ever showed Wall Street. This deal spans all of the Realogy agencies:
We’ve published a copy directly from Coldwell Banker.
Below is the pricing for the 175,000 Realogy agents who are a dominant force in the industry. Not only amazing — IT HAS NEVER BEEN DISCLOSED. And it already covers exclusive agentstatus on both Zillow and Trulia – most notably with regard to excluding other brokers’ ads from Realogy listings.
PRICING POWER: Never Had it … Never Will
This Realogy marketing deal was done to purposefully afford Realogy an unfair advantage over their competitors, by blocking all competing agent ads on listings generated by Realogy agents.
More importantly, this agreement eliminates over 20% of all Zillow/Trulia inventory in exchange for a minimal
amount of money. (Note that whatever gross sum FAB PLUSgenerates from Realogy and its agents has to be split among all the online ad vendors; we also acknowledge Realogy corporate probably subsidizes a small, undisclosed part of the overall deal price.)
But it’s not just any 20% — Realogy’s NRT group is the largest owner and operator of residential real estate brokerages in the United States, with operations in more than 40 of the 100 largest US metropolitan areas – surely the most lucrative potential markets for Zillow/Trulia.
Further, data indicates Realogy agents consistently deliver the highest average property price, demonstrating that their premium brands generally represent the most prestigious listings in the market.
The FAB PLUS deal is marketed explicitly to Realogy’s agents as a direct way to “Block competitors from advertising on your listing details page.”