The cost of doing real estate just got a whole lot more expensive.  You know there’s an old joke: What’s the difference between and California real estate license and a California driver’s license?  Not everyone in California has a driver’s license. 

The real estate industry in California has long been plagued by easy licensing and the cheap cost to start a real estate business.  It’s a little like the idea that the American Dream is that everyone should own a home.  As we saw with the real estate meltdown of 2007, clearly not everyone should own a home.  The same is true for the practice of real estate; not everyone should be allowed a license.  There is a reason that when asked about their experience during a real estate transaction, most real estate professionals are held in esteem only slightly better than used car salesmen.  The reason is simple, too many people that have no business doing real estate are doing real estate.  Ever looked into becoming an attorney or getting a license to sell insurance?  How about securities like stocks and bonds?  Getting your Series 6 or Series 7 is tough.  Even to become a sheet metal worker requires an apprenticeship.  Real estate?  Pay for an online class, take a bunch of practice exams and sit for the state exam and voila, you can sell real estate!  Yeah, you need to find a broker to hang your license with but that’s about as tough as standing in the street and yelling, “Free money” and having people put their hand out.  It’s easy.  And the fees?  Not that much.  For about $1000 you can get out there and sell real estate.  However, that’s about to change.

With Zillow’s purchase of Trulia announced today, we may actually see the cost of doing real estate go up.  It’s always been the case that the best real estate agents are spending money to advertise their clients’ properties.  They spend money on prospecting and marketing for the clients and themselves.  The consolidation of the advertising arena means that there is less competition for ad dollars and that means higher costs to the consumer who in this case is all the real estate agents.  If suddenly to be competitive you have to spend real money marketing properties online, agents without the benefit of deep pockets are going to find it more difficult to compete.  This is welcome news for seasoned real estate agents.  It means fewer newbies can offer the level of marketing because it is going to cost more.  It also benefits the traditional brokerages who are constantly fighting over the same licensees.  A broker that pays for services from Zillow, is going to have a better draw than one that does not.

Zillow and Trulia have said they anticipate keeping both brands alive.  We know this will not be the case.  Score Seattle, sorry San Francisco, you lose this one.  It is only a matter of time before the bean counters and Wall Street demand the elimination of duplicate and overlapping costs.  No need to have two CEO’s, same for HR, admin and eventually sales and marketing.  I can hear Carl Icahn and Bill Ackerman now…

So the real estate marketing world is going to change.   Fine with me.  It will cost me more and to that I say, “Great!” because eventually I’ll probably benefit.