Concur on that assumption. Real estate sites in general have a huge amount of passive traffic that can generate advertising revenue. Women in particular have a huge affinity to just browsing listings for fun and aspirational purposes. Whilst Zillow isn't ad driven, know a fair number of sites that rely on that. Source. Work in the space.
Realtors who pay Zillow receive leads that are profitable. If Zillow leads do not increase their business, my guess is that the realtors sooner or later stop buying ads on Zillow.
It's a transactional relationship that exists only as long as it benefits both parties, and there's no moral aspect to it.
I still don't understand what Zillow hoped to achieve by this. Zillow displays all types of housing, right? If anything, Kate's site gave Zillow free advertising.
Zillow is an awful tool (data quality is infamously bad), but it is fun infotainment that gets eyeballs to hand over to agents, and those agents get a huge commission due to the oligopoly of real estate agent industry, so they can pay large referral/ad fees to zillow.
I have a friend who does real estate in DC who pays Zillow thousands per month to be on the forefront of all the incoming leads. It reminds me a ton of Yelp.
Seems to me like the realtors are probably right, zillow is throwing their weight around to make more money, but realtors are very incentivized to fight back against zillow.
The real estate market is huge and inefficient, a ripe opportunity for technologists to capitalize on. But I don't understand what Zillow brings to the table. Do they have any plan beyond their current business model (advertising)?
As a consumer, I think I should oppose Zillow. They seem to just take public data, present it nicely, and slather it with advertisements. Real estate agents play the same heavy-handed role they always have, except now they have to give some of their profits to Zillow else lose visibility to their competitors.
I'm more excited about Redfin. Redfin makes shopping for a home closer to the self-service experience it should be, with agents dealing in higher volume with lower margins playing a lighter role. Unlike Zillow, Redfin seems to make that market more efficient, and I think that's the bigger opportunity for capitalization.
Realtor here, so sure, I'm biased... Zillow is engaged in arbitrage just like anyone else trading assets. It's possible to get a great price and low fees... or it's possible to get taken for a ride. Knowing what I know about real estate - I'd never buy or sell through Zillow or a similar service (Redfin, etc), and I'd never recommend it to a family member or friend. Everybody focuses on commissions, but if you sell your house below what you should have, you are leaving a lot more money on the table than the cost of my commission.
> There are marketing expenses and time invested to list and market a property
Putting a house on Zillow takes, what, 15 minutes?
Perhaps the exception is very high end real estate, but from what I've seen most of the high end realtors are just really good at networking and schmoozing.
I'm in the market for a house now, and I use Zillow/Redfin every single day at the moment. I'm right there in the "I love this thing" state. I haven't purchased a home before, so it wasn't until now that I got to this point.
You're totally right that monetization is the next concern though.
To me, a plethora of “Zillow owned homes” in an area is a negative signal for pricing outlook. Zillow is a non-user of these properties and therefore represent future selling pressure in the neighborhood.
I think they’re welcome as a market participant and, if they’re particularly good at pricing properties, they might be able to make some money by exploiting inefficiencies in the market.
I think it’s far more likely that they’ll be a net donor to most markets from their algorithmic operations (in trading terms, I doubt they’ll exhibit positive alpha from purely algorithmic buying).
Well, the URL contains the word "research", so I assume Zillow considers this to be a research report.
"I don’t think industry really does very much research. They come up with an idea and they try to sell it. If it was a good idea, maybe they will make money. Even if it was a bad idea, if they have good marketing people, they might still make money and we never know..."
I don't get what Zillow's business model is or how they make any money. In the market where I live houses are going for crazy prices and under contract almost as soon as they hit the market.
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