Zillow Story - The Real Estate Marketplace

The real estate market tends to be a highly fragmented market in most parts of the world. Since the product being sold is not homogenous, there is very little information available about the trends in the real estate sector.

For many years, participants in the real estate market have had to deal with this uncertainty. However, Zillow saw an opportunity in this uncertainty.

Zillow created a business model which helps buyers, as well as sellers, crack better deals. As a result, Zillow has now become a household name in all of America. Even though the company began in the year 2004, it has quickly gone on to become a $12 billion company.

In this article, we will have a closer look at what Zillow is as well as the story behind the Zillow model.

What is Zillow?

Zillow is a real estate marketplace that aims to provide buyers, sellers, and other intermediaries, with accurate information about the real estate market.

Zillow maintains one of the most comprehensive real estate databases in the United States of America. Zillow has also spent a lot of money on technology. As a result, Zillow is able to use this vast database as well as big data technologies to provide the most accurate data related to the market.

Zillow provides a proprietary tool called Zestimate on its website. This tool is used by buyers and sellers to determine the price of a property. Over the years, the tool has become so accurate that the Zestimate value is considered to be a benchmark and is used as a data point to start the bidding process.

Zillow provides several different facilities to its users. Some of these facilities have been listed below:

  • Zillow allows users to view properties from foreclosures and other such distressed sales. This makes it possible for the buyer to obtain better deals.

  • Zillow also maintains a database of agents that they have already vetted. Hence, if buyers want to deal with a real estate agent in a particular zip code, they can use the ones suggested by Zillow since a background check has been performed on those agents

  • Zillow also provides leads for several other service providers such as mortgage brokers, packers and movers, and other such service providers.

    The end result is that four out of every five homes which are listed on the real estate market in America have been viewed by buyers on Zillow! Zillow knows the pulse of the American real estate market. They also create detailed annual reports for property trends in various neighborhoods across the country.

Zillow Offers

How does Zillow Generates Revenue?

Zillow has been quite innovative when it comes to revenue generation as well. Zillow has several revenue streams which it uses to generate cash flow. The details of some of these revenue streams have been mentioned below:

  • Zillow generates a significant portion of its revenue from the rental section. Zillow allows landlords to place listings on their websites. Landlords can then accept applications through this website.

    Zillow provides all the information about the tenants on the same interface. Zillow also provides an option for landlords to accept rental payments via Zillow. This service is free for the landlords. However, tenants have to pay a $29 fee to access this service. Since all the best rental listings are available on Zillow, tenants do not mind paying the $29 fee!

  • Zillow also generates revenue by offering its space to property management companies for advertisement. As mentioned in the point above, Zillow has a significant number of prospective tenants on its website. Hence, companies whose main business is to rent out apartments are willing to buy advertisement space at high prices on this website. This helps Zillow generate significant revenue

  • Zillow also has a premier real estate agent program. Real estate agents have to pay a fee to Zillow in order to join this program. Zillow suggests customers to use the services of a premier agent. This helps the agent obtain more business which is why they are willing to pay a higher fee.

    Zillow also guarantees a certain number of views per listing for premier agents. These views are targeted views and belong to a specific zip code. Also, Zillow charges these premier agents based on the number of views that they have provided.

  • Since Zillow is a huge platform for home sales, mortgage lenders also find it to be a good place to advertise their products and services. Zillow charges these mortgage lenders on the number of clicks as well as views that it generates. Since clicks and views translate to sales, mortgage lenders are willing to pay top dollar to advertise on Zillow.

  • Zillow also offers software solutions for landlords, premier agents, and other players involved in the real estate ecosystem. Zillow sells these facilities as a cloud-based service. Hence, users have to pay only when they use the service.

  • Zillow has taken over a mortgage lending company. They have rebranded the company to Zillow home loans. As a result, Zillow originates some of the loans for properties sold on their website. Loan origination is also another source of revenue for Zillow!

The bottom line is that Zillow was once an obscure start-up. However, after several rounds of funding and an initial public offer, Zillow has now come to dominate the American real estate market! This is the reason that Zillow acts as an inspiration for many entrepreneurs in the United States and across the globe.


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Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.


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