I’ll be exploring the inner workings of Zillow and exploring how they make their money both for reasons that benefit real estate agents, and those that hinder earning capabilities.
Zillow is a free web-based platform that allows an owner and/or their agent to list their property for sale or rent. Zillow’s online search tool features a sleek looking service that allow the consumer to search for properties online very easily and for free.
We dig deep and explored the main ways they make money in the marketplace:
So how does the Zillow Group make money?
Sending leads to companies for a fee
Zillow charges real estate rental companies or management companies to advertise their listings on Zillow and its many websites. These include Zillow, Trulia, Hot Pads, HGTV Network AOL etc. Zillow sends these partners their perspective leads and these are income generators to the property management companies.
This helps Zillow’s bottom line stay in the black. Zillow has supposedly identified rentals and leases as a big revenue source, there’s about $3.5 Billion worth of business done in that rental market and because renters move more often, there’s the ability to generate more fees more quickly.
Premier agent services for Real Estate Agents
Management companies advertise for tenants on Zillow but this is not the main way that they attract revenue. One of the most profitable services for Zillow is premiere agent services for real estate agents. Zillow charges estate agents fees to place advertisements on their websites. It helps them attract potential buyers and sellers that can be on the agent list for a particular zip code.
Real estate agents pays Zillow essentially to buy their own leads back
Zillow charges agents for the impressions that their listings get on Zillow and make them pay for it. Services such as this have been the main source of revenue for Zillow. The real estate industry is about the only industry that I know of that essentially gives away its data or its listings for free so real estate agents and brokers spend a considerable amount of money procuring listings.
They then belong to an MLS or a Multiple Listing Service and they freely upload those listing to the system which then shares that information with the world including Zillow. Zillow repackages that information, makes it look all fancy shmancy on your iPhone or tablet and essentially sells it back to the agents.
Selling advertising to mortgage lenders
The Zillow group sell advertising to mortgage lenders and to other businesses related to the real estate field such as interior designers, home-ware companies and businesses that are related to the construction market like general contractors. They may even reach out to affiliates in the automotive industry. These organisations are paying by the click to get more clients to their website and platforms.
The disadvantages of using zillow as a service
So we’ve discussed how Zillow make their money using their platform and we can clearly see that it is somewhat of a cash cow but let’s look at why it may not be the best service for those in the industry.
Minimal leads and/or bad leads
When Zillow sells the leads back to brokers, they solicit agents to come into their platform and buy leads now in my marketplace. The amount that Zillow charges to be on every listing in Newport Coast, for example – and this is aruond 97 listings – is $5,000 per month.
At the first glance that doesn’t seem too bad but then you realise that you are not the only agent on they’re sharing four other agents. So the consumer has a choice of which agent they would select. +
The Newport Coast marketplace quite expensive and do you think the consumer is going to trust that huge home buying exercise with an agent that they randomly select on Zillow?
I would say not at all. so you have to look at the number of leads that are generated.
Zillow doesn’t let the agents know the number of leads, so you’re supposedly getting all these leads but the reality is that the number of leads is very close to zero or if there are any leads, they’re very difficult to convert.
We coould use that money to benefit the home seller
There’s another way of thinking about this eight thousand dollars of expenditure now you can also do less or amount you get less leads maybe you get less of nothing but the way I look at it that eight thousand dollars is really my clients money and by my client I mean the home that I have been entrusted to sell that’s the home that I have listed and that I’m promoting so that eight thousand that could be spent with Zillow that drops straight to their bottom line and gives that company the ability to spend over a billion dollars to purchase Trulia that’s a couple of years ago I believe can be better spent for the benefit of my consumer my customer which is the home that I’ve been entrusted to sell look that eight thousand goes a long way towards additional online marketing print media as well PR and then also big social media pushes and boosts on Facebook and YouTube and all the other avenues that you’ve got you can spend a lot more will have that eight thousand on better photos better video but a better drone and so on to promote that listing so eight thousand for a maybe lead or eight thousand for a whole bunch of advertising to promote that home to the buying populous they’re going to see the home on Zillow and about nine hundred websites anyway so why not be smart with your dollars me and a whole bunch of other agents already have to the benefit I think of our consumer that home seller out there
Unkown agents advertising
When you look on Zillow at the agents listed on the marketplace, there are many of them that I haven’t even heard about. If you look closely you’ll find that even the very seasoned agents haven’t done any good business for a long period of time.