We Need To Have This Zillow Talk

Dated: March 11 2022

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From humble beginnings with the help of many real estate agents…

When Zillow started it relied on individual agents to manually upload their listings to their marketing platform. I was among the first agents to do just that. This helped Zillow to grow considerably in becoming a consumer real estate portal destination.

…Zillow began courting the real estate brokerages…

Having achieved a critical mass thanks to individual agents, Zillow approached brokerages and sold them on the idea of a brokerage listing feed. I was with one of those brokerages at the time. As agents, we had no choice in the matter. I became part of a process I did not control. My listings on Zillow now linked to my brokerage website instead of my own website’s presentation of that listing. I changed the links manually on Zillow but they reverted back at the stroke of midnight. Zillow and my brokerage were interfering with my own marketing efforts.

… then Zillow went after the MLS organizations across the country…

After Zillow convinced brokerages nationwide to hitch their wagon to their real estate marketing portal, they set their sights on the MLS organizations. One by one they caved and many of them agreed to syndicate their listings to Zillow. The Northwest Multiple Listing Service did not but left it up to their members, the brokerages, to decide on the data feed of their listings. Eventually, all of the brokerages did, some reluctantly. Zillow had become such a powerhouse that consumers would demand that their for-sale homes be shown on Zillow.

… and then Zillow threw those overboard who made it grow.

Having achieved critical mass, Zillow told agents that they no longer could upload their own listings manually. The company argued that manually entered listings were less reliable and more likely outdated than those it received via syndication. That’s too bad because I was able to provide more and different information than my local MLS allowed – more text to describe a home and photographs of the neighborhood. Better still, my manual entry allowed me to link to the custom listing of any home on my website.

Zillow still tries to convince me to spend my marketing dollars by becoming a Premier Agent. My answer is still “thank you, but no thank you.” This is not sour grapes. I admire Zillow’s business strategy. Their assessment of a fragmented industry and the technophobia of most of the agents were right on the money. So ends my Zillow talk.

Well, not really. That was in 2017, now it’s February 2021 and an update is in order.

February 2021 Update: and then the unbelievable happened.

After years of the pronouncements by Zillow that the company would never become a real estate brokerage, the unthinkable happened. Zillow did just that. Over the past four years, Zillow became the Zillow Group, with a mortgage company, a rental property powerhouse, a home-flipping company, and ultimately Zillow Homes, a fully functional brokerage.

The real estate agents, brokerages, and MLS organizations across the country had unwittingly created what could become the Amazon of real estate. And they did so almost entirely free of charge to Zillow.

Zillow turned out to be the Trojan horse.

Zillow’s recent acquisition of Showing Time put the Northwest Multiple Listing Service (NWMLS) in a peculiar position. A member firm of the NWMLS now owns a service that is used by the majority of the member firms and brokers to schedule home showings.

It was like adding insult to injury.

November 2021 Update: and then the unexpected happened.

Zillow closed its iBuyer Business and laid off 25 percent of its staff.

Zillow’s co-founder and CEO Rich Barton said “is too risky, too volatile to our earnings and operations, too low of a return on equity opportunity and too narrow in its ability to serve our customers…”

Zillow’s Chief Financial Officer Allen Parker said that the company’s forecasting process “at that time was not keeping up with that rapid rate of home price appreciation increase that was occurring.”

What does it mean?

The iBuyer flipping business had become Zillow’s largest source of revenue but it was a drain on earnings, racking up a loss of $381 million in the last quarter.

Zillow lost money, but worse, the company lost credibility. For years, the Zestimate – Zillow’s estimate of a home’s value – was one of the company’s most publicized but also most controversial offerings. When a company miscalculates the value of its own home purchases, it has no business to tell anyone else what a home is worth.

Zillow’s future financial health will depend more than ever on its original business – collecting money from subscribers to its Premier Agent program. It doesn’t take much imagination as to what would happen to Zillow if a substantial number of the agents now turned their backs on the company.

Zillow Chronology

  • 2004 incorporates
  • 2006 goes public and launches website
  • 2008 adds mortgage business
  • 2009 adds rental homes
  • 2018 enters iBuyer business (home flipping)
  • 2021 opens brokerage offices
  • November 2021 closes home flipping business

I created my first commercial website in 1995 and became a real estate agent in 2002.

See Gerhard’s website for sellers and website for buyers.

Blog author image

Gerhard Ade

Born and educated in Europe, Gerhard Ade’s career spans three decades in marketing communications and two in real estate. A branding expert, his most well-known design is the VIA logo for Canadi....

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