I don’t know about you, but moving house is one of my life’s top ten most stressful experiences. There’s so much to organize, from selling your current home to finding a new one, not to mention how you’ll transport a lifetime of possessions from one place to another.
For a long time, I’ve thought the real estate industry needs shaking up. Technology is advancing at such an incredible pace it makes sense that it should eventually revolutionize the traditionally slow, manual process of selling and buying. And now it has been, by Zillow.
Zillow is by far the most popular real estate website in the US, offering customers an on-demand experience and almost end-to-end service. It’s precisely the sort of business I’ve been dreaming of.
The global value of real estate hit $326.5 trillion in 2020, a 5% increase from the previous year. Specifically in the US, the commercial real estate market size is $1.2 trillion in 2022. This number will only continue growing as the world population increases, demanding more properties to live and work in.
This growth is good news for Zillow since it has maintained at least 10% of the industry’s total revenue opportunities and addressable market since it was founded. However, as more companies follow Zillow’s tech-savvy footsteps, competition will increase considerably.
This Zillow competitors analysis looks at which real estate businesses will likely thrive in the coming years and which pose a significant threat to the US market leader.
The Bottom Line Up Front
Zillow is the leading real estate marketplace by a considerable margin. With annual revenue and total unique website visitors increasing each year, the company is on an upward trajectory that doesn’t seem to be slowing soon.
However, some concerns have been raised by agents and buyers that the information on Zillow’s website isn’t always accurate. In my opinion, trustworthiness is the single most important quality people look for in real estate companies, so this is something Zillow must rectify quickly to prevent further reputational damage.
List of Zillow’s Main Competitors
- Realtor.com
- HomeLight
- Redfin
- Homes.com
Zillow Business Strategy
Zillow Group, Inc., known simply as Zillow, is a tech real estate marketplace founded in 2006 with headquarters in Seattle, Washington. Given the impressive achievements of three of its founders (Lloyd Frink and Rich Barton are former Microsoft executives who also founded Expedia, and Spencer Rascoff co-founded Hotwire.com), Zillow was bound to succeed.
Zillow Group’s brands, subsidiaries, and affiliates are:
- Zillow
- Zillow Premier Agent
- Zillow Homes
- Zillow Home Loans
- Trulia
- StreetEasy
- ShowingTime
- Out East
- HotPads
The company allows buyers to look at property listings for free; it relies partly on ad sales to agents and related businesses to make money, known as an advertising revenue model.
However, this isn’t the only service for which you can use Zillow. It offers various products for buyers, sellers, renters, and landlords. Thus, the company’s revenue is split into three segments: Home, IMT, and Mortgages. Not only does it make money from advertising, but it also charges a selling fee and interest on home loans.
Read this guide for a more in-depth analysis of how Zillow makes money.
Zillow offers several key features, including aerial views of homes, value estimates, value changes within a timeframe, and prices of comparable homes within an area.
It expanded its listings in 2009 to include rental homes; shortly after, it introduced the option for renters to pay landlords online using the Zillow Rental Manager tool. However, this means renters must pay a transaction fee when using debit or credit cards, which they can avoid by paying using ACH.
In 2021, Zillow had 68 million monthly visitors, with 138 million properties listed in its database. Astonishingly, 67% of homes in the US have been viewed on Zillow regardless of whether they are for sale.
The company has real estate brokerage licences for numerous states, and Zillow Canada Inc. operates in multiple provinces.
Acquisitions and partnerships have been vital for Zillow’s immensely successful business strategy. In 2011, Zillow partnered with Yahoo! Real Estate to create the most prominent advertising network on the web.
The following year, Zillow acquired RentJuice, a SaaS company that allows property managers and landlords to market and lease rental properties through online tools, for $40 million. This was a critical step forward because it provided Zillow with ready-made software solutions.
The most significant acquisition for Zillow was Trulia, a leading online real estate company, for $3.5 billion in 2014. This move allowed Zillow to eliminate one of its key competitors by bringing it into the Zillow Group.
In 2013, Zillow started powering AOL Real Estate, and it took over MSN Real Estate the following year.
Zillow Mortgage Marketplace is another vital tool allowing borrowers to get custom loan quotes without having to reveal personally identifying information.
In 2021, Zillow reported $8.1 billion in revenue, up from $3.34 billion the previous year.
Zillow Competitors Analysis
Zillow competes against rivals like Realtor.com and Redfin in the real estate industry.
Realtor.com
Realtor.com is the second most visited real estate website in the US as of 2021. It is operated by Move, Inc., a Newscorp subsidiary, and its headquarters are in Santa Clara, California. The company was founded in 1995.
Realtor has over 100 million active users each month, and it offers these users a comprehensive list of properties for sale and a wealth of tools and information to help with the buying process. Using the MyHome dashboard, property owners can track the value of their house over time, scout similar properties in the area, and research and manage home improvements.
The company’s business strategy focuses on selling referral-based solutions, advertising, and leads to brokers, agents, and other people within the industry. Consequently, it uses a hybrid advertising and service-based revenue model.
In 1997, Realtor became the exclusive real estate listings source for several well-known companies such as America Online (AOL), NBC, and USA Today. By the turn of the century, Realtor had become the most successful website for real estate listings, with over 1.3 million, and it had expanded its services to include virtual tours of properties.
News Corp purchased Realtor’s parent company, Move, for $950 million in 2014, when Realtor received 34.1 million unique monthly visitors. Two years later, the company claimed to display 97% of residential properties for sale in America.
More recently, Realtor.com has sought to expand through acquisitions and strategic partnerships. It acquired UpNest.com, which algorithmically matches real estate customers with agents in their location, in 2022 to improve its seller strategy.
Elizabeth Banks, the famous actress, director, and producer, is currently Realtor’s spokesperson. She appeared in the company’s YouTube marketing series targeting millennials looking to purchase their first home, and Fred Savage directed her first ad campaign.
In 2021, News Corp. posted $2.5 billion in revenue, and digital real estate from Realtor.com accounted for $426 million of it.
HomeLight
HomeLight is a real estate technology company founded in 2012 with headquarters in Scottsdale, Arizona. It provides an online platform that matches buyers and sellers with real estate agents.
In 2015, HomeLight received $3 million in a funding round led by BullPen Ventures, with participation from Crosslink Capital, Montage Ventures, 500 Startups, Krillion Ventures, and Western Technology Investment.
The company initially focused on buyers, whereas today, it is mainly geared toward sellers. Its business strategy aims to rank agents based on their experience level, property type, neighborhood, and price range to give a clearer picture of the most suitable properties for customers.
To do this, HomeLight uses an algorithm that ranks agents based on data such as sales and records from over 100 sources and 30 million national transactions.
The agent matching service provided by HomeLight is free. However, the company uses a commission revenue model because it charges a referral fee (essentially a type of commission) to licensed real estate agents. Consequently, these agents often charge sellers a higher commission to cover costs.
HomeLight has engaged in various mergers and acquisitions to consolidate its position in the industry. For instance, in 2018, it announced a partnership with Yelp to combine HomeLight’s data with Yelp’s Home Services listing.
The following year, HomeLight acquired Eave, a digital mortgage startup, and in 2021 it partnered with the National Association of Real Estate Brokers to launch a program offering support, mentorship, and stipends for African-American real estate professionals to help them get started in the industry.
HomeLight has had several successful funding rounds, putting it in a solid financial position. By 2017, it had raised a total of $15.5 million from investors, and in August of that year, it raised a further $40 million in a funding round led by Menlo Ventures.
As of 2022, HomeLight is valued at $1.7 billion. Its estimated revenue in 2021 was $300 million.
Redfin
Redfin Corporation is a residential real estate brokerage founded in 2004 with headquarters in Seattle, Washington. It operates in 95 markets in the US, Canada, and various other markets via referral agents and partners.
The name Redfin is an anagram of “friend” and “finder”. The company’s business strategy focuses on charging sellers low fees of 4% of the sale price of a property (1.5% to the selling agent and 2.5% to the buyer’s agent) and offers commission rebates to people who purchase properties using the service.
As of 2021, Redfin had a 1.17% market share in the US by value. When the company started, its website showed properties on an interactive map, a new concept at the time, giving Redfin a unique selling point (USP).
It is in a solid financial position thanks to several successful rounds of funding:
- 2006: $1.25 million in Series A
- 2006: $8 million in Series B
- 2007: $12 million from Draper Fisher Jurvetson
- 2009: $10 million from Greylock Partners
- 2013: $50 million in a Mezzanine Round
- 2014: $70.9 million from various investors
Redfin went public in 2017 with an initial public offering, raising $138 million. The company reaches 47.1 million people across its mobile app and web properties, and it completed 76,680 transactions sides in 2021.
Unfortunately, Redfin is no stranger to controversy. In 2007, the company was fined $50,000 by the Northwest Multiple Listing Service and had to shut down reviews of homes on the market on its website, which were prohibited under the multiple listing service rules.
Following this, several fair housing organizations brought a class action lawsuit against Redfin, accusing the company of violating the Fair Housing Act by offering fewer services to sellers and buyers in minority communities. Redfin paid $4 million to settle the lawsuit and enacted several significant changes in 2022.
Despite these controversies, Redfin is a multi-award-winning company. Inman News gave Redfin an Innovator Award in 2006 for the Most Innovative Business Model, and in 2012, Business Insider named it one of The Digital 100: World’s Most Valuable Tech Companies.
Acquisitions have undoubtedly played an essential role in Redfin’s ongoing success. One of the most important examples is the acquisition of RentPath – which owns Rent.com, Apartment Guide, Rentals.com, and Lovely – for $608 million in 2021.
Redfin’s full-year revenue in 2021 was $1.92 billion, a 117% increase compared to 2020. Gross profit increased yearly, jumping by 74% to $403.8 million.
Homes.com
Homes.com, Inc. offers online marketing services and advertising products to help real estate professionals connect with interested sellers and buyers. The company was founded in 1999, and its headquarters are in Norfolk, Vancouver. It is operated by Ten-X, a brokerage with licenses in all fifty US states and DC.
In March 2000, Homes.com raised $38.5 million in a venture capital funding round, giving Hummer Winblad Venture Partners a controlling interest.
Four years later, the company was purchased by Trader Publishing Company, a joint venture between Cox Enterprises and Landmark Media Enterprises. In 2006, Homes.com became a subsidiary of Dominion Enterprises LLC.
The company provides various tools, such as a search engine for properties featuring price, type, and location. It also sells broker and agent websites.
Homes.com has segmented its marketplace into the following real estate categories: homes, homes in NYC, apartments, Westside rentals, and land. Users can search based on top markets or individual states.
Regarding business strategy, Homes.com takes a slightly different approach from its competitors by focusing on marketing and advertising tools. In 2018, it was the fifth-largest portal by traffic market share in the US.
Homes.com’s most recent funding round happened in 2021 and saw a significant CoStar Group investment. The company’s annual revenue is $21.4 million.
Zillow SWOT Analysis
This SWOT analysis discusses Zillow’s strengths, weaknesses, opportunities, and threats.
Strengths
- Good brand recognition within the real estate industry
- Millions of unique users visit the Zillow website each month
- Excellent product portfolio covering the whole real estate lifecycle
- Relatively high customer satisfaction – G2 rates Zillow at 3.8
- Dedicated customer service department
- Extensive brand portfolio, including Zillow Premier Agent and Zillow Home Loans
- Great network of partners
- Strong financial position with year-on-year revenue growth
Weaknesses
- Commission fees drive up transaction costs
- Customer satisfaction, though higher than the industry average, could be better
- Information on the site is often outdated
- Zillow often gives buyer information to irrelevant agents, resulting in the buyer receiving lots of calls and getting frustrated
- Zillow is not a real estate broker; it cannot do for clients what an agent could do
Opportunities
- Use new technology to streamline existing services and develop new ones
- Expand rental services
- Expand into new markets, including Europe
- Personalize the user experience better
Threats
- Fierce competition from similar websites
- Change in buying habits – if people go directly to agents without using a service like Zillow
- Changes in the housing market could cause significant problems
FAQs – Zillow Competitors Analysis
Question: Which company is Zillow’s biggest competitor?
Answer: Based on revenue and website visits, Realtor.com is Zillow’s biggest competitor. Zillow reported $8.1 billion in revenue in 2021, whereas Realtor reported $2.5 billion in revenue.
Question: Which is the biggest real estate marketplace in the US?
Answer: Zillow offers the biggest real estate marketplace based on visitor traffic, averaging 68 million monthly users in 2021.
Question: What makes Zillow unique?
Answer: Zillow empowers people to make intelligent real estate decisions with the most comprehensive tools available. The service is free for users, which is particularly appealing.
Conclusion
The real estate marketplace market is competitive, but Zillow is the clear leader. With strong annual revenue and year-on-year growth, it’s hard to see how things could go wrong for the company. Several companies offer the same service as Zillow, such as Realtor.com, but none get anywhere near as many monthly visits.
However, criticism of Zillow is growing online. Many people have expressed concern over the accuracy of the website’s information, and some agents and sellers are increasingly skeptical of using a go-between to facilitate the selling and buying process. Zillow should act now to address these concerns before they start impacting business.
Recommended Reads:
- Affirm Competitors Analysis
- Flexport Competitors Analysis
- Uline Competitors Analysis
- Yext Competitors Analysis
- Aldi Business Model Explained
- Nutanix Competitors Analysis
- Docusign Competitors Analysis
- OpenAI Competitors Analysis - April 11, 2023
- How Does Chime Make Money? - March 20, 2023
- Insurance Value Chain Explained - January 31, 2023