Real Estate News & Commentary

Zillow Continues Quest to Take Over Real Estate With Move Into Mortgages

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person on tablet on mortgage site

Zillow is interjecting itself further into the the buying, selling, and home-financing process with its recently-added lending arm.

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The real estate juggernaut projects it will be making upward of 3,000 mortgage loans a month within the next few years, according to a report by GeekWire.

The new mortgage origination feature, introduced in an earnings announcement last week, is a result of the company’s acquisition of Mortgage Lenders of America (MLOA). Zillow Group finalized its purchase of the Overland Park, Kan.-based brokerage for $66.7 million (in cash!) last October.

Woman Moving Into New Home Using Digital Tablet

Related: 5 Factors to Investigate BEFORE You Buy That Property You Found on Zillow

All Things Real Estate—in One Place

Zillow’s latest move is sparking comparisons in the media to companies like Netflix, Uber, and Amazon.

Now more than ever, consumers expect to be able to access “information and services via the internet, as well as to complete transactions,” Seattle-headquartered Zillow noted in its most recent 10-K filing with the U.S. Securities and Exchange Commission.

The loan offering is meant to do just that, transforming the Zillow platform into a one-stop shop for users to find and buy homes "where, when, and how they want" within a single app.

“Homes are the center of people’s lives, the focus of some of their most important decisions, and often their most valuable assets,” the 10-K went on to say. “In addition to whether to buy, sell, or rent, [our]consumers frequently make many other important home-related decisions, including decisions relating to home financing and home equity loans.”

mortgage-documents

Related: What Mortgage Lenders Look for When You Apply for a Loan

Branch Into Financing Follows Addition of Buying and Selling

The extension of the scope of its business comes on the heels of other big changes at Zillow. For instance, the company rolled out another new feature early last year, namely buying and selling homes directly through Zillow Offers.

In addition, co-founder Rich Barton has been reinstated as CEO as of last week. Barton, who held the position the first five years of the company’s existence, replaces Spencer Rascoff. Rascoff is stepping aside after 10 years but will continue to serve on the board.

Zillow is the most popular real estate website in the U.S., averaging 36 million unique visits a month, according to May 2018 data from statista.com. Trulia and Yahoo! Homes are the second and third most visited, with 23 and 20 million monthly visits respectively.

While MLOA originated just 4,000 mortgages in 2018, power-player Zillow anticipates being able to scale the operation to a much larger degree, GeekWire reported.

How do you feel about (God)Zillow’s latest attempt to take over the real estate world?

Leave a comment below.

An editor and copywriter who has spent 10+ years creating content for print and digital publications, Jessa serves as the Managing Editor for BiggerPockets.com.

    Kyle Hipp
    Replied over 6 years ago
    Great artcle Jeff!! I was raised by pretty smart parents ( I didn’t always think so at the time but realize more and more every day). When I was a child I would ask my dad how to spell a word and he would direct me to the dictionary on the bookshelf. This taught me that I could do things for myself and that information is everywhere especially in this internet age. This served me well but did make me hesitant to ask others for help when I realized I could most likely find the answer for myself. As I stumbled in my young adult life I learned that the lesson was not that I had to do everything myself but rather use resources. It was not myself that found the answer but rather the resource being the dictionary. I now see that it is fantastic to search out answers and knowledge but it is even better in certain circumstances to utilize the expertise of the resources available to me. I still do more myself than I need to but my resources check or approve or finish my work. I attempt to keep great records and ask the right questions throughout the hear for my acciuntant. He in turn allows me a lower rate. I have a fantastic attorney that provides excellent guidance. They give me the tools to take care of a lot and I am always happy to pay for their approval in order for thinks to go smoothly. This has even applied to the construction side. I am a Millwright by trade and can figure out most things but for some reason a reasonably small plumbing job requires about 15 trips to the hardware store and just way too much time. I now hire an old high school classmate who is now a plumber. He usually brings on a helper to make the jibs go quicker so I do that for him. I learn a ton everytime and get a little off labor by helping. I am amazed everytime when he knocks iut a job with only one extra trip 😉 In the end I would much rather admit I had help but got it right than take all the credit and have a couple things not correct..
    Jeff Brown
    Replied over 6 years ago
    Kyle, you used a great analogy. Absolutely excellent. Thanks so much.
    Glenn Schworm
    Replied over 6 years ago
    Jeff, Enjoyed your article. Why is it that we all seem to have to learn the hard way at first before we trusting the professionals. Maybe it is just me? 🙂 I always say that the hardest lessons learned are usually the best ones learned and will never be forgotten. Thanks again for the article. Glenn
    Jeff Brown
    Replied over 6 years ago
    Right with ya on that one, Glenn. Thanks
    Dennis
    Replied over 6 years ago
    Lenders #@%!!! This is a sore subject around our house, this after almost a year trying to do what should have been a simple refinance of an investment property. The “Senior Loan Officer” has asked for just about every document ever generated surrounding 3 businesses we own including every property we have ever owned. The process has taken so long the original appraisal expired! Now why was I so stupid not to cut and run from this imbecile? I didn’t want to walk away from the appraisal fee, believing this knuckle head might soon pull it together. Now let’s examine the complexity of this property, a renovated single family detached house. Tenant occupied for 5 years and with an expectancy of a permanent tenancy. Loan amount less then 50% of appraised value, deed in a land trust. Now out of that trust as a condition of the new loan. I have 840 credit score, had a 900 Duns number in the last large business I owned, have little debt, and good income. So what could possibly be the problem? I’m the problem for thinking this dope could ever pull it together. The loan was deigned; reason? The time period the loan officer took to supply the info to his company caused the loan to be closed out. After threatening to take this rejection up to the next notch in the legal food chain the loan is on again with a new competent loan officer who does not claim to be a senior loan officer, a title that vanished from the other fellows emails in midstream of the process. Not to sound cynical but at age 56 and after many transactions I can safely say 90% of all people claiming to be professionals or experts are neither. The world is held together by the glue generated by 10% of the workforce. Keep this in mind when hiring anyone. In defense of the 90% it has some members who I would put into a category above incompetence which I call “less bad”.
    Robert Ricco
    Replied over 6 years ago
    “The world is held together by the glue generated by 10% of the workforce”. That was phrased so admirably that I had to give you kudos for summarizing the 90/10 Principle in a way that relates to picking advisors. Love it. Indeed, keep it in mind when hiring your team.
    Jeff Brown
    Replied over 6 years ago
    Don’t know where you are, Dennis, but if you’re in Texas, have I gotta guy for you. 🙂
    Paula Pant
    Replied over 6 years ago
    Dennis, my question to you is — how do I find that fantastic 10 percent? I once went through a similar situation (the lender wanted so much paperwork that the original appraisal expired!) but I didn’t want away because I just didn’t know who else to turn to. The loan officer was referred to me by someone in the RE industry who I trust and like. So — aside from personal referrals — how else can I find the good 10 percent?
    Dennis
    Replied over 6 years ago
    Jeff, Philadelphia, PA , but I think I might be a Texan at heart.
    Jeff Brown
    Replied over 6 years ago
    There’s been a ton of those in the last 6-7 years or so. 🙂
    Scott Lawson Lender from Petaluma, CA
    Replied 8 months ago
    Competition is good for everyone. Pricing and customers that come away with a good experience is really all that matters. Ever look at some reviews for Quicken mortgage? https://www.yelp.com/biz/quicken-loans-palm-springs This ain’t like selling under garments on Amazon…The nerds writing the software have no idea what goes into a home loan–I say go for it…Let’s see what you got…
    Josh Stack Investor from Cramerton, NC
    Replied 8 months ago
    @Scott Lawson don’t underestimate the nerds, they will win in the end. Laugh now but Zillow will crack the code. It’s iteration iteration iteration until it sticks. The potential upside is so massive that venture dollars will continue to flow to them until they find the right formula. It’s short sighted to believe that writing a home loan and completely digitizing the purchase process cannot be solved. Nothing the anyone does in the value/process chain of a transaction is so unique that only a licensed holding human being can do.
    Scott Lawson Lender from Petaluma, CA
    Replied 8 months ago
    Here’s another for your entertainment. https://www.yelp.com/biz/quicken-loans-west-hollywood There used to be many more on Yelp like this. It seems much of the bad press on this site has been purged somehow…
    Jessa Claeys Managing Editor from Denver, CO
    Replied 8 months ago
    “Somehow…” — haha! Something that’s also been in the news a lot lately, particularly here in Denver. A Colorado woman is being sued for leaving a negative review! Ay yi yi.
    Matt Jerome from Minnetonka, Minnesota
    Replied 8 months ago
    As a tech enabled agent I am not concerned about Zillow. Most people want an experienced educated realtor to guide them through the process. Keller Williams is providing a platform for agents that streamlines processes and provides a better consumer experience.
    Josh Stack Investor from Cramerton, NC
    Replied 8 months ago
    @Matt Jerome – 20 years ago no one would ever think of buying clothes or perishable groceries online. The days of the traditional realtor are numbered. I’m not saying there will one day not be a place for agents but the role will change dramatically and the margins will get thinner and thinner as your services are commoditized.
    Chris Chessari Investor from Bloomfield, Connecticut
    Replied 8 months ago
    Zillow (Z) is expanding into a lot of things to try and figure out how to make a profit. It lost $94 million in 2017 and $120 million in 2018. It’s stock has dropped 36% since its high in June 2018. I have real doubts about their ability to flip thousands of homes a month. Their home flipping generated $1723 (.05%) per home sold…. hardly worth it. https://therealdeal.com/2019/02/21/zillow-revenues-are-up-but-losses-are-widening-as-it-pivots-to-home-flipping/
    Josh Stack Investor from Cramerton, NC
    Replied 8 months ago
    @Chris Chessari – it’s not just in search of profits, it’s in search of the recipe that will ignite the flywheel and eventually lead to outsize profits through the control of demand.
    Matt NA Investor
    Replied 8 months ago
    This is just another attempt at a bigger company capitalizing on their captured audience with crossover services or products. Like Quicken loans, etc., their products probably won’t be the best value for the consumer. Problem is, a good percentage of buyers will take their advertising and gimmicks at face value and won’t compare programs like they should.
    Josh Stack Investor from Cramerton, NC
    Replied 8 months ago
    @ Matt Na – Speed and convenience will always win in the end for the bulk of the bell curve that matters.
    E. Barret Investor from Cleveland, Ohio
    Replied 8 months ago
    I’ve wanted to like Zillow for years now. Unfortunately every single time I refer to it for more than pictures I encounter gross inaccuracies. This occurs primarily with estimated parcel and rent values, but also with sales data and price history– metrics otherwise available on public county websites without discrepancy. I mostly look at B-class urban/suburban in the midwest/rustbelt and assume Zillow must have more valuable information in larger coastal cities. I’m curious to know what other users find. Is Zillow useful for much in your area(s) of operation or have rampant inaccuracies left you similarly disenchanted?
    Josh Stack Investor from Cramerton, NC
    Replied 8 months ago
    @E. Barret – It’s a starting point. Google search and Siri weren’t that good in the beginning. Siri still isn’t but do you have any doubt that over time the data will not become more and more and more accurate? If we step back and look at the scale of data that’s easily accessible on Zillow compared to 20 years ago it’s amazing. Carry that forward through extrapolation another 20 years and where are they?
    Steve Hartkopf
    Replied 8 months ago
    So in Zillow’s search for profits they will compete against their mortgage lending advertisers and, since they are getting into the buying & selling of properties, they are going to compete against retail realtors, which also advertise on the site, as well as the real estate investors (like me) who use their site. What could go wrong?
    Josh Stack Investor from Cramerton, NC
    Replied 8 months ago
    @Steve Hartkoph – I encourage you to read up on how Aggregation Theory (Ben Thompson, Stratechery) works. In traditional business your point would hold true. In an aggregation model where distribution costs are taken to zero, it does not. It is a bold new world we live in.
    Josh Stack Investor from Cramerton, NC
    Replied 8 months ago
    Jessa, et al; Zillow is an aggregator, much in the same way as the FANG (Facebook, Amazon, Netflix, Google) companies. The key to Zillow’s long term success will come from controlling demand, not supply. We as landlords are the supply, sellers of homes are the supply. Renters/buyers go to Zillow because you can find all listings there, agents/landlords ensure their listing is posted on Zillow because that’s where the buyers/renters go first to look for product. More supply leads to a better customer experience ensuring that even more consumers check Zillow first. Added services ensure that Zillow can be a one stop shop for buyers and renters. The flywheel accelerates. https://stratechery.com/2018/zillow-aggregation-and-integration/ Zillow, Aggregation, and Integration by Ben Thompson Posted onMonday, April 16, 2018 Last Friday something truly remarkable happened: a public company that had grown its valuation from $539 million to nearly $7 billion in seven years announced it was changing its business model. The company was Zillow, and the stock market quickly put a price on how big of a risk the company was taking; from CNBC: Zillow shares plunged 9 percent on Friday after the online real estate database company announced it will begin buying and selling homes, a capital-intensive endeavor. With Zillow’s new program, announced on Thursday, home sellers in the test markets of Phoenix and Las Vegas will be able to use Zillow’s platform to compare offers from potential buyers — and Zillow. When Zillow purchases a home, it will aim to quickly flip the home, making updates and repairs and listing it as soon as possible. An agent will represent Zillow in each transaction. “We’re entering that market and think we have huge advantages because we have access to the huge audience of sellers and buyers,” Zillow CEO Spencer Rascoff said on CNBC’s “Squawk Alley.” “After testing for a year in a marketplace model, we’re ready to be an investor in our own marketplace.” But investors are less enthusiastic. Flipping homes, a model that’s being utilized by start-up Opendoor, is very different than operating an internet marketplace. It carries additional risk associated with buying and selling homes and requires a hefty investment in operations. And it also potentially puts Zillow in direct competition with the realtors on its platform. Zillow sank $5, or 9.3 percent, to $48.77 as of mid-day on Friday, knocking more than $900 million off its stock market value. That’s a lot of money to bet on…well, what exactly? What kind of company is Zillow today, and what kind of company does it hope to be in the future? Zillow and Aggregation Theory Last fall I refined Aggregation Theory by Defining Aggregators. To quickly summarize, I wrote that Aggregators as a whole share three characteristics: A direct relationship with users Zero marginal costs to serve those users Demand-driven multi-sided networks that result in decreasing acquisition costs This allows Aggregators to leverage an initial user experience advantage with a relatively small number of users into power over some number of suppliers, which come onto the platform on the Aggregator’s terms, enhancing the user experience and attracting more users, setting off a virtuous cycle of an ever-increasing user base leading to ever-increasing power over suppliers. Not all Aggregators are the same, though; they vary based on the cost of supply: Level 1 Aggregators have to acquire their supply and win by leveraging their user base into superior buying power (i.e. Netflix). Level 2 Aggregators do not own their supply but incur significant marginal costs in scaling supply (i.e. Airbnb or Uber). Level 3 Aggregators have zero supply costs (i.e. App Stores or social networks) Where, then, does Zillow fit? It certainly has the hallmarks of an Aggregator: users go to Zillow directly to look for homes, Zillow incurs zero marginal costs to serve those users, and the company has created a two-sided market where its suppliers (home sellers) are incentivized to come onto the platform on Zillow’s terms in order to reach Zillow’s end users, thus making the platform more attractive to those end users. The question of supply is more complicated; in North America real estate listings are gathered in hundreds of local multiple listing services (MLSs) run by local realtor associations, and access is restricted to brokers in that local region. Redfin got access to those listings by becoming a broker itself, but Zillow, at least at the beginning, relied on brokers uploading listings themselves — which they were willing to do, thanks to the userbase Zillow had already built up thanks in part to its Zestimate house valuation tool. This was Aggregation Theory in action: gain users with a new kind of user experience, then leverage that user base to get suppliers to come onto your platform on your terms, further improving the user experience. And, eventually, Zillow was able to parlay that user base into direct access to those MLS services, first via the owners of Realtor.com, and then, when they pulled the agreement, via local MLSs and brokers directly who understood how important it was to stay on Zillow. Interestingly, this means that Zillow arguably started out as a Level 3 Aggregator, and then stepped down to a hybrid of Level 1 and Level 2: cutting all of those deals is expensive, and the company does pay for the data, but it’s not exclusive by any means. And this, by extension, gets at why Zillow, despite having so many of the characteristics of an Aggregator, just doesn’t seem nearly as important as companies like Netflix or Airbnb or Facebook: it has accommodated itself to the real estate industry; it hasn’t transformed it. The Real Estate Media Company The first sentence in Zillow’s S-1 was its mission statement: “Our mission is to build the most trusted and vibrant home-related marketplace to empower consumers with information and tools to make intelligent decisions about homes.” In 2014, though, the company coined a new description for itself: a “real-estate media company.” The occasion was the purchase of Trulia: both companies made money selling ads to real estate agents eager to get their listings at the top of the two real estate aggregators that were the top two starting points for real estate searches; by emphasizing they were both media companies Zillow could claim they both had many competitors and weren’t competitive with real estate agents all at the same time. It also had the benefit of being true (until last week). The real estate business in North America has long been an expensive quagmire, for reasons I laid out when Zillow bought Trulia: While real estate transactions in the aggregate are very frequent, for individual buyers and sellers they are very rare. Thus there is little incentive to push for a simpler solution. A real estate transaction is usually the largest transaction most buyers and sellers will undertake, which makes them very risk averse and unwilling to try an unconventional service. There is a lot of regulation and paperwork associated with a real estate transaction, where assistance is very valuable. And, as just noted, transactions are rare, which means there is little incentive to learn how to deal with said regulations and paperwork on your own. Combine the reticence of consumers to push for change with the local realtor association-controlled MLSs, and a willingness by realtors to punish anyone changing the status quo (by not showing a house, or pointing out flaws that would kill a sale), and the best outcome for Zillow was to be an aggregator but not an integrator: the company was completely removed from the purchase process. Integration and Aggregation This gets at why Zillow, for all of its success, seems so underwhelming compared to other Aggregators. One of the key theories underpinning Aggregation Theory is Clayton Christensen’s Conservation of Attractive Profits, which I explored in the context of Netflix while developing the theory: The Law of Conservation of Attractive Profits [was] first explained by Clayton Christensen in his 2003 book The Innovator’s Solution: Formally, the law of conservation of attractive profits states that in the value chain there is a requisite juxtaposition of modular and interdependent architectures, and of reciprocal processes of commoditization and de-commoditization, commoditization, that exists in order to optimize the performance of what is not good enough. The law states that when modularity and commoditization cause attractive profits to disappear at one stage in the value chain, the opportunity to earn attractive profits with proprietary products will usually emerge at an adjacent stage. That’s a bit of a mouthful, but the example that follows in the book shows how powerful this observation is: If you think about it in a hardware context, because historically the microprocessor had not been good enough, then its architecture inside was proprietary and optimized and that meant that the computer’s architecture had to be modular and conformable to allow the microprocessor to be optimized. But in a little hand held device like the RIM BlackBerry, it’s the device itself that’s not good enough, and you therefore cannot have a one-size-fits-all Intel processor inside of a BlackBerry, but instead, the processor itself has to be modular and conformable so that it has on it only the functionality that the BlackBerry needs and none of the functionality that it doesn’t need. So again, one side or the other needs to be modular and conformable to optimize what’s not good enough. Did you catch that? That was Christensen, a full four years before the iPhone, explaining why it was that Intel was doomed in mobile even as ARM would become ascendent.When the basis of competition changed away from pure processor performance to a low-power system the chip architecture needed to switch from being integrated (Intel) to being modular (ARM), the latter enabling an integrated BlackBerry then, and an integrated iPhone four years later. The PC is a modular system whose integrated parts earn all the profit. Blackberry (and later iPhones) on the other hand was an integrated system that used modular pieces. The PC is a modular system whose integrated parts earn all the profit. Blackberry (and later iPhones) on the other hand was an integrated system that used modular pieces. Do note that this is a drastically simplified illustration. More broadly, breaking up a formerly integrated system — commoditizing and modularizing it — destroys incumbent value while simultaneously allowing a new entrant to integrate a different part of the value chain and thus capture new value. Commoditizing an incumbent’s integration allows a new entrant to create new integrations — and profit — elsewhere in the value chain. Commoditizing an incumbent’s integration allows a new entrant to create new integrations — and profit — elsewhere in the value chain. This is exactly what is happening with Airbnb, Uber, and Netflix too. This is the original piece of Aggregation Theory that was missing from last year’s Defining Aggregators: it is one thing to sit on top of an existing industry and, well, be a media company/lead generation tool. There have been a whole host of businesses that did exactly that, and while there is plenty of money to be made, without some sort of integration into the value chain of the industry itself they simply aren’t transformative. To put it another way, aggregation doesn’t transform value chains; integration does. Why aggregation matters is that it is the means by which new integrations are achieved: Netflix leveraged its position as an aggregator of video content into the integration of the customer relationship and content creation, undoing the integration of linear channels and content creation Airbnb/Uber and other similar services integrate the customer relationship with the driver/homeowner relationship, undoing the integration of cars/property with payment Google and Facebook integrated content discovery with advertising, undoing the integration of editorial and advertising More broadly — and this really gets at why Zillow is different — Aggregators that change industries (including Aggregator-like Amazon and Apple that deal with physical goods) integrate the customer relationship with however it is their industry generates revenue; Zillow, on the other hand, was completely divorced from the home selling-and-buying process. The Threat to Zillow — and the Opportunity Again, not all companies need to be Aggregators, and as I noted at the beginning, Zillow has become a very successful company by getting half-way there. And, to return to that Daily Update about their purchase of Trulia, I didn’t think it was even possible for them to go all the way: So then, perhaps this deal isn’t anticompetitive, but rather the key to building a company big enough to finally shake up the homebuying process? That’s Brad Stone’s argument in Bloomberg Businessweek…But remember, Zillow/Trulia are marketing tools; who is paying for that tool? Stone has the answer in the next paragraph: The companies, which rely on advertising from real estate agents for the bulk of their revenues, are being careful about how they discuss the future of their combined efforts. What Stone characterizes as “careful” I characterize “prudent” and “truthful”, because let’s be honest: Zillow/Trulia are not going to bite the hand that feeds them. Nor should they! It would be irresponsible to their shareholders, employees, and all their other stakeholders. It’s very easy to fantasize about disruption; it’s much more productive to simply follow the money. (This is why Redfin is the more interesting company in this space; they use their own network of real estate agents. It’s also why they are much smaller, despite having had a head start.) This is why last week’s news was such a surprise, to me anyways; granted, Zillow had been experimenting with facilitating sales to investors, but to fundamentally change your capital structure, margin profile, and compete with your customers in one fell swoop feels like something else entirely — and Wall Street agreed! I can, though, see where Zillow is coming from: no one thinks the North American real estate market is the way it is because that is somehow optimal or good for consumers; the only folks that benefit from the status quo are real estate agents that continue to collect 6% of the purchase price even as their responsibilities, particularly in the case of the buying agent, run in the opposite direction of their incentives. Zillow did well to capture a portion of that 6% for itself through its realtor ad model, but that only meant that Zillow was as dependent on the status quo as the realtors. To be sure, Zillow has long been a better bet than Redfin, which has admirably IPO’d with a business that basically adds a tech layer (and thus superior lead generation) to a traditional real estate agency; the reality is that simply adding a tech layer doesn’t change industries — that requires new business models. This, though, is where Opendoor, the startup I wrote about in 2016, is compelling: buying houses with the click-of-a-button solves a major problem for sellers, the most disadvantaged party in the entire value chain under the status quo (and thus the most open to something new). And, by definition, it means the company (and competitors like OfferPad) are involved with the transaction that drives the value chain — the actual buying and selling of homes. Make no mistake, the business model is risky, but that is another way of saying the potential return is massive as well: truly becoming a market maker for an industry that does $900 billion worth of transactions every year has massive upside. And, by extension, massive downside for the status quo — which again, includes Zillow. That is one reason to act. Even so, that might not have been enough for Zillow to make such a shift: remember, this is a public company accountable to shareholders, and sometimes doubling down is the most prudent course of action. That, though, is why I spent so much time discussing integration: there is a massive amount of upside for Zillow in this move as well. Remember, Zillow is in nearly every respect already an Aggregator: it is by far the number one place people go when they want to look for a new house, and at a minimum the starting point for research when they want to sell one. They own the customer relationship! What has always been missing is the integration with the purchase itself — until last week. Zillow is making a play to be a true Aggregator — one that transforms its industry by integrating the customer relationship with the most important transaction in its respective value chain — by becoming directly involved in the buying and selling of houses. The Zillow Experiment This absolutely could go sidewise: Zillow is already being hammered in the stock market — investors aren’t generally fans of high-margin companies entering low-margin businesses, with huge amounts of volatility risk to boot. Moreover, Zillow is embracing a model that, should it be successful, tears down the status quo: this will not only enrage Zillow’s customers, but also endanger Zillow’s primary revenue stream. Here, though, Zillow’s status as an almost-Aggregator looms large: we now have years’ worth of evidence that realtors will do what it takes to ensure their listings appear on Zillow, because Zillow controls end users. It very well may be the case that realtors will find themselves with no choice but to continue giving Zillow the money the company needs to disrupt their industry. I will certainly be watching closely: how Zillow fares will result in lessons that may be applicable broadly. Think of Spotify, for example: I was a bit bearish on the company last month because of the power of Spotify’s suppliers; the bull case is that Spotify’s ownership of the customer relationship will allow the company to build out the capability to sidestep the record labels even as the record labels can’t punish Spotify because they need them. That’s exactly what Zillow is testing right now: just how much power comes from being an Aggregator, and how much an industry can be transformed when that power is wielded.
    Marquez Milton
    Replied 8 months ago
    Thanks for the article. Josh Stack I wonder if Zillow will be able to gain more control of the Real Estate industry before something new and revolutionary changes everything. Then there is State law and regulators. The coming years should prove interesting especially for investors.
    Allison Leung from Denver, CO
    Replied 17 days ago
    Great article! Very interesting.