- The Blueprint
- Is this site Zillow’s worst nightmare?
Is this site Zillow’s worst nightmare?
Our special edition on the online listings battle
Welcome to this special edition
We always want to keep you informed on the biggest and most pressing issues in our industry. That’s why today we are dedicating this entire newsletter to the major shift happening in the online listings business.
In our last edition, we discussed the letter that CoStar CEO Andy Florence wrote in defense of Homes.com, a subsidiary of his company, after public criticisms from Realtor.com Senior VP Bob Evans.
We can see why Homes.com has created an uproar in this space. For years, online listings have been dominated by two sites, Zillow.com and Realtor.com. But now in just two short years, since being acquired by CoStar in 2021, Homes.com has stunned nearly everyone by becoming the #2 most-visited site behind Zillow.
We can easily spot the reasons for its massive success. We’ve all had our issues with these various listings sites, but Homes.com has established itself as the most agent-friendly portal in our business. We like the Homes.com slogan “your listing, your lead”, as it captures exactly how the company is changing the online listings game.
Today, we are going to do a deep dive into how we got here. We think this is absolutely worth your time, and we hope it helps you gain a deeper insight into these major developments.
- James and David
The online listing-portal war is getting fierce
Who owns these sites?
Zillow is owned and operated by Zillow Group, a publicly traded company.
Realtor.com is owned by parent company Move, Inc, of which News Corp. owns a sizable stake. News Corp also owns The Wall Street Journal, which you should consider when reading Andy Florence’s letter.
Homes.com is owned by CoStar Group, which also owns Apartments.com and Homesnap.com. CoStar has a market cap three times greater than Zillow’s.
What is the history behind CoStar?
In 1986, CoStar began as a data services provider for the office building industry, but then expanded into marketplaces and data services for almost all types of real estate.
In 2020, CoStar entered the single-family home market when it acquired Homesnap Inc., which provides home brokers with apps and other technology.
CoStar intends to make Homes.com into an online marketplace that will better serve the interests of both home sellers and brokers than its competitors.
What is the history between Costar and Realtor.com?
In 2022, CoStar was rumored to be looking into acquiring Realtor.com from Move, Inc. but withdrew from the potential $3 billion deal this year in favor of using its cash reserves to improve Homes.com instead.
How do the business models of Zillow, Realtor.com, and Homes.com differ?
Zillow has users fill in a contact form and then sells that info to participating agents as leads. This model has been called controversial since the agent receiving the lead may not be the agent listing the property.
Realtor.com makes its money by selling leads to agents and offering advertising space to agents, brokers, and other parties. The company has also pioneered the so-called “next-gen-lead-gen” model where agents pay a percentage of their commission for the portal company to generate leads for them.
Homes.com makes money by charging agents for extra visibility packages. Although agents receive leads from their listings for free, those who want to get more leads will pay Homes.com to put their listings at the top of the portal's search results pages. CoStar has successfully used this model in commercial and rental real estate. It’s also a common business model for portals outside of the United States.
We have tried to be comprehensive, accurate, and fair to all parties in the listing market. We think that Homes.com’s “your listing, your lead” agent-centric philosophy will resonate with the overwhelming majority of brokers and agents. The importance of the distribution of listings and leads within our community cannot be overstated. It’s absolutely crucial to our business. We welcome the disruption and potential innovation by Homes.com. Zillow should watch out. It has a real competitor and rival on its hands.
The news that just missed the cut
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Just in Case
Keep the latest industry data in your back pocket with today’s mortgage rates:
Source: Mortgage News Daily
That’s a wrap on this edition of The Blueprint!
Remember: each day is a gift and a new opportunity to lead the life you want and to become the person you want to be. The mistakes and missteps you’ve made in the past don’t define you. Live as intentionally as you can and be ruthlessly focused on the goals you’ve set out to achieve. You can do it!
Thanks for reading, and we’ll see you back here on Tuesday!
- James and David