Tag Archives: Zillow

Zillow to Buy Trulia; Will Pursue Twin Brand Strategy

Zillow is buying Trulia, its chief rival, for $3.5 Billion in stock. The two companies – both nine years old — have a lot of overlap currently. But after the deal closes in 2015, they will seek to develop two differentiated marketplaces for real estate-related information, which includes house sales, rentals, mortgage and related national and local advertising.

As the acquiring company, Zillow would focus on “top of funnel” awareness advertising. Trulia, meanwhile, would focus more on specific agent-related, final purchase (or rental)- related advertising. According to ComScore, Zillow attracted 83 million unique visitors in June, while Trulia attracted 53 million. Roughly half of Trulia’s visitors do not visit Zillow.

The proposed purchase price, roughly $70.53 a share, represents a 25 percent premium over Trulia’s current stock price. Combined revenues from both companies could produce $721 Million in 2015 under present conditions, according to estimates by Benchmark Research. Separately, the companies estimate $100 million a year in cost savings by eliminating redundancy. Under terms of the agreement, Trulia CEO Pete Flint will report to Zillow CEO Spencer Rascoff.

In our view, the primary goal of the acquisition isn’t to build the one-two punch of differentiated real estate sites, or even to maximize cost savings from eliminating overlap. Mostly, it takes Trulia out as a rival company, and per GeekWire, it also ends apparent merger talks between Trulia and Move.com, the #3 Real Estate site that controls the NAR’s Realtor.com site. (It also isn’t the first time Trulia has considered selling itself. Google apparently was interested in buying the site in 2009 when it was pursuing a major listings effort).

Over the next several years,the effort to differentiate the two sites make more sense than to collapse them into one brand. Such a strategy would be reminiscent of what AutoTrader.com has accomplished with KBB.com; The Weather Co. has accomplished with Weather Underground; and what Match.com has accomplished with the purchase of several dating verticals.

Winning national advertising dollars is especially viewed as a key growth area. Zillow has budgeted $45 million in marketing dollars this year to accelerate that effort. Zillow, perhaps best known for its controversial Z-Estimates, sees a unique advertising market among speculative home browsers, targeting everything from landscapers to auto companies. Trulia, meanwhile, has been less controversial than Zillow in the Realtor community and might be a better brand for Realtors to work with.

Will there be anti-trust issues? Both Zillow and Trulia tend to draw from Realtors and brokerages that are digitally minded in their advertising. Zillow head Rascoff, however, suggests that the market is nascent and represents less than 3 percent of the $12 Billion market in real estate advertising.

We don’t know about that. The reality is that the two companies actually tie up a great deal of the linkages between real estate advertising and distributors, such as the search engines, local media companies and others. But ultimately, it probably falls short of real anti- trust concern.

Zillow CEO Spencer Rascoff at a recent BIA/Kelsey conference

Zillow Starting to Add Realtor Reviews

On average, people only move every six years or so. So there aren’t likely to be as strong a list of reviews of real estate agents as there is for pizza. But that hasn’t stopped Zillow from adding reviews of real estate professionals to its Directory.

The company started collecting reviews in December and now says it has “thousands.” The reviews are connected to an agent’s Zillow profile, providing a richer picture for potential Realtor advertisers. The agent’s answers to various consumer questions are also part of the profile, as it is with Trulia’s Directory.

The drive to have more reviews is something that is felt across verticals. It is among the biggest reasons, for instance, why Angie’s List sponsors its Big Deals – to add reviews to its home and trade profiles. In a release, Zillow CEO Spencer Rascoff says that “Agent Reviews are another huge step towards transparency for buyers and sellers.

When visitors use the Zillow Directory to search for a real estate agent in their area, results are sorted by local agents with the highest overall ratings and greatest number of reviews. Ratings are on a 1-to-5 basis, with 5 being “very likely” to use again, and 1 “very unlikely”.

Consumers can compare agents’ overall ratings, as well as ratings across several categories of service including: process expertise, local knowledge, responsiveness and negotiation skills. Along with ratings, qualitative reviews further help consumers understand a former client’s experience with that agent.

Homethinking, which launched in 2005, has had some experience with agent reviews. But it tightly integrates the reviews with the agent’s transaction history, providing more of a 360 degree picture.

Real Estate: Are Multiple Listing Services Ready to Compete for Consumers?

With the rise of consumer-facing real estate sites such as Realtor.com, Zillow and Trulia, it seems only natural that Multiple Listing Services would break out from behind the Realtor and brokerage firewalls, and provide truly local, for-profit real estate sites, complete with advertising and features.

Houston Area Realtors has been perhaps the most prominent MLS to do this. Another is MRIS, the mega-MLS covering the entire Washington DC. Metro area. Another large MLS that has had a consumer facing site is Multiple Listing Service of Long Island, NY, which has been active on the consumer side for over seven years.

MLSLI has a friendly site, complete with standard features such as neighborhood and school information. But now, the 20,000 agent-strong MLS, which is owned by the Long Island Board of Realtors and serves Nassau, Suffolk and Queens, says it is ready to overhaul its site for the social and mobile generation. Working with Local Matters, which has been focusing on the MLS market, MSLI says that its new, locally customized site will be up in 90 days; in time for spring, which is the peak house buying season.

MLSLI VP of Operations Jim Speer tells us the site will help spur his members to work more effectively with social media such as Facebook and Twitter. Many Realtors have been effectively using social media, but there is a still huge chunk that don’t. It will also include Zillow-like automated valuation models for homes.

The site will also be more agent-centric. “On our website, users will click on a listing and get direct access to agents and their office listing,” he says. “It is really a straight path to our agents and brokers members.”

Speer, however, believes the site will only be enhancing the role of the agents and brokers. It will probably never be a big revenue maker, he says. “Maybe it will offset some of our dues. But we don’t sell anything to our members,” he said. “There won’t be featured listings or advertising.”

Zillow Earns First Profits; Ups Rascoff to CEO

Zillow, after five years and $87 million raised, says it is now in the black for the first time, after focusing more on revenues.

The online real estate company, which competes with brokerage sites, Trulia and others, also announced that CFO Spencer Rascoff has been appointed CEO, replacing Expedia Founder Rich Barton, who becomes Executive Chairman and focuses on a heavy portfolio of vertical investments, such as Avvo.com, the legal site.

Rascoff and Barton , in a phone call yesterday, tell us that the company is currently driving revenue on Zillow.com, Yahoo Real Estate and Mobile from five key revenue streams, including its Mortgage Marketplace, display, national advertising, local advertising and mobile advertising. The latter channel has become especially critical and now accounts for 20 percent of usage on weekends, says Barton. “Real estate is the ultimate local shopping experience,” suggests Rascoff.

The mortgage marketplace, especially, has become one of the company’s fastest growing areas as well, with 314,000 mortgages leads being processed on the site, up six fold from August 2009 , when it was introduced. This compares in the balance to four million homes being listed, and 150,000 rental listings. Twenty—five percent of home shoppers are now looking at home rentals as a point of comparison, says Rascoff.

Zillow Extends Ties with Yahoo Real Estate; Will Power Listings

Zillow announced today that it will power Yahoo’s “for sale” listings, in much the same way that Cars.com powers Yahoo’s new and used cars listings. Zillow typically carries four million + listings. The announcement spearheads a slew of online real estate announcements prior to next week’s Inman Real Estate Connect conference (which I am attending),

The enhanced Yahoo and Zillow tie doesn’t achieve the “buy a slot” status of other Yahoo vertical outsourcing — it would have been too expensive for any of the major real estate portals — but it also goes well beyond the current Yahoo-Zillow relationship,which basically consists of Yahoo’s syndication of Z-estimate home valuations. That has been in place since 2006.

Under the new deal, the two companies bring together the real estate websites that have the second (Zillow) and third (Yahoo) highest number of unique visitors, per ComScore. The deal, which is symbiotic for both companies, shows how things have changed from five or six years ago, when Yahoo itself was seen as a major threat to use open Internet listings to dominate real estate advertising. Now, Yahoo is basically content leveraging its sales relationships with national brokerages, while Zillow focuses on the content and local accounts. Real Estate remains highly profitable for Yahoo.

While Zillow listings won’t go up on Yahoo until later this year, the two companies are immediately coordinating their sales efforts. Zillow’s “Premier Agent” program will be extended to Yahoo Real Estate. Current Zillow advertisers will be offered the chance to extend their relationship to Yahoo. Additionally, Zillow’s local “Showcase Ads” and “Featured Listings” will automatically be extended to Yahoo, making it easier for both sites to reach a quorum of users. For Sale By Owner advertising will also appear on both sites.One thing that Yahoo doesn’t get access to in the deal is Zillow’s burgeoning display business.

Zillow Adds Rentals to Real Estate Listings; Introduces Premiums

Facing up to the reality of a real estate market in which many houses for sale end up becoming “shadow” rentals, Zillow has added rental listings and information to its real estate services. At the same time, Zillow is attaching a $9.95 premium for listings to be posted for six months, which represents the first time that the ad-supported service has ever charged for listings. The fees include unlimited photos.

Zillow’s new fees, however, will only be assessed for “manual” listings that are not part of the feeds that Zillow receives from its primary sources, which include brokers, 200 Multiple Listings Services and 171 newspapers. Just three percent of its listings are said to be“manual,” representing a potential rental listing market of 120,000 units.

CFO Spencer Rascoff says that he expects to see strong demand for rental information. The company points to research showing that 25 percent of its four million unique visitors are “dual tracking” rents and houses for sales, seeing whether they can get a better deal from renting or owning. “No one expects price appreciation anymore. All you have is an option to pay for a house outright,” says Rascoff.

The rental option gives users an option to view rental costs a la carte, or against “for sale” information. While adding rentals would theoretically pitch Zillow against rental publishers such as Apartment Finder, Apartments.com, ApartmentGuide and My New Place, Rascoff says Zillow’s offering is really oriented towards single family homes, or small complexes, while the others are oriented towards large property managers. “A third of rental units are single family homes,” he says. “More than half of rental units are four units or less.”