In the past, property sellers and buyers relied solely on newspaper advertisements, generic buy and sell sites, and agents. Then in 2006, former Microsoft and Expedia executives Rich Barton and Lloyd Frink decided that there should be a better way to buy and sell houses. Zillow revolutionized the industry by openly sharing the nationwide house listings data, which has formerly been available only to real estate professionals.
Since then, Zillow grew into a giant group of companies that together cover the entire property buying cycle: buying, renting, selling and financing. It’s brands range from real-estate marketplaces for end clients to marketing software for agents and brokers.
One of such marketplaces is Trulia, which has been a long rival of Zillow up until Zillow has acquired it for $2.5 billion in a stock-for-stock transaction in 2015.
Zillow’s mission is: “to build the largest, most trusted and vibrant home-related marketplace in the world”.
Over a billion dollar in revenues later, one can safely say they’ve already achieved it. Indeed, the company’s results are astounding: 195 million unique users a month and 110 million houses!
Business Model, More than the Advertising platform
Since it’s conception and until recently, Zillow has been purely a media business. This means that Zillow concentrated only on providing a platform for agents and mortgage providers to advertise their services and refrained from getting involved in any house-related transactions.
“We are a media company. We sell advertising. Having a large audience is critical”, Zillow Group CEO Spencer Rascoff, a quote from Fast Company dated in 2015.
Not anymore! Now they’ve also gotten into the rent and even house buying business.
Currently, the main revenue streams of Zillow are:
Zillow Offers (New!)
The revenue from the home-selling business called ‘Zillow Offers’ is not yet reflected since it has only been launched recently.
Let’s take a look at each revenue stream one-by-one.
Zillow offers a suite of products to agents that is marketed as ‘Premier Agent’, which includes:
Advertising on zillow.com and trulia.com – agents pay a fee that depends on the Zip Code, to appear in home searches.
My Agent – is an opportunity for an agent to be the only agent a buyer sees next to listings.
Premier Agent CRM – is a tool to manage relations with potential and current clients.
Premier Agent Direct – is an array of options to advertise listings for agents.
Basically, Zillow covers all essential business needs of a real estate agent, such as:
Attracting buyers and sellers
Promoting the agency and agents
Managing relations with existing and potential clients
This is probably one of the reasons why this business has been so successful.
The company also owns the largest rental network in the US called Zillow Group Rentals that is comprised of Zillow, Trulia and HotPads. The network brings around $110 million in revenue, which is 10% of the total group revenue.
The rentals revenue comes primarily from property managers that pay for advertising on the network on a cost per lead, cost per lease and cost per click basis.
There are two rental advertising products:
Zillow Rent Connect – lead generation tool for large property management companies. Service includes the display of listings across the Zillow rental network and transferring all inquiries directly to property managers.
Zillow Rent Connect: Boost – PPC advertising for multi-family development companies where advertisements are shown above the renter’s search results on Zillow websites for real estate.
In 2018, Zillow has also launched a set of tools to simplify the apartment hunting process for renters. For $29 renters can get their:
credit report from Experian
background check from Checkr
Getting a mortgage is an important and often painstaking step in the home-buying cycle. That is why Zillow decided to incorporate tools and information to help buyers find the right mortgage solution. This not only assists buyers in their journey, but also provides lenders with an opportunity to market themselves to their potential clients.
Zillow offers two advertising products to mortgage lenders:
Custom quotes – is a mortgage shopping tool with which consumers can compare quotes from lenders based on the information they’ve put in.
Long-form quotes – is a way for consumers to get connected to the appropriate lenders based on the information they’ve supplied in the long-form survey.
Lenders pay Zillow for the advertising services either on a subscription basis or a per-lead basis. The costs depend on the loan amounts, credit score and loan type.
To ensure fairness for the consumers, Zillow uses a rating system for lenders. Consumers rate lenders and this rating plays a big role in how often a lender appears in ratings and/or how often they get referrals.
In 2018 Zillow has introduced Zillow Offers, a new business of purchasing homes from sellers. Basically, the process goes like this – Zillow buys a property, updates and renovates it, and then sells them to buyers with a markup.
The service is intended for homeowners that want to avoid the hassle of selling their house. They have the option to request a quote directly from Zillow. If they like the offer they can sell their house to Zillow. If they like to get other offers, they can list their house on Zillow and be connected to an agent.
Zillow has already introduced this service in a couple of cities (Phoenix, Las Vegas, Atlanta, Denver) and is going to continue the expansion.
The company has stated that if they manage to occupy a 5% market share, they could earn $1 billion in profits annually.
Why Create a Website Like Zillow or Trulia?
You probably already know why this world needs another Zillow, otherwise you wouldn’t be here, researching this topic, would you?
However, before we proceed to deep diving on how to create a real estate website. Let us first look at “why” you would do this project in the first place. Knowing your “why” is great way to start any endeavor.
So here is our reasoning to why it may be worth competing with the Zillow monster.
The basic idea is to play on the weaknesses of your competitors (believe it or not, Zillow also has them!) and avoid being smashed by their strengths. Your “why” or reason for creating another service is to offer a better alternative to sellers and agents.
In order to do that, you need to first know those strengths and weaknesses, as well as external opportunities and threats really well. So here is the basic SWOT analysis of Zillow.
Brand and scale
Zillow real estate marketplaces combined occupy by far the largest market share.
Enormous homes database
Zillow owns a database of over 110 million homes in the US, a result of the complex aggregation of listings data from a multitude of sources and contributions by the users.
Domination of mobile home-shopping
Zillow operates over 50 mobile apps combined. Two-thirds of the Zillow brand usage is on a mobile.
Wide array of free tools for consumers
Beyond the smart listing search, Zillow also offers Zestimate home estimator, mortgage calculator, Zillow rental manager and so on.
Powerful technology for professionals
Zillow has a portfolio of robust software for real estate professionals like: Premier Agent a real estate CRM, Dotloop for transaction management and Bridge Interactive for listings management.
Great advertising opportunities for professionals
Having the largest audience of property buyers and sellers in the US, Zillow offers the largest advertising platform for agents/brokers, mortgage lenders, property managers, and other industry professionals.
Outdated listings data
Zillow is often criticized for having outdated home data, like having listings of properties ‘For Sale’ that have already been sold months ago. A study showed that 31% of homes listed on Zillow were unavailable for sale.
Advertising is too expensive
Agents and brokers often complain that advertising at Zillow is too expensive and it is extremely hard or impossible to get a positive ROI. A 6 months advertising contract can cost up to $8,400 for 18 leads per month.
Agents are also not happy about the quality of those ‘expensive’ leads. They say that most of them are not sales-ready.
Zillow’s house value estimates are said to be inconsistent and inaccurate. Although Zestimate is not intended to replace home appraisal, it can still hurt consumers, especially sellers. It got to a point that sellers sued Zillow for unfair business practices due to an inaccurate valuation of properties.
Large market opportunities
In 2017, 5.5 million existing and 608 thousand new homes were sold in the US. To attract clients, US agents and brokers have spent $7.2 billion on advertising.
Highly fragmented market
There is no openly available data for property listings for consumers, besides posted listings on marketplaces.
Increasing role of technology 90% of home searching is conducted online.
One the competitors can become strong enough to squeeze Zillow out of its leadership position.
Zillow has already faced a number of lawsuits. Depending on their severity, some of them can pose serious threats to the company.
Judging by the weaknesses stated above, one of the best ways to compete with Zillow is with a great local strategy.
Zillow is a global giant company by nature. This is both their strength and weakness. They cannot provide equally great data and service to all their users in all areas.
Concentrating on a particular geographical region can have a lot of benefits:
Exceptionally accurate and complete listings data
Content and tools that are relevant to the specific region and target audience
Real Estate Website Development Process: How Hard is it to Create a Website like Zillow?
Simply put, it is very hard!
The things mentioned above are not even the tip of the Zillow iceberg. The website is like a swiss army knife with loads of tools for home sellers, buyers and industry professionals. They have a big and dedicated crew dedicated to it, working 24/7. According to Aberdeen, the company is going to spend $20.8 million on technology in 2018 alone.
However, Zillow, like you see it now, wasn’t built in one day or in one go. It was a gradual evolution process. They’ve started with the core functionality of a listings website then added functionalities and features along the way.
If you don’t have as much money as ZIllow, the only way to start is with a really smart differentiated “minimum viable product” or MVP.
If you are unsure of what should go into your MVP you can use a Kano survey. It is a good tool to determine the core functionality and how potential or current users perceive the usefulness of your product’s features. By the end of the survey you should be able to categorize all your features into three categories:
Mandatory features – the features that users expect by default, e.g. like being able to register/login on a website…
Linear features – the core features, the ones that make users go to your website instead of somebody else’s, e.g. the most complete home-listings data.
Exciter features – the nice-to-have features that are not expected by users, but that add value to their experience, e.g. like Zestimate.
This categorization will help you determine what features should go into your MVP and which should be left for later phases.
As mentioned before, a survey is a good way to do this. Below we share a list of linear and exciter features that will help you get started.
Linear/Core Features: Help Them Find or Sell Their House
What is the most important part of a listings website? Listings! (Duh!).
Therefore, the most essential features of a website like Zillow are:
A listings database
Let’s go over each of them.
1. Listings Database
So where will you get your inventory from? Zillow uses a combination of sources:
Multiple Listings Service
Most of the real estate websites, including Zillow, rely on Multiple Listings Service or MLS for their home listings data. This is one of the best ways to get access to a lot of relevant listings data.
However, MLS integration can be challenging. First of all, you need to be a licenced agent/broker in your region(s) and you need to be a member of a particular realtor organization. These requirements depend on the MLS in you region(s).
Also, if you plan to use data from different MLS systems, you might encounter a problem in data standardization. Each MLS uses their own way of keeping listings data (data fields, formats etc.) which makes it difficult to display multiple MLS feeds on your website. Tools like Spark API can help you to streamline access to data and ensure it’s displayed correctly.
In addition to that, whenever Zillow CEO and representatives get a chance, they always mention that part of their listings is contributed directly by users. Namely, that out of 110 million listings 80 million have been updated by users.
It is great to be the primary source of information for a listings website! Therefore, you need to make sure you have all the necessary functionality that allows sellers and agents to upload their own listings on your website, like:
Form to fill out about a property
Picture and video upload
2. Robust Search
Even if you have the greatest listings database, it would have little value without a convenient and robust search.
Zillow offers a very sophisticated search functionality that can be divided into two categories:
Zillow location search is very impressive. Users can start searching by entering a zip code and continue with a map search:
Conduct a polygon search by drawing a circle around an area a user is interested in
Search for properties that are near to schools
Hover over the dots to see the listings
And, as you can see, all of this is powered by Google Maps. Both Zillow and its competitors use Google Maps for their geospatial search.
In addition to this, buyers can use a multitude of filters to narrow down their search:
Number of beds
Other – number of baths, square feet, lot size, year built, keywords etc.
It is very important that the information is presented in a very convenient user-friendly manner.
Exciter Feature: Home ‘Zestimation’ at the Push of a Button
Zillow has a lot of exciter features, in fact, so many that we wouldn’t be able to cover them in one article. So I suggest we take a look at their most famous and controversial feature – Zestimate.
Zestimate is a great example of an exciter feature. It is a very ambitious project aimed at automating the estimation of a house value. Although, they’ve been very careful to warn everyone that Zestimate is not intended to replace the house appraisal, it’s a starting point and a tool for those curious about their house worth.
Nonetheless, this feature has been adored and hated by millions. The ease of finding out the current price of your house with a push of a button is both a good thing and a bad thing. The good thing is that you have a quick but possibly inaccurate assessment of your house. The bad thing is that buyers can low ball you with offers based on the low and inaccurate Zestimate result.
So how does Zillow arrive at those numbers? Zestimate is a statistical model, it is a smart blend of big data and artificial intelligence.
Zestimates are based on:
Past sales data – past sales prices, mortgage records, prior tax assessments
Physical features of a house – bedrooms, bathrooms, square footage, neighborhood, proximity to water etc.
The process of home ‘Zestimation’ consists of the following three steps:
Cleaning the data
In the first step, all the data that consists of past sales and physical home attributes is cleaned of any information that is irrelevant for determining the market value of a house. For instance, a mother selling a house to her son below the market value, or a foreclosure are pricing outliers and should be excluded.
Then, Zillow’s models are trained on the ‘recently sold’ data to form relationships between prices and physical characteristics of homes. This is how Zillow estimates the value of things like extra square feet, proximity to a park or a lake, etc.
In the third step, these relationships are applied to all homes being Zestimated.
The accuracy of the estimate depends on whether or not there are enough recent transactions in the neighborhood. If there haven’t been many house sales recently, then the data used in the Zestimate model will be outdated and with a very wide range (the wider the range, the more likely there is an error in pricing).
How Much Does it Cost to Create an MVP of a Listings Website?
It should have been clear by now that Zillow is a very complex online real estate platform. It is not something that can be built with WordPress or some real estate website builder.
The best and actually, the only way to build a real estate website like Zillow is with custom web development. The technology stack depends on the skill-set of the development team. Our team uses LA(N)MP stack and one of the PHP frameworks (Yii, Laravel or Symfony), which can work perfectly for a complex marketplace like Zillow.
The cost of your MVP depends largely on what features and requirements you require for the first version of your platform. Below is an example of how much it may cost to create a real estate website with PHP.
Listings website MVP:
Manual uploading of listings data by sellers and agents
Advanced listings search with Google Maps integration
Content Management System
A website with the above functionality can cost from $10k to $20k depending on the type of MLS integrations and other requirements.
The estimate is based on our hourly rate of $35, which includes the work of the front-end and back-end developers, as well as a project manager and QA engineer.
How to Apply This To Your Business
Creating another Zillow is not a piece of cake to say the least. It takes a focused differentiation strategy because you cannot start with being everything to everyone like Zillow is today. It also takes a very skilled web development team among many other things.
For the technical part, you can consider us to help you make your own real estate website. Our team is wired to build complex marketplaces and platforms like Zillow. We have been developing feature-rich websites with complex back-end since 2007.
Get a free technical consultation and an estimate of your real estate listings website!