During the early 2000s, people interested in purchasing properties had limited options and often relied on real estate agents and brokers for assistance. Roughly a decade ago, people would use Craigslist ads or Google to search for property addresses and then personally travel to the location to investigate. However, the advent of other sites like Zillow has revolutionized the entire process, making it far more convenient. Nowadays, potential buyers can browse the site, examine property photos, arrange inspections, and even complete transactions with a click of a button, all from the comfort of their homes.
But how did Zillow become such a dominant force in the market?
What strategies can you utilize to create a site similar to Zillow?
This article aims to answer these questions and guide you through developing your real estate website like Zillow. You'll learn about constructing a two-sided marketplace, the associated expenses, and the steps required to make your site profitable. By implementing these suggestions, you can create a highly effective and lucrative real estate platform without incurring high costs.
How did Zillow start its way?
The company was established in December 2004 by two former Microsoft executives, Rich Barton and Lloyd Frink, who realized a need for a site that could calculate a home's value and rental rates. Their plan gained traction quickly and attracted a million users in just three days after launching a site with real estate data from 300 cities. The business model became popular among homeowners, buyers, and sellers, with their home value estimates.
Zillow's move into the on-demand home-buying market through Zillow Offers marked a significant turning point for the company. By buying houses directly from homeowners, Zillow aimed to make the buying and selling process more efficient and revolutionize the conventional real estate brokerage model. In 2018, Zillow expanded its market by partnering with Century 21 Canada, which allowed them to list Canadian properties on the site and enter the Canadian real estate market.
Zillow's triumph exemplifies the potential of innovation and disruption. The founders' ability to identify a gap in the real estate industry and develop a solution that addressed the problem demonstrates the importance of using technology to solve real-world issues. The company showed how a brilliant idea and excellent execution can transform its business into a multi-billion dollar enterprise.
Zillow business strategy and user roles
Zillow primarily follows a horizontal strategy, meaning that the company offers its customers a range of existing estate-related products and services. The platform caters to different users with their unique needs and goals, including home buyers, renters, homeowners, and real estate professionals. To provide a personalized experience to each user, Zillow offers a range of user roles:
- Home buyers and renters that can search for homes and apartments, save their favorite listings, and receive alerts about new listings that meet their search criteria.
- Homeowners that claim their home on Zillow, update information about it, respond to reviews, and track their estimated value over time.
- Real estate professionals that can create a free account or upgrade to a paid subscription to access tools for managing their listings, promoting their services, and generating leads.
What are Zillow's revenue models?
Identifying the right monetization is the next crucial step after deciding on the most suitable business model for your marketplace. The appropriate monetization system is a critical factor in building a thriving marketplace. Zillow provides free services for users to list a home for sale or rent, search for properties, and view estimated property values. However, Zillow's parent company, Zillow Group, generates revenue through several paid subscription plans and advertising services. Here we will examine how Zillow makes money and explore its subscription plans.
To generate revenue, Zillow provides several promotional services, which include:
- Premier services that allow real estate agents to run ads and acquire leads for a fee. Agents are charged based on the cost per ad impression and cost per lead, which can range from $20 to $60.
- Promotional sales targeted towards real estate firms. Zillow charges these firms a cost per lead, cost per click, and cost per lease for displaying ads within the Zillow Rental Network, which includes popular websites like AOL Real Estate, Trulia, MyNewPlace, Yahoo! Inc., Hotpads, and MSN Real Estate.
- An advertisement sales model involves selling advertising space to lenders, mortgage professionals, and other businesses with a cost-per-lead fee.
- A subscription model for mortgage services connects users with custom quote services and a lead management platform.
Zillow provides various subscription options tailored for people working in the real estate sector. These plans provide access to additional features and tools to help users promote their listings and grow their businesses. Among them are:
- Zillow Rental Manager, a subscription-based service for landlords and property managers. The service lets users list and manage their rental properties on Zillow, Trulia, and HotPads. The plans start at $9.99 per week for a single listing and go up to $29.99 for five listings.
- Zillow Premier Agent, a service for real estate agents. It provides agents with branding on Zillow's website, increased visibility for their listings, and a customer relationship management system. It helps track Zillow users who have expressed interest in working with an agent.
- Zillow Pro for Brokers, which increases visibility for listings and access to Zillow's lead-generation tools. Costs for services vary by the size of the brokerage.
- Zillow Mortgage Marketplace, which allows lenders to advertise their services to Zillow's users and provides them with leads generated by Zillow's mortgage calculators. Costs for services vary based on the number of charges purchased.
Zillow generates revenue through advertising and paid subscription plans, and as the platform expands, it is expected to introduce new subscription plans and income streams to sustain its financial success. Zillow's specific tools and features have made it the preferred platform for home builders, rental professionals, buyers, investors, and agents across the United States.
Wondering how to build a website like Zillow? Let’s discover in detail what features made the platform unique.
Must-have features to build a website like Zillow
To build such a comprehensive online platform like Zillow, you must offer unique tools and features to help individuals in the real estate industry buy, sell, rent, and easily promote properties. Below is a list of the most important ones that your users may need.
One of the essential features of any real estate website similar to Zillow is property listings and databases. If your real estate agent already has a property database in your city, region, or country, integrating it into your website's backend is crucial. But what if you don't have a database? Let's explore some options.
Suppose you want to develop a real estate marketplace in the United States. In that case, you can follow the footsteps of Zillow and integrate databases from the National Association of Realtors (NAR) or Multiple Listing Service (MLS). However, this option is complicated, as you'll need a real estate license for each state to gain access to MLS and NAR databases, which can be both time-consuming and expensive.
One more approach is to allow landlords to post information about their real estate for sale on your two-sided marketplace. This approach can be advantageous, as it creates a more comprehensive database of properties.
Finally, you can also enter into a data-sharing agreement with one of the national real estate companies and list their property directly on your marketplace. Several real estate platforms are available, such as 365 Connect, RealBird social media, mobile listing marketing platform, and JBGoodwin Realtor's marketplace with the broker-listed property.
Integrating a filtering algorithm into your marketplace is essential to enhance user experience and make it easier for users to find the properties they need. Here are some indispensable search parameters to consider:
- Price range
- Property type
- Number of bedrooms and bathrooms
- Square footage
- Year built
- Amenities such as a swimming pool, garage, or outdoor space
- School district
- Walkability score
- Property condition
- Listing type (for sale or rent)