If you are someone who is looking forward to buying a new home or renting a new apartment then you must know how difficult it is to get a place that satisfies all your requirements. Back in the day, it was a huge task if you had to buy a new property. People had to keep looking at the classifieds, meet brokers, and do a lot of research on their own if they wanted to buy a property. This is because there are lots of things you look for in a property. Not only the property but the place where it is located is also very important. Most people who are looking for a home understand how crucial it is to get a home in a good neighborhood. This is because you don’t want to end up in bad neighborhoods where you constantly have to worry about your safety.
This is a big concern especially for the people who have kids. They don’t want their kids to grow up and get influenced by the environment. But you have other priorities if you are a person who is single and has a job. You may want to rent out an apartment on your own or you may share an apartment with your roommate. The location also plays an important role in this but more than that it is the budget you have to rent an apartment. You don’t want to spend most of your money living in a big and costly apartment if you are single. People are more likely to live with their friends to save money. So the easiest way to find a property is using a platform that deals with real estate. Currently, there are a few popular platforms that you use and Zillow is one of them.
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What is Zillow?
By now you must have understood that Zillow is a platform that deals with real estate. The best way to explain it is by taking the example of Craigslist. Craigslist was invented so that you can look for all kinds of things like jobs, properties, items for sale online. This is also a bit similar to that. Zillow is like the Craigslist list but only for properties that are up for sale or rent. Zillow is an American company that was founded in the year 2005 by Rich Barton and Lloyd Frink. Even before founding Zillow Barton was a successful entrepreneur as he was also the founder of Expedia.com which he ended up leaving in 2003. The idea for Zillow came tk him when they were searching for a new home in Seattle. They realized how hard it was to find a home through research even on the internet.
The more they searched the more frustrated they got. This is because they could not only find the required information but also because of the realtors they met. They could not find good realtors as each one of them quoted a different price for the same property so that they could maximize their profits. This encouraged them to find Zillow which would serve as the database for information regarding real estates. They have also received a capital of $32 million from Technology crossover ventures and Benchmark capital. With 72 employees Zillow released its beta version in 2006 and it was an immediate success. In fact, more than two million people visited the website in the first two days due to which the site crashed. Part of the reason for this is the feature called Zestimate. This feature allowed people to estimate the price of the property they are looking for.
How does it work?
Zillow is like an online marketplace for real estate properties. This is a platform where both businesses and individuals can list the properties they want to sell. One can access this platform using their application or through the web. On this platform, you can find any type of information that involves buying, selling, and renting properties. Not only that but you can also find information about home loans. If you are a buyer then you have a lot of options to choose from. One of them being the homes that are sold by Zillow themselves. They do this through a program called Zillow offers. Apart from that, you can also buy homes through agents or directly from the owners.
You will also get good deals if you want to rent a property. You can simply browse through the properties that are listed for rentals or you can submit an application to Zillow. This does many things like background checks and assessing the budget speeding up the whole process. Even the sellers get multiple options to choose the way in which they want to sell their properties. They can list their properties on Zillow where its Zestimate tool assesses the price of the properties making sure that they get good profit. They can even sell their property to Zillow if they want. This happens quickly as they receive an offer within a few hours. You can even work with an agent associated with Zillow that will help you in selling your property. These agents can be photographers, inspectors, and other professionals who can help you.
Business model of Zillow
The business model of Zillow involves a lot of people. It deals with buyers, sellers, agents, and mortgage services. The platform is free to use for buyers. It is the sellers who have to pay money for using their platform to sell their properties. But Zillow is not just one company. Over the years it has acquired a number of platforms that deal with real estate. It owns all of these companies under the name of the Zillow group. HotPads, StreetEasy, Our East, Trulia, Naked Apartments and etc are owned by Zillow. Let’s look at all the important aspects of its business model.
Buyers
What is the use of having a real estate marketplace if you don’t have enough buyers? They are the ones that bring the businesses to your website. It is because of the buyers that sellers want to list their properties on the website. So it has to provide all the things that a consumer is looking for and also the things that they did not think of. Zillow understands this and leaves no stone unturned to give them the best experience when they are looking for properties. The Zestimate tool is a great feature that helps the buyers immensely. They can know the approximate price of the property. If they want to get the property quickly they can just buy the homes directly from Zillow as it can do this through their Zillow offers the program.
Sellers
Sellers are the ones that are the source of the revenue. Because Zillow has a lot of visitors the sellers will be able to reach out to more potential customers than usual. This is the reason they want to list their properties on the platform. But if Zillow wants to make more money they have to make sure that they sell the maximum number of properties through their platforms. So they provide them with lots of services to make it easier for them to sell the property. They will buy the property directly from the sellers through their Zillow offers. They will even provide them with agents if they want. These agents will help them in selling their properties or they can simply list their properties on Zillow.
Agents
As mentioned earlier Zillow has agents that are associated with it. These agents can be photographers and other professionals who will make sure that the property looks desirable. They are the ones that help the buyers to sell the properties that buyers could not sell. Zillow makes sure that they get a good deal for working for them.
How does Zillow make money?
Zillow, as you know, deals with real estate and it is an online platform so it naturally has more ways in which it gains revenue. Let’s go through them one by one.
Commissions for selling homes
This is probably the most predictable way in which Zillow earns money. The database of Zillow consists of information about most of the houses in the US that are for sale. So a buyer can access the information about them very easily through Zillow. When the sellers are able to sell their property through Zillow they have to pay 6% as commission.
From software tools
The company has tools that help sellers to sell their properties. These programs are called Premier Broker and Premier Agent. Both these tools help brokers, agents, and other people who work in the real estate sector to track leads, advertise services, and organize their work on Zillow. It will charge them according to the market they have.
Subscription fees
Yes, even a platform like Zillow has a premium membership. But this is not for buyers or sellers but mortgage services. The money it makes depends on the interest that is charged by the home loan provider. Not only that but it also depends on other factors like the down payment, duration, and the amount.
Advertisements
Zillow also charges fees from real estate firms for showing their ads. It makes good money by selling advertising space on their platform. Apartments from that they also get paid for cost per click and cost per lead.
Conclusion
This is the business model of Zillow. It is one of the most popular online real estate marketplaces in the US and it is still going strong. There are many other articles on Zeen that can educate you about the business models of different companies that are popular all over the world. You can check out the business model of the Cash App here.
