At Inman Connect two weeks ago, Zillow CEO Rich Barton was not the least bit fuzzy about the enormity of his company’s pivot, nor did he hesitate about what’s to come from the giant Seattle portal. The company has stopped apologizing for what it is and avoids obfuscation about what it might become some day.
It has two straightforward and bold business models.
Zillow is now in the business of buying and selling houses, building up serious infrastructure to serve its new model including property management with a network of contractors, movers and handymen.
To scale its Premier Agent program, it has changed its business model to a generous commission split, collecting 35 percent on every successful referral from its massive consumer distribution.
At first, I was taken aback by Barton’s remarks at Connect. But his clarity was refreshing. The portal has stopped walking on eggshells with the industry about being this or becoming that. It is no longer claiming to be a media company or making promises about never becoming a broker or earning commission dollars. Those were strident claims that many critics distrusted.
When I asked Barton about being a broker, he was upfront about the necessity of being licensed as a broker. When I asked if we would see Zillow for-sale signs, Barton said almost proudly that it already has Zillow yard signs as part of its Instant Offer program. The inference: expect more.
Bottom line: Zillow will do whatever is necessary to build out its new consumer experience and, in turn, do whatever is best for Zillow shareholders. Previously, Zillow did not disrupt but instead enabled the 100-year-old real estate business model by peddling digital ads for agents. Today, Zillow is about changing the real estate experience without being hemmed in by anything, including the old rules of real estate.
Barton has said that the company dove into iBuying after seeing it as an “existential threat.”
For the real estate industry, Zillow for too long represented an imagined “existential crisis.” Something big, something meaningful, but something that might happen someday to threaten the industry, somehow.
Now we have clarity around most things related to Zillow without any confusion about what it might do next. Do not expect any politically correct promises from Barton.
Zillow will soon become the largest buyer and seller of homes in most markets in the U.S. It will be represented by agents where they are needed and they will make the process of buying and selling a home easier.
Zillow will leverage its consumer audience to drive business to its Premier Agents and will for the first time generate enormous commission income on their enterprise. I also expect it will dominate both the mortgage and the title industry at some point, earning generous fees along the way.
Zillow is no longer someone from outside the industry looking in, dodging barbs and pandering for trust. It has more data — consumer behavior, transaction information and home listings — than anyone. It has more consumer mindshare than any other real estate company. Barton has the full support of Wall Street, its money and the market cap to make almost anything possible.
Zillow has become the real estate industry, as much or more than any homebuilder, real estate company or trade association. Its influence in Washington, D.C. is growing and it is building out its lobbying operation in state houses around the country.
Like Google is to search, Facebook is to social and Amazon is to ecommerce, Zillow is to real estate. Here to stay, powerful — a company that you interact with, like it or not.
