Thursday, 11 April 2013

Zillow.com the realestate.com of America

Zillow.com is America's leading online real estate database similar to realestate.com.au here in Australia. Zillow has estimated market values for all the 110 million homes in the US. The site offers users an estimate of their home and the value over time just like a stockmarket. Zillow has branched out its services to include mortgages, rentals and home improvements.

Mobile 3x more valuable than desktop?
We like mobile centric companies and Zillow is a mobile leader. More traffic comes from mobile than desktop with over 60% of traffic from mobile on the weekends. The problem with a lot of mobile companies is that they monetise less due to smaller screens leading to less advertising. The beauty of Zillow is they monetise more on mobile than desktop. A smartphone user is 3x more likely to contact a realestate agent and generate a lead than on a desktop. Zillow is more dominant on mobile than desktop with mobile unique users 70% greater than than their closer competitor. 75 homes are viewed every second on mobile.


Source Zillow investor day


The interesting thing about Zillow is that it is half the market value of Realestate.com.au but in an economy 10x the size of Australia. See the chart below comparing agent commission to the total value of the respective companies. Zillow was actually founded 11 years after realestate.com.au in 1995. 


                                                        Source Zillow investor day


A good question is how has the US online housing market lagged Australia?

According to Zillow the real estate industry anointed one site to exclusively have all the listings. Sounded good in theory but it was bound by restrictions by the realtors and was not focused on the user leading to a poor consumer experience. This non focus on the consumer lead to the creation of Zillow.com and their own housing database.

Been there, done that


The great thing about the Zillow team is that it is the same team that revolutionised the travel industry when they started Expedia. To management the real estate industry felt much like the travel industry and Expedia in 1996. Zillow built their own real estate database and the popular Zestimate number (estimate of house value) to encourage users to their site and update their own photos and information to increase the accuracy and value of the Zestimate. The focus on the consumer led to an increase in users leading to more real estate agents a virtuous circle.

On a number of metrics Zillows marketshare is still small. 30,000 agents have signed up as Premier Agents while over 400,000 have set up their profiles on Zillow.com. This is out of an overall market of nearly 2 million real estate professionals. 
As the market leader Zillow is still only at 2.2% of online advertising spend. On many of the metrics below Zillow has a lot of future growth to look forward to. 


                                                         Source Zillow investor day


Jason



Disclosure: Decisive has no position in any of the companies mentioned.

The material in this article is for informational purposes only and in no way constitutes a solicitation of business or investment advice. The material has been prepared without regard to any client's or other person's investment objectives. Before making an investment decision you should consider the assistance of a financial adviser and whether any investment or service is appropriate in light of your particular investment needs.