Encountering an octopus in the sea is not that dangerous, but it might be as close as you get to meeting an intelligent alien.
Like the octopus, Zillow has vast reach and brainpower to rival all comers in the real estate ocean.
For a decade, the Seattle company has been the poster child for real estate industry internet anxiety. For some, this insanely successful company symbolized the menace of technology, which might some day threaten the century-old, sacred real estate pact of broker cooperation and independent agents.
Even though the company plopped itself in the middle of the real estate market and became the de facto gatekeeper for real estate customers, it never took a commission dollar, not even a referral fee.
The boogeyman was just that.
And what about Zillow morphing into a real estate broker? Never happened, it just became more relevant than many brokers by offering agents qualified customers. And its recent moves do not seem remotely related to becoming a broker.
The Zillow octopus is moving beyond its $1 billion business as the industry’s primary intermediary to homebuyers.
The Seattle firm is now swimming in much deeper waters, expanding its platform and leveraging its network into a true marketplace and becoming more transactional as it goes.
In the past few months, it became a real estate investor, a mortgage lender and a property manager (sort of).
Zillow is buying houses, as an iBuyer. It expanded its apartment business with a rental application and payment solution and acquired a mortgage company that will make home loans.
The company’s promise is to do what consumers want. For home sellers, Zillow Offers promises to ease the uncertainty and inconvenience of selling a house. Renters want an end-to-end solution from search to application to payment.
For home loan borrowers, “getting a mortgage can be the toughest, most painstaking and time-consuming part of the home buying process,” said Greg Schwartz, president of media and marketplaces at Zillow Group.
Zillow can now predict all sorts of real estate behaviors.
With homebuyers, Zillow boasts 187 million unique users, 6.3 billion visits last year and 110 million homes in its database. Layer in mortgage data, and you have an unmatched data swirl.
Zillow can peddle an array of real estate-related products to its overlapping customers. Like Amazon does with my Prime account when I buy soap, it targets me to purchase a newly-released book related to my last read.
Do these moves mean Zillow is leaving its core business behind? Hardly. It’s just expanding its reach in logical ways. And its loyal customers, Premier Agents and broker-owners, could win by jumping on the Zillow bus.
For example, the company has hinted that its mortgage services could become an in-house broker solution. And Premier Agents are beneficiaries when Zillow buys homes by representing the sellers.
But something bigger is going on here.
Zillow is emulating other mega-platforms such as Google, which has expanded into a variety of business ventures including airline and hotel reservations. Uber has gotten into food delivery, and Netflix is making movies.
Once you have the audience, the predictive analytics model and the consumer data, these marketplaces can go in new directions.
Plus, Zillow faces competitive threats.
Who does the Seattle firm fear the most? Not Realogy, Keller Williams, realtor.com or certainly not Upstream. But instead the company a few short blocks from its headquarters, Amazon, who may someday use its enormous reach to get into real estate.
It is introducing an array of home products that could lead to some sort of real estate offer. As the homebuying process becomes more digital, it clears the way for an e-commerce giant like Amazon.
Like everyone in business today, the Bezos behemoth is the fire-breathing dragon that may someday be blowing flames down your throat.
Plus, if Zillow is going to push its valuation into tens of billions, it must find new ways to grow its revenue.
Wall Street has not been impressed in the short term, the stock got hammered when it bought the mortgage company. But Zillow has generally been focused on the long term, it shunned profits for 10 years and built a $10 billion company.
And now long-term success will be valued on how well its new enterprises perform and how the company knits the pieces together.
Like an octopus, if it can manage its eight arms at once, it will be the smartest creature in the real estate sea.
