Real estate portal Zillow is branching out into rental listings and search, offering visitors the ability to use the monthly payment they can afford as a search filter to compare rental housing and homes for sale side by side on a map.
Landlords and renters are already part of Zillow’s growing user base, and the new rental listing and search service should prove popular with consumers who are undecided about whether to buy or rent their next home, said Chief Operating Officer Spencer Rascoff.
One in four people who plan to move in the next three years say they intend to look at both for-sale and rental properties, Rascoff said, citing a poll by Harris Interactive.
As was the case when Zillow began displaying for-sale listings three years ago, rental listings will initially have to be entered manually, one property at a time. Zillow will charge landlords and property owners $9.95 to list a rental home or apartment for 180 days, primarily to prevent spamming, Rascoff said.
Zillow plans to start accepting bulk feeds of rental listings at no charge from real estate brokerages and property managers during the first quarter of 2010, Rascoff said.
At launch, only a handful of rental listings in the Seattle area are available on the site, and the company expects it will take some time to build up its database, although Zillow had 1 million for-sale listings within a year of launching that service.
Bulk feeds now account for 97 percent of Zillow’s nearly 4 million for-sale listings, Rascoff said. The company has decided to start charging real estate agents, brokers, builders and homeowners who want to enter individual for-sale listings as an incentive for them to provide accurate, up-to-date information.
On the rental side, "The trick will be getting listings liquidity," Rascoff acknowledged. "Every product trying to create a marketplace has this kind of chicken-and-egg problem."
In this case, the chicken-and-the-egg problem is that landlords want their listings on sites that attract the most renters, and renters are attracted to sites that have the most listings.
In addition to the online classified service Craigslist, which is free in many markets, Zillow will be competing with a number of other established rental property Internet listing services, or ILSs.
According to data aggregator Hitwise, five of the 20 most visited Internet sites in the real estate category center around rentals: Rent.com, Apartments.com, MyNewPlace, ForRent.com and Apartment Guide.
Still other sites primarily geared around for-sale listings — including Realtor.com, the most visited real estate site on the Internet — also offer rental listings, although typically that site contains only a fraction of the apartment listings that are available on Craigslist and apartment-focused real estate sites. …CONTINUED
Ken Shuman, a spokesman for online real estate site Trulia, said that company plans to begin offering rental listings in the first quarter of 2010, along with a set of personalized tools for consumers to evaluate renting vs. owning.
It’s a crowded field, but Rascoff sees that as an advantage for a site like Zillow, an established brand with a range of offerings.
"It’s really a three- or four-horse race on the for-sale side," Rascoff said, where Zillow is already a dominant player as the second-most-visited real estate site on the Web, according to Hitwise. "The rentals market is even more fragmented, where Craigslist is maybe the only well-known consumer brand."
About 10 percent of the 8.3 million monthly unique visitors Zillow claims for 2009 are renters, Rascoff said, and many landlords are already using the site’s automated valuations and database of more than 93 million properties to help determine market rent.
While many rental sites are geared toward multi-unit buildings, Zillow’s rental listing and search service will cater to property owners and renters who are interested in one- to four-unit properties.
Slightly more than half of all rental units are in buildings with four units or less, he said, and one in three are single-family homes.
"We think a large part of the market is not being served," Rascoff said of properties that are not professionally managed.
Zillow users can search for rental properties and homes for sale by neighborhood, ZIP code or city, and filter their search based on price, monthly payment and other characteristics.
Zillow also calculates the monthly payment on homes for sale assuming a 20 percent down payment and local mortgage rates from its mortgage marketplace. Consumers using monthly payment as a search criteria see both for-sale and for-rent homes that match their criteria side by side.
Lisa Trosien, a Chicago-based property management consultant and trainer, said rental sites tend to be more dominant in some markets than others, so there’s no set answer when clients ask her where to market their properties.
While Rent.com has the greatest market share of any dedicated rental site, Apartments.com dominates in the Washington, D.C., area because of its affiliation with the Washington Post, Trosien said.
Trosien said that depending on how Zillow’s rental-search function works, she might be reluctant to recommend the site to her clients.
If users come to the site looking for an apartment or home to rent, and are also presented with for-sale properties, property managers will find themselves competing with for-sale listings.
"My guess is they are going skew toward (the) purchasing side," in presenting listings to consumers, Trosien said. If so, Zillow’s rental and search service "is not a true competitor to Craigslist." …CONTINUED
That said, Craigslist isn’t always the best solution for property managers with lots of rental listings because it’s difficult to enter them one at a time, Trosien said.
"One of my favorite sayings is, ‘When is free not really free? When it’s Craigslist,’ " Trosien said.
In addition, many Craigslist users "are not interested in big communities — they prefer the organic look and feel of non-ad-agency ads," she said.
Rascoff said that while some landlords may not like the idea of seeing their rental listings displayed side by side with homes and condos for sale, "It’s naive to think that renters aren’t aware of for-sale listings as well. It’s like saying, ‘I don’t want to sell my potato chips in that store, because there are all sorts of other potato chips in that store.’ "
While there could be a downside, Rascoff acknowledged, "the upside is potential exposure for that listing."
That’s been the thinking at HotPads.com for two years now, which rolled out capabilities in December 2007 similar to those announced by Zillow today.
HotPads.com’s map-based search tool gives users the ability to see both rental and for-sale properties based on the amount they are willing to spend each month on rent or mortgage payments. The site also offers rent-ratio heat maps that show the ratio between median home price and annual rent.
HotPads co-founder Douglas Pope said the site offers its 750,000 unique visitors per month access to about 3 million for-sale listings and 350,000 rentals, which he said represents the largest collection of rental listings online.
It’s harder to aggregate rental properties, Pope said, because unlike for-sale listings there are no multiple listings services, and property management firms tend to be less technically savvy than real estate brokerages. On a per-listing basis, the profit margins on rentals are smaller than for-sale listings, he noted.
Zillow’s entry into the rental listing space is "not surprising," Pope said. "I think the rental market has huge potential for companies like ours. I wouldn’t say (Zillow’s entry) is a challenge, either, because it’s a huge space."
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