Lacking an iBuyer strategy for the past year, realtor.com has fallen further behind in terms of delivering value to consumers and agents. Multiple options to enter the space are available, but the clock is ticking for realtor.com to execute strongly and maintain relevance in a rapidly evolving industry.
Power at the top of the funnel
One of the topics I discussed in my recent Inman Connect presentation was the power companies have at the start of the consumer journey. Real estate portals around the world derive and maintain their dominant positions because they are a consumer’s first stop in the homebuying and selling process.
In the days before the internet, real estate agents were the starting point.
With the launch of Zillow and its Zestimate, portals became the popular starting point for consumers. Opendoor and iBuyers shifted the dynamic by offering instant offers on homes, attracting consumers.
Today, a number of iBuyer aggregators and real estate agents are fighting to attract consumers by incorporating instant offer services. I explain further in the quick video clip below.
In some markets, up to 40 percent of serious homesellers are requesting an instant offer before listing their home! Instant offers are becoming the new Zestimate — the new, natural starting point for determining a home’s value. And because of this, they are also an existential threat to portals.
The value of seller leads
The iBuyer business model generates a ton of high-intent seller leads: consumers who are interested in moving and request an offer, but don’t sell their home to an iBuyer.
In the past three months alone, Zillow generated 69,000 offer requests but only bought 1,500 homes. The remaining leads can be distributed to real estate agents — a valuable source of new business.
Today, Zillow Offers is active in 11 markets. Once it expands to 20 markets, Zillow could generate close to 500,000 seller leads annually — a number that will increase as its national rollout continues.
Zillow and realtor.com’s traditional lead generation businesses are built around buyer leads. IBuying has become the holy grail of seller leads: popular with consumers, valuable to agents and of generally high quality.
Over time, these leads will become a valuable source of new business for real estate agents and an additional revenue driver for Zillow.
Using rough estimates, it’s clear that the profit potential of seller leads far outweighs that of buying and selling actual homes with considerably less risk for Zillow.
Real estate agents partnering with Zillow receive valuable buyer and seller leads. The same partnership with realtor.com yields only buyer leads.
Strategic advantage: Zillow
Each day, Zillow continues building its sustainable competitive advantage by strengthening its leadership position in consumer’s minds as the place to go for an instant offer.
Simultaneously, Zillow generates tens-of-thousands of valuable seller leads for its agent customers each month — a service that realtor.com does not provide.
For a real estate portal’s two most important audiences — consumers and agents — Zillow is highly differentiated while realtor.com lags behind.
Realtor.com needs to provide an iBuyer service — but does not need to buy and sell houses directly — to compete with Zillow. The logical entry point is a partnership with a national iBuyer (and that iBuyer, by the way, needs an inexpensive source of leads just as much as realtor.com needs an iBuyer service).
Until realtor.com unveils a coherent iBuyer strategy, it will remain at a growing disadvantage to Zillow, and risks further irrelevancy in the evolving battle for consumer eyeballs.