Zillow is testing a “homegrown closing services” platform in a handful of markets — including title and escrow services — in an attempt to bring the company closer to offering a one-stop platform to wrap around its homebuying and selling platform Zillow Offers.

The move is also an effort to improve the unit economics, the money that’s made or lost, of buying and selling homes as Zillow Offers continues to scale.

Zillow Offers expanded rapidly in the third quarter of 2019, adding eight markets — more than one every two weeks — with plans to launch in Los Angeles, perhaps its most ambitious market in 2019. In the third quarter, Zillow lost, after interest expenses, an average of $4,826 on each home, after losing, on average, $2,916 per home post-interest expense in the second quarter.

Overall, the segment posted a net loss of $67.8 million before interest, tax, depreciation and amortization.

“We remain comfortable with this range for the time being, as our business is in the early stages of development,” Zillow CEO Rich Barton said in a letter to shareholders.

The first phase of Zillow Offers has been, according to Barton, a lot about planting flags. The goal was to gain a national footprint to drive national marketing efficiency, according to Barton.

“Phase two is about getting depth in these markets and figuring out how to roll out software and systems and process such that we can get gain leverage on the unit economic costs,” Barton said on an investor call.

“The goal longterm in this business is not to lose money on Zillow Offers and just make money on all these adjacent products,” Barton added. “We are aiming to have the core Zillow Offers business make money in and of itself and do very well and also give us all kinds of fantastic optionality on the myriad of verticals that surround the house transaction.”

Those adjacent services that Zillow expects to help the unit economics longterm are mortgage, title and escrow services. On the earnings call, Barton revealed for the first time that Zillow is testing closing services in an undisclosed number of markets.

“These are very early days and small numbers, but we are encouraged by the early consumer signals we’ve received that reinforce the value of bundling multiple services around each transaction,” Barton said.

Zillow made the move to start a home loan segment after the acquisition of Mortgage Lenders of America last year. Revenue for that segment was reported at $25.3 million in revenue, and it posted a net loss of $12.3 million before taxes.

But the company also made moves to start scaling Zillow Home Loans. In the third quarter, it named two new executives to run the segment, with a focus developing and testing proprietary lending software to make Zillow Home Loans the mortgage platform for its homebuying and selling platform Zillow Offers.

Email Patrick Kearns

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Inman Connect is LIVE next week! Join us and thousands of your peers from wherever you are.Register Today×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription