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This post has been republished with permission from Mike DelPrete.
Last week, former rivals Opendoor and Zillow announced a partnership to provide Opendoor’s instant cash offers to Zillow’s audience.
Why it matters: This is a big move for both companies. It reaffirms the continued relevancy of iBuying, gets Zillow back into the seller lead game, and gets Opendoor access to its largest customer acquisition channel yet.
But, why: It’s a match made in lead gen heaven.
- Zillow generates and monetizes buyer leads, but is missing a product that generates seller leads (that product is iBuying).
- Opendoor generates millions of seller leads, but it’s really expensive and Opendoor only monetizes a small fraction of those leads.
- Go deeper: Zillow vs. Opendoor: Who’s doing it better right now?
This partnership gives Zillow the ability to generate and monetize high-quality seller leads (consumers that are considering selling their home), something it lost when Zillow Offers was shut down last year.
- Historically, Zillow was only able to convert 10 percent of sellers who requested an instant offer; the other 90 percent are high-quality seller leads.
- Those leads are worth their weight in gold and can be monetized through Zillow’s premier agent network (yes, I’ve been talking about this since 2018).
For Opendoor, this partnership represents an incredible — and perhaps the industry’s largest — source of customer leads.
- It extends Opendoor’s ecosystem partnership strategy, which includes deals with Redfin, realtor.com, and eight of the top ten homebuilders.
- The potential benefit to Opendoor is economic: lower customer acquisition costs, which were around $5,500 during the most recent quarter.
Perhaps most important, a Zillow Advisor will be the first point of contact for consumers requesting an instant cash offer.
- This effectively cements Zillow’s powerful position at the top of the funnel with continued, full access to the customer.
- A Zillow Advisor will be able to discuss an instant cash offer alongside a traditional sale (seller lead), in addition to Zillow Home Loans.
Without the opportunity to upsell adjacencies, Opendoor becomes a fulfillment engine, similar to its other industry partnerships, focused on the core iBuyer transaction (buy, fix, sell).
The bottom line: This deal is both a confirmation of the relevancy of iBuying, and a continuation of that relevancy through Zillow’s promotion of instant offers across its massive platform.
- It puts Zillow back in the potentially-lucrative seller leads business, and gives Opendoor access to millions of potential customers. Win-win.
Mike DelPrete is a strategic adviser and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.