“We sell ads, not houses.” That is something that Zillow’s CEO Spencer Rascoff has responded on multiple occasions when he has gotten questions about how they plan to respond to companies like Opendoor, OfferPad and now Redfin who give instant offers for sellers that need their houses sold fast. Whether it was a change of plans or just corporate subterfuge, this statement is no longer true. Zillow announced that it will soon be in the business of making instant offers on houses and then selling them through their network of brokers.
Rascoff had this to say about the well-funded competition that his company will face in the space: “There are several startups and real estate brokerage websites experimenting in this space, but Zillow is the only one that has designed a product to keep the agent involved in every part of the transaction, most notably by giving them the opportunity to secure new listing agreements. Ultimately, Zillow Instant Offers has the potential to deliver the highest intent, highest quality listing leads at scale to our Premier Agents.”
That last part really emphasizes Zillow’s advantage. Zillow is not only a much bigger company than its largest competitor Redfin (around $10 billion verses just under $2 billion) but it has much more activity. Zillow reported that they surpassed 100 million unique users on their websites every month last year while Redfin’s is around 20-30 million. This increased data set, even if it is skewed by the people who use house searching as a pastime, will give Zillow an even better understanding of which areas produce the highest quality listings that would be the most valuable to buy.
This move will also come into play later this month when, as we reported yesterday, the Department of Justice will review its agreement with the National Association of Realtors on the privatization of MLS listing data. NAR’s general counsel said that, since the big internet companies are not brokerages, “There is nothing exclusionary from preventing third-party data aggregators from using MLS data.”
Now that Redfin and Zillow will be acting as intermediaries between buyers and sells, if not brokers specifically, it might make it harder to say that they should not be able to access the MLS data if listing brokers don’t want them to. Even if they were allowed to access all the MLS data, it is not a certainty that they would be on board for the open data initiative seeing how it might require them to publish their private listings and erode some of the size advantage that they have fought so hard to get.