Zillow (company)

Company information

• Date founded: 2004
• Industry: Real estate
• Corporate headquarters: Seattle, Washington
• Type: Public

Overview

Zillow is the largest online real estate marketplace in the world. The marketplace was intended to provide greater power to real estate consumers, allowing them to examine real estate listings without contacting a real estate agent. Since its inception, Zillow has grown to include online property sales, mortgage financing, and one of the largest property databases in the United States. Zillow has expanded its market share by aggressively acquiring its competition, eventually forming a large real estate conglomeration called the Zillow Group. Though the service has proven popular with consumers, it is sometimes criticized by real estate agents for providing consumers with unrealistic expectations.

History

Zillow was founded in December 2004 by entrepreneurs Richard Barton, Spencer Rascoff, and Lloyd Frink. Barton had previously founded Expedia, Inc., an online travel booking service that attempted to secure users the lowest available travel prices. In 2003, the holding company IAC acquired Zillow for $3.6 billion. Rascoff had previously helped found the online travel company Hotwire.com. Frink had previously been an executive at both Expedia and Microsoft.

Following the acquisition of Expedia, both Barton and Frink decided to take time away from their work to search for their next project. They were hunting for a new entrepreneurial venture, hoping to duplicate their previous success. At the time, both executives were searching for new homes to purchase. They became frustrated that they could not closely examine the features of most homes online and were struggling to find information on houses that would be suitable for their families.

They began comparing their home shopping experience to their work at Expedia and believed a similar approach would be successful. They wondered if moving parts of the real estate market online and providing consumers with up-to-date market information at no cost would shift a significant amount of power away from real estate agents and into the hands of consumers. The group quickly became excited about the idea and began to plan their new start-up.

Zillow was incorporated in 2004. Shortly after, Barton and Frink began assembling a team to develop a website. They intended to launch a site that would change the way people shopped for a home. Their team successfully built Zillow, and the website went live in 2006. Zillow was an immediate hit with real estate agents and homebuyers, receiving more than one million visitors in its first three days. Barton and Frink were unprepared for this success, and Zillow’s servers quickly crashed. However, after stabilizing its hardware, the website continued to rise in popularity.

As its popularity increased, Zillow continued to add new features to its service. In 2009, Zillow launched its mortgage marketplace. This service allows consumers to provide their information to banks, lenders, and other financial institutions to secure quotes for home loans. Some lenders offer pre-approval services through the Zillow mortgage marketplace. That same year, Zillow launched its first mobile app, allowing users to search for available properties without access to a desktop computer.

Soon after, Zillow targeted another market. Previously, the service solely contained information relevant to consumers who wanted to purchase property. In December 2009, Zillow added rental information to its database. This allowed users to search the website for any available apartments in the area, as well as view pictures and information about available rental properties before contacting the landlord.

In 2011, the website allowed users to rate and review local real estate agents, allowing consumers to compare agents carefully before choosing one. Later that year, Zillow became a publicly traded company. Zillow then took the opportunity to buy two related companies: HotPads and StreetEasy. HotPads is a map-based real estate marketplace that allows users to conduct location-based searches easily, while StreetEasy is a New York City-focused real estate marketplace.

In 2015, Zillow acquired the online real estate marketplace Trulia. Prior to this acquisition, Trulia had been one of Zillow’s largest competitors. Following the acquisition, Zillow reorganized itself by forming the Zillow Group. This group was a combination of many of the largest real estate brands on the market, all working under the Zillow banner.

Zillow then began testing its next major e-commerce feature, Zillow Offers, in 2017. The program allowed real estate buyers and sellers to directly sell properties online. This process was typically much quicker than the traditional real estate purchasing process. In 2018, the company launched Zillow Offers in the Las Vegas and Phoenix real estate markets. That same year, Zillow acquired the lending firm Mortgage Lenders of America, using the firm to directly finance mortgages through Zillow. Throughout the next several years, Zillow Offers was spread throughout the United States, making it possible to purchase property online in several of the largest real estate markets in the country. Zillow Offers continued expanding to additional markets, and in 2018, Zillow partnered with Century 21 Canada in its first venture outside the US.

However, in 2020, Zillow reduced expenses by 25 percent in response to the COVID-19 pandemic, with about half of its employees shifting to a work-from-home structure. In 2021, Zillow announced plans to hire 2,000 additional employees to support its expanding business, but at the end of the year, the company closed Zillow Offers following significant losses, which reduced the workforce by 25 percent. In 2022, Zillow unveiled its housing super app strategy to integrate all aspects of home buying, selling, and renting into a single platform. The following year, the company reorganized into three segments, including Mortgages, Homes, and its Internet, Media, and Technology (IMT) branch. In 2024, Zillow partnered with First Street Foundation to launch a Climate Risk Score, helping homebuyers assess potential climate-related risks for properties.

Impact

Zillow’s database contains more than 160 million homes throughout the United States. Most of the homes in the database are not directly listed for sale. The database includes basic information for each property, including its rough size and sale history. Each property in the database is coupled with an estimated value determined by an algorithm. Zillow received over 9.6 billion visits in 2020 and posted revenues of $3.34 billion over the same period. That figure was almost a 22 percent increase from the previous year. Even in 2022, which saw a previously booming housing market slow to a crawl, Zillow had year-end revenues of $2 billion. It remained the overwhelmingly most popular online real-estate site. Though revenues decreased slightly in 2023, in 2024, revenues recovered, reaching $2.156 billion.

Consumers have praised Zillow. The popular service provides potential buyers and sellers with many tools that make navigating the real estate market easier for the average person. However, the service has been criticized by real estate agents. Many real estate agents argue that the algorithmic price estimates provided by Zillow are inaccurate and may provide buyers or sellers with unrealistic expectations. In addition, listings for newly available homes sometimes take two to three days to show up on Zillow. That can result in some prospective buyers finding more desirable properties that already have numerous other offers or have already been sold by the time they see it on Zillow.

Bibliography

Brumer, Liz. “Zillow Turns Zestimates into Cash Offers.” Million Acres, 3 July 2024, www.millionacres.com/real-estate-investing/articles/zillow-turns-zestimates-into-cash-offers. Accessed 20 Jan. 2025.

Cook, John. “Zillow at 10: Rich Barton, Spencer Rascoff, and Lloyd Frink on the Rise of the Real Estate Media Titan.” Geekwire, 4 Feb. 2016, www.geekwire.com/2016/zillow-10-years. Accessed 20 Jan. 2025.

“An Introduction to Zillow.” The Motley Fool, 17 Sept. 2019, www.fool.com/investing/2019/09/17/an-introduction-to-zillow.aspx. Accessed 20 Jan. 2025.

“Our Brands and Businesses.” ZillowGroup, www.zillowgroup.com/about-us/business. Accessed 20 Jan. 2025.

Reyes, Carrie B. “Zillow’s Impact on the Real Estate Industry.” First Tuesday, 13 Mar. 2018, journal.firsttuesday.us/zillows-impact-on-the-real-estate-industry/62280. Accessed 20 Jan. 2025.

Simon, Javier. “Home Prices Could Drop Through 2023: Zillow.” Fox Business, 29 Mar. 2023, www.foxbusiness.com/personal-finance/home-prices-drop-2023-zillow. Accessed 20 Jan. 2025.

“Zillow Company History Timeline.” Zippia.com, www.zippia.com/zillow-careers-13097/history. Accessed 20 Jan. 2025.

“Zillow Group Reports Fourth-Quarter and Full-Year 2022 Financial Results.” PR Newswire, Feb. 2023, www.prnewswire.com/news-releases/zillow-group-reports-fourth-quarter-and-full-year-2022-financial-results-301748056.html. Accessed 20 Jan. 2025.

"Zillow’s New Climate Risk Score Brings Transparency to Home Shoppers." Zillow Group, 26 Sept. 2024, www.zillowgroup.com/news/zillows-new-climate-risk-score-brings-transparency-to-home-shoppers. Accessed 20 Jan. 2025.

“Zillow.” Success Story, successstory.com/companies/zillow. Accessed 20 Jan. 2025.