The Cultural History of Zillow
What is Zillow?
Since the creation of this website in 2006, Zillow has revolutionized the real estate market. Now, instead of being limited to just agents and brokers, information on homes is now freely accessible to the public. Due to its large user base, people tend to browse on Zillow before even contacting an agent, which makes this website a crucial component to the home buying and selling processes (Andrews, 2019). Zillow is a website that provides consumers with access to over a million real estate listings and properties in the United States. The business is known for its Zestimates which are approximations of home values based on an algorithm that the founders created (Zillow, “What is Zillow?”). The website also provides functions that help consumers with home loans, finding an agent, and buying, renting, and selling properies. The Zillow Group receives 245 million unique monthly users, undoubtedly surpassing any of the other real estate listing sites like Redfin. Although the site may be controversial to some agents and brokers; nonetheless, the website appeals to many consumers and will arguably continue to have an important role in the real estate industry.
These images are derived from the Zillow Website and are 5 of the 10 most popular Zillow listings (Picard, 2016).
In 2006, Zillow was founded by Rich Barton, the previous CEO of Expedia, and Lloyd Frink, a previous employee for both Expedia and Microsoft. In a radio talk from GeekWire, the two co-founders and CEO Spencer Rascoff discuss the beginnings of the business (Cook, 2016). Barton and Lloyd originally came up with the idea for Zillow when shopping for their own homes. They were disappointed with the lack of real estate data and information available and wanted to give rise to a platform in which all of the marketplace information was provided for the consumers in one place (Cook, 2016). Lloyd says they decided to venture into a startup together simply because they have fun doing it (Cook, 2016). Additionally, Lloyd and Barton describe to the radio host how the unique name of “Zillow” came to be. Lloyd says that they brainstormed words not only from the analytical aspect of the business but also the emotional aspect of it. They took the word “zillions” and the word “pillow” and combined them to form “zillow” (Cook, 2016). Barton describes how they came up with the idea for the name together when they were drinking. He said that they wanted it to be distinctive so that they could be flexible with the future of the company and also so that they would not have to pay more than $9.99 for the URL (Cook, 2016). Moreover, when deciding to go ahead with their idea, Lloyd and Barton called their ex-expedia colleague and founder of Hotwire, Spencer Rascoff to be the CEO of the business. Rascoff has brought a lot of insight to the company like his emphasis on zillow culture and having a healthy work-life balance. He wrote a book called, “The New Rules of Real Estate” which discusses how to navigate the real estate market and how some factors rather than others lead to spikes in the value of homes (Cook, 2016).
CEO Rascoff, childhood chess prodigy and Harvard graduate, recounts his start with Zillow in a podcast from business insider. He chose to switch from Expedia to Zillow because he felt as if he could make more of an impact at a smaller, startup company (Mazarakis and Shontell, 2017). Rascoff also discusses in the podcast how the founders came up with the idea of Zestimates. He said that one day he and the other Zillow employees were looking over the Queen Anne neighborhood and had an epiphany. What if they could see a price on every rooftop in the neighborhood?
“Every other real-estate site focuses on what’s for sale. What if we focused on answering this other question that people have about real estate, which is, ‘What’s my house worth?'”(Mazarakis and Shontell, 2017)
To create the Zestimates, they needed to acquire data on every home from each county that consisted of “bed, bath, square footage, tax assessment, and sale history” in order to create these digital values. When the company finally launched its innovative website with its never-before-seen computer generated home estimate values in February 2006, it received over a million views on the first day (Mazarakis and Shontell, 2017).
Zillow consumers consist of a wide range of people. They could be agents and brokers, users looking to buy a home, those interested in browsing cool homes, or people creepishly wanting to know the price of their friends and neighbors’ homes (Lorenz, 2020). When Zillow was founded, it was simply a website in which people could list their homes for sale or for rent for free; however, the main vision that the founders had for profits was through advertisements (“An Introduction to Zillow,” 2019). Users have the ability to search for a property, see its data and specs, and property value all for free on the Zillow website or the mobile app (Fontinelle, 2020). The company makes the majority of its revenue from advertisements on Zillow and on other Zillow group sites. The Zillow group is a real-estate portfolio that Zillow has created over the years and includes branches of Zillow like Zillow Offers, Zillow Premier Agent, Zillow Home Loans and businesses that the company has acquired like Trulia, Out East, StreetEasy, and HotPads (“Z.o – Zillow Group Inc Profile.”). Zillow Group’s overall mission is to provide consumers with more resources to do home research on their own before they come into contact with agents and brokers. Zillow does not want to take away the roles of agents and brokers; however, it wants to provide a space for a positive consumer experience in which they can guide consumers through the tedious home buying process (Thompson, 2017).
The business charges property management companies and real estate agents advertisement space to promote their listings and their services on Zillow and its branch sites (Fontinelle, 2020). Investopedia discusses how Zillow makes a lot of money when advertising rentals for property management companies on Zillow Rental Network sites like HotPads and Trulia. Renters have more financial potential then house owners because they move more frequently and property owners have to spend more money on advertisement on these properties (Fontinelle, 2020). Real Estate agents also can buy space to advertise themselves on Zillow’s platforms. Hypothetically, if a potential consumer is browsing Zillow for a new home, and an ad pops up for a highly-rated local agent, the user is more likely to contact the agent if they do not already have one (Fontinelle, 2020). Moreover, Zillow makes money from its Premier Agent Program. Agents pay Zillow around $20- $60 per lead to appear as the real estate agent next to the property details on the site (Strozyk, 2021). Zillow can use data to track which customers are looking for an agent and this data can also be specified based on location (Fontinelle, 2020). Because nearly 90% of all people use the Internet to house hunt before even contacting a real estate agent, this is a great way for agents to get noticed (Strozyk, 2021).
In addition to advertising, another important way that Zillow has been making money recently has been through its new service called Zillow Offers (aka iBuying). This iBuying phenomenon that Zillow introduced in April 2018 is a way in which customers can avoid the real estate process completely and actually sell their home to Zillow’s server. A customer would send information on their home to the business and Zillow would respond with a monetary offer that they would purchase it for. The customer does not have to sell Zillow their home and sell through an agent and a broker if they do not agree with their estimated home value. However, if Zillow does buy the property, Zillow “flips” the home and resells it (Fontinelle, 2020). The process is definitely very appealing to people interested in selling their homes as it eliminates a lot of the time and obstacles that are required. Due to Zillow’s inability to predict market fluctuations, the Zillow Offers business was temporarily shut down; they were forced to fire around 25% of their employees (Fontinelle, 2020). Zillow claims that in addition to overpaying for homes, the company also dealt with labor shortages and supply chain issues which led to their loss of $450M. However, Zillow still plans to bring back this service and hopes to be purchasing around 60,000 homes by 2024 (“Zillow Halts Buying Homes after Reaching ‘Capacity,’” 2021). Overall in 2020, The Zillow Group as a whole accumulated a total revenue of over $3.34 billion.
Moreover in regards to regulation, Zillow has faced a multitude of antitrust laws favoring listings by brokers in the National Association of Realtors (NAR) (Nylen, 2021). Politico states that Zillow and Trulia started segregating their listings so that listings by NAR would appear at the top of searches and that any foreclosures and homes without agents would be on a separate tab (Nylen, 2021). Rex, an online brokerage company claims that their listings are being discriminated against in Zillow’s site by being placed in a hidden section of the website. Rex claims that Zillow is violating Section 1 of the Sherman Act in taking away competition between Real Estate brokers (“Zillow Change to Its Platform Poses New Antitrust Questions,” 2021). Because Zillow is the most popular Real Estate site, Zillow’s new style of showing listings could put lesser known websites at a huge competitive disadvantage. Listings with NAR agents are favored over listings without agents in 3 out of 4 of the most popular Real Estate search engine sites. Zillow claims, however, that MLS systems forced them to change how they show their listings and that they still have the goal of promoting the most “up-to-date housing information” (Nylen, 2021).
Furthermore, some believe that Zillow has created a monopoly in the Real Estate market which could be dangerous. A man went viral on Tik Tok claiming that although it may not be intentional, Zillow has the ability to control prices in the housing market and it is putting young and inexperienced buyers at an extreme disadvantage in the home buying process (Clark, 2021).
For the identity portion of the circuit of culture, Zillow is most simply known as the most popular search engine and source of information for Real Estate currently on the web. However, when comparing the mission statement and values of the company and the views of brokers and real estate agents, the identity of the business becomes more complex.
On its website, Zillow claims that its mission is to “give people the power to unlock life’s next chapter.” The site claims that people rely on their business to give them the most prevalent and transparent information about Real Estate and that they can trust Zillow to help them in their home buying journey (“Our Story–Zillow,” 2021). Some of the company’s values include that the customers are their north star, doing the right thing, accountability, working as a team, and thinking big. Zillow highlights on its site that its overall goal is to deliver a business that is convenient, reliable, and offer ideas that will continue to innovate and expand the Real Estate industry.
Agents and Brokers have disliked the idea of a site where all listings are available to the public since the very beginning of Zillow. These groups of people felt that their roles could be deemed obsolete and taken over by the Internet; however, there is much more to buying and selling homes that require agents and brokers for these processes to be possible. When people purchase a home, it is usually one of the most expensive purchases of their lives. Redfin did a study that people would pay a lot of money to have a highly ranked professional agent guide them through this process and help them make an informed decision (Reyes, 2018). Agents also have an issue with one of the site’s most frequently used features–the Zestimate. Although these Zestimates seem to be a great way for consumers to determine an estimated price for their home or a home they are interested in buying, these values have proven to be wildly inaccurate. The Zillow algorithm usually overestimates how much the price of the home will be worth, which leads to disgruntled consumers when their homes usually sell for less than they expected (Kaysen, 2018). Since Zillow is such a widely used source of information, agents face difficulty in convincing their clients that the consumers’ personal estimate is probably more accurate (Reyes, 2018).
What does Zillow represent for the public? An escape. The rise of the COVID-19 global pandemic in 2020 created a newfound appreciation of the home and the desire to renovate one’s living space. The pandemic has generated a surge of views on the Zillow website and the mobile app; total monthly visits have gone up over 50% since before the pandemic (Soper, 2021). Consumers have developed a new trend called “Zillow Surfing” to fantasize over expensive mansions that they could never live in and as a way to escape from the harsh realities of 2020 (Source 7).
“I go into neighborhoods that obviously I can’t afford as a college student and look at my ideal house and fantasize about when this is all over”Crystal Silva, Age 20 (Lorenz, 2020)
It has also become a trend and running joke on social media that people like to stalk people’s homes before they even go there.
On Feb 6, 2021, SNL created a skit that offers Zillow Surfing as an alternative to sex for those who are in their late thirties. This video was an instant success due to its relatable and hilarious content; it received almost 2 million views in just one day. Middle aged people fantasize over the site in sexual voices as they describe how “the pleasure [they] once got from sex now comes from looking at other people’s houses” (Soper, 2021).
Zillow also has a lot of emotional relevance for some people. Consumers browse the site looking at expensive homes with pools, renovated kitchens, and home gyms in their dream locations. These listings give them motivation to work hard so that they have the opportunity to live in these beautiful homes at some point in their lives. In this respect, Zillow could help revive the idea of the American Dream.
“It’s me daydreaming about what’s possible down the road. Right now I feel like the future is so uncertain, there’s something therapeutic about searching houses and starting to make plans for something with a positive outcome. It makes me think there is a light at the end of the tunnel, and someday I’ll be at my dream house.”Ian Damasco, age 45 (Lorenz, 2020)
Zillow has become a way for people of all ages to connect on social media platforms. People have been connecting through Zillow discord servers and “Zillow twitter” to share cool and bizarre listings and a man named Tucker Boner has actually been streaming “Zillow Hunts” on a platform called Twitch (Lorenz, 2020). The business’s intention was not to create a social network; however, it has flourished into one. Zillow currently has no applicable engagement feature on their site but users are advocating for a comment section on the site so that “surfers” can connect over homes (Lorenz, 2020).
Zillow has definitely created a cultural shift in the United States. Due to the COVID-19 Pandemic and the increasing importance of the home, the business has grown exponentially in the past couple of years. As a way to deal with boredom and desire, Zillow surfing became a nationwide trend and way for people to connect online when in-person connecting was impossible.
Andrews, Jeff. “The 2010s Changed How You Shop for Homes. Will the 2020s Change the Way You Buy Them?” Curbed, December 9, 2019. https://archive.curbed.com/2019/12/9/20991628/2010s-real-estate-trends-zillow-redfin-ibuyers-opendoor
“An Introduction to Zillow.” The Motley Fool, September 17, 2019. https://www.fool.com/investing/2019/09/17/an-introduction-to-zillow.aspx.
Anna Mazarakis and Alyson Shontell. “How the Founder of Zillow and Hotwire Led His Startups through Major Crises, Layoffs, and a down Round to Massive Exits.” Business Insider, October 21, 2017. https://www.businessinsider.com/zillow-ceo-spencer-rascoff-success-how-i-did-it-2017-10.
Clark, Patrick. “Zillow Caught Up in TikTok Drama Over Big-Money Role in Housing.” Bloomberg.com. Bloomberg, September 24, 2021. https://www.bloomberg.com/news/articles/2021-09-24/why-is-zillow-buying-up-houses-viral-tiktok-criticizes-firm-for-price-jump
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Kaysen, Ronda. “Why Zillow Addicts Can’t Look Away.” The New York Times, September 14, 2018. https://www.nytimes.com/2018/09/14/realestate/why-zillow-addicts-cant-look-away.html.
Lorenz, Taylor. “Zillow Surfing Is the Escape We All Need Right Now.” The New York Times, November 19, 2020. https://www.nytimes.com/2020/11/19/style/zillow-surfing-home-listings.html
Nylen, Leah. “Zillow Faces Antitrust Suit over Change to Real Estate Listings.” Politico, March 9, 2021. https://www.politico.com/news/2021/03/09/zillow-antitrust-lawsuit-real-estate-listings-474688
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Soper, Taylor. “Zillow Skit on Saturday Night Live Goes Viral as Show Pokes Fun at House-Browsing ‘Fantasies’.” GeekWire, February 8, 2021. https://www.geekwire.com/2021/zillow-skit-saturday-night-live-goes-viral-show-pokes-fun-house-browsing-fantasies/
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