US-based giant property listing database Zillow has begun to buy and sell property online, a cash-intensive endeavour. It’s CEO Spencer Rascoff says he thinks this is a great opportunity for them.
“After testing the marketplace model for a year, we are ready to be an investor in our own marketplace,” he added. One of their advantages is that they have access to a huge audience of sellers and buyers, but investors have been spooked by the radical new direction that will be very cash-intensive to sustain. The company’s shares dropped by 9% on Friday 13 April, one day after Zillow made their announcement.
Zillow’s move follows shortly after UK-based online estate agency Purplebricks announced they are fast-tracking their expansion plans in the USA thanks to a generous investment by German digital media giant Axel Springer.
The happenings on the online property front have not gone unnoticed locally. Recently the two biggest local portals, Property24 and Private Property, said to Property Professional they don’t intend to become online estate agencies as that would mean they are then directly competing with their customers.
Following the latest news on Zillow Mark Coetzee, COO of Private Property, said it is really an interesting development that Zillow has now announced that it will also be buying and selling houses.
“I suspect that Zillow have realised that 10% of the real estate market is trading with competitors like OpenDoor and Purplebricks and are wanting to get in on that action,” he said, adding “They (Zillow) have tried their best to make this an agent friendly opportunity by allowing their premier agents to sell the properties they buy, while also making themselves a potential buyer to mandates their premier agents hold.”
Coetzee said it will be interesting to see how the agents who support Zillow react to this news. “We remain committed to our partnership with Industry and certainly won’t be looking to compete with the industry that supports us,” he concluded.
JP Farinha, CEO of Property24, reaffirmed his earlier statement that Property24 will not be adopting the Purplebricks model as they would then be competing directly with their customers. “Property24’s purpose is to provide the best possible online platform for estate agents to market their properties and certainly not to become an estate agent,” he said previously.
Similarly Carolyn Savage, General Manager IOL Property, said they have no immediate plans to change their model. “Our present strategy is to provide affordable, cost-effective exposure to the broader real estate community with the traditional real estate model as the core.”
Zillow is testing the waters of flipping homes only in Phoenix and Las Vegas with no indication yet of when they will expand. Time will tell whether property buyers and sellers will support Zillow or prefer to remain with the estate agencies they know, but there are those that predict if Zillow pulls this off they will have created the ultimate guaranteed real estate lead.
IMAGES SOURCE: marketwatch.com
