In this guide we are going to investigate how does Zillow make money?
Zillow provides list a property for rent and a home for sale by owner or agent, Zillow’s online and mobile search tools which include its smartphone app, allows users search for a property and view estimated property values for free of charge.
Even with these free services, still Zillow makes money from its website.
How Does Zillow Make Money?
Zillow makes money by charging property management firms with openings, real estate brokers seeking buyers and sellers, and mortgage lenders seeking borrowers for advertising space on Zillow.com and the Zillow mobile app.
Additionally, it offers to general advertising, particularly those in the real estate sector.
The Zillow Group, which also owns Trulia, StreetEasy, and HotPads, owns Zillow as a wholly owned subsidiary.
Zillow announced Q4 and full-year 2022 earnings, $483 million was the total revenue from continuing operations for the third quarter, exceeding the high end of the company’s forecast range. Despite declining by 5% year over year, IMT segment revenue of $457 million exceeded the company’s expectation range.
As promised in July, the Zillow Group (Z, ZG) split its shares to create new classes of shares that would grant access to new revenues and provide a mechanism for ongoing investment.
The following recent highlights:
- At a consolidated level and for each of the three reportable segments, the first quarter performance of Zillow Group matched or exceeded the company’s outlook.
- Consolidated Q1 revenue was $4.3 billion.
- Revenue for the IMT business increased by 10% year over year to $490 million, above the midpoint of the company’s expectation range of $487 million.
- The $363 million in Premier Agent sales increased by 9% year over year, meeting the middle of the company’s expectation range.
Key Takeaways
- Zillow makes money by charging property management businesses to advertise their listings on the Zillow Rental Manager portal.
- On their website, which also features a search of multiple listing services, client reviews, prior sales, a bio, images, and videos, Zillow offers Premier Agent branding.
- When real estate brokers buy online ads on Zillow that are targeted at people in their local area, Zillow makes money.
Ad Sales to Mortgage Lenders and Other Businesses
Mortgage lenders and other companies such as Interior designers, home organization retailers, and general contractors that wish to market to Zillow users purchase advertising space on Zillow’s website.
The majority of these advertisers work in the real estate sector, but some also market automotive products and services, consumer goods, insurance, and telecommunications services. The number of unique visitors Zillow receives each month has a significant impact on display income.
Zillow is primarily compensated by mortgage lenders based on cost per click (CPC) or cost per thousand impressions (CPM). A click signifies that after looking up mortgage rates, the customer contacts a nearby lender for more information, whereas an impression denotes that the advertisement appeared on Zillow’s desktop or mobile website.
The subscription-based mortgage software provider Mortech, which is owned and run by the Zillow Group, is another source of income for Zillow.
Additionally, it provides lending services via Mortgage Lenders of America.
Ad Sales to Property Management Companies
Zillow makes money by charging property management businesses to display their listings on the Zillow Rental Manager, which comprises websites from Zillow, HotPads and Trulia. This is one way that Zillow generates revenue.
To assist these marketers get the most out of their advertising budgets, Zillow gives them qualified leads—potential tenants.
Rentals provide a major market opportunity for the organization. Renters move more frequently than homeowners, thus to fill vacant apartments, property owners must spend money on advertising and lease discounts.
Premier Services for Real Estate Agent
On their website, which also features a search of multiple listing services, client reviews, prior sales, a bio, images, and videos, Zillow offers Premier Agent branding.
Zillow also allows real estate agents to buy advertising. Agents can attract new clients who are buying or selling homes by running ads that are specifically targeted at consumers in their local marketplaces.
Additionally, the advertising assist agents discover buyers by increasing the visibility of their listings.
The Premier Agent program also gives agents access to a CRM tool that allows them to keep track of Zillow users who have indicated a desire to deal with a real estate agent.
By zip code, prices for services differ. Zillow receives much of its revenue from real estate brokers based on how many times their ads are seen to users in particular zip codes.
The main source of revenue for Zillow continues to be Premier Agent services.
iBuying
Zillow also makes money from it’s real estate technology trend called iBuying which involves house flipping or Offers business. This service is available in 14 markets. This automation simplifies the process for sellers, making it quicker and simpler.
Customers may use the website to submit Zillow information about their homes, and the business will make them a cash offer in a matter of days. The client has three options: accept Zillow’s offer, list their house with a nearby realtor Zillow recommends, or decide not to sell at all.
After making repairs and relisting the house, Zillow aims to sell it again within 90 days of purchasing it.
What is Zillow’s Annual Revenue?
For the year ending September 30, 2022, Zillow’s revenue was $10.818B, a 179.76% increase from the previous year. Compared to 2020, Zillow’s yearly revenue in 2021 increased by 143.95% to $8.147 billion.
- Zillow revenue for the quarter ending September 30, 2022 was $0.483B, a 12.18% decline year-over-year.
- Zillow revenue for the twelve months ending September 30, 2022 was $10.818B, a 179.76% increase year-over-year.
- Zillow annual revenue for 2021 was $8.147B, a 143.95% increase from 2020.
- Zillow annual revenue for 2020 was $3.34B, a 21.77% increase from 2019.
- Zillow annual revenue for 2019 was $2.743B, a 105.68% increase from 2018.
| Zillow Annual Revenue | (Millions of US $) | Zillow Quarterly Revenue | (Millions of US $) |
| 2021 | $8,147 | 2022-09-30 | $483 |
| 2020 | $3,340 | 2022-06-30 | $1,009 |
| 2019 | $2,743 | 2022-03-31 | $4,257 |
| 2018 | $1,334 | 2021-12-31 | $5,069 |
| 2017 | $1,077 | 2021-09-30 | $550 |
| 2016 | $847 | 2021-06-30 | $1,310 |
| 2015 | $645 | 2021-03-31 | $1,218 |
| 2014 | $326 | 2020-12-31 | $789 |
| 2013 | $198 | 2020-09-30 | $657 |
| 2012 | $117 | 2020-06-30 | $768 |
| 2011 | $66 | 2020-03-31 | $1,126 |
| 2010 | $30 | 2019-12-31 | $944 |
| 2009 | $17 | 2019-09-30 | $745 |
Threats to Zillow’s Revenue
Since the majority of Zillow’s advertising partnerships are transient, the company cannot take them for granted. If current sponsors stopped their relationship and Zillow was unable to find replacements, the company’s advertising revenue, which is crucial to its financial success, may suffer.
Ad revenue may decrease if Zillow’s user base declines or if its rivals recruit more mortgage lenders, property management businesses, and real estate brokers as advertisers.
Additionally, since the company mainly depends on advertising revenue from its Premier Agent program, revenue may suffer significantly if agents no longer find value in advertising on Zillow.
Last but not least, Zillow has no influence over the real estate market, which might be negatively impacted as well as consumer interest in mortgages and home buying, all of which could result in a decline in ad revenue.
Zillow net worth
Zillow net worth as of January 31, 2023 is $10.31B.
As of February 1, 2023, the market capitalization or net worth of Zillow Group was $10.64 billion. In a year, the market capitalization of Zillow Group has dropped by 16.20%. According to our data, Zillow is now the 1478th most valuable firm in the world.
FAQs
What Is Zillow?
Zillow is the leading real estate marketplace where users can search millions of for-sale and rental listings, compare Zestimate® home values and connect with local professionals.
It is the most-visited real estate website in the United States dedicated to empowering consumers with knowledge, inspiration and data around properties.
Although Zillow offers free access to listings, it earns money by selling advertisements to real estate agents and other businesses.
What is the competitive advantage of Zillow?
The database at the heart of Zillow provides it an advantage over competitors. It gathered its information by scraping it from the Multiple Listing Service (MLS).
A local association of realtors known as MLS stores all of their real estate information in one location.
Zillow is the undisputed leader in the competitive real estate marketplace business.
The heterogeneity of the datasets that make up Zillow’s data base offers a source of competitive advantage with high annual revenue and year-over-year growth.
Conclusion
Zillow makes money via selling real estate brokers advertising and upgraded profiles, as well as by flipping homes (and charging a sales commission), collecting fees for leads, and charging interest on its mortgages.
Zillow still dominates the online real estate industry, despite the fact that it’s obvious that the failure of its homebuying service had a significant negative impact on its earnings and reputation in general.
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Additional Resources:
Zillow Group Reports First-Quarter 2022 Financial Results (link)
Why Zillow Is Free and How It Makes Money (link)