Realtor.com, enriched and emboldened after the News Corp. purchase, is fighting to claw away at Zillow’s mainstay “Zestimates.”
Can Rupert Murdoch take an online fixer upper and turn it into a digital real-estate profit spinner? We’re about to find out.
Murdoch’s News Corp. plunked down $864 million in cash and assumed $88 million in costs in November to acquire Realtor.com’s parent company, Move Inc., setting up a testy head-to-head rivalry with the unmatched king of online home-sales information, Zillow Group. Zillow has bounded to the top in part because of a feature that includes price estimates for almost every house in America.
Now, Realtor.com, enriched and emboldened after the News Corp. purchase, is fighting to claw away at Zillow’s mainstay “Zestimates,” contending they just aren’t that accurate. Realtor.com argues it offers home sellers and shoppers a better online experience by listing more properties with accurate information as opposed to the guessing involved in Zestimates.
“We want to emphasize what’s real,” News Corp. Chief Executive Robert Thomson said. “And the Zestimate’s not real. We’re the real deal in real estate in real time.”
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Zillow scoffs at that. It says it’s always updating its estimating technology, which, according to company data, has a national median error rate of 8 percent. CEO Spencer Rascoff said last month that Realtor.com’s efforts to alter the playing field haven’t made much of a difference so far.
“We haven’t seen anything at Realtor.com or News Corp. that has directly impacted Zillow’s business or at least successfully impacted our business despite, perhaps, their efforts,” he said.
The Realtor.com-Zillow rivalry is escalating as the housing market picks up steam on U.S. job growth, low mortgage rates and a wave of millennials entering their prime buying years. More than 90 percent of homebuyers use the Internet in their search process and 50 percent deploy mobile applications, according to the National Association of Realtors.
At stake for Zillow and Realtor.com is the share of marketing spending by real-estate agents, estimated by Goldman Sachs at $9.7 billion this year.
“Both have access to sufficient resources and both have a strong enough resolve so as to make this a portal battle for the history books,” said Stefan Swanepoel, a consultant and author on real-estate trends.
The competition already features sharp elbows. News Corp. has used its ownership of ListHub, a service for posting homes on the Internet, to try to cut off the flow of listings to Zillow. Zillow is striking deals with local multiple-listing services to keep the information coming.
Move sued Zillow last year for alleged theft of trade secrets after Move’s chief strategy officer, Errol Samuelson, defected to the rival company. Zillow has disputed the allegations. The case is pending in King County Superior Court.
Zillow reported on Tuesday a loss of $58.4 million on revenue of $127.3 million in its first quarter, the first since buying Trulia.
Realtor.com has been licensed since 1995 as the official site for the National Association of Realtors. It lost its early online market lead after the Internet bubble burst and former CEO Stuart Wolff was convicted of insider trading and falsifying the company books.
Both Zillow and Realtor.com get the bulk of revenue from real-estate agents, who use the websites for marketing, customer management and lead generation. Leslie Ebersole, a real-estate agent in St. Charles, Ill., moved all of her online spending to Zillow in 2013 because it offered better support than either Trulia or Realtor.com.
“I’m a card-carrying member of the NAR,” said Ebersole, a Realtor since 2005 who leads a team of six agents that sold $30 million of homes last year. “I’m fine with NAR promoting the Realtor brand with Realtor.com. But as an agent growing my business, that doesn’t help me against other agents.”
Swanepoel, the CEO of Swanepoel T3 Group in San Juan Capistrano, Calif., said the Zillow-Realtor.com competition will help buyers and sellers of homes by spurring innovation and improving the quality of market information.
“The one company is perceived as younger and dynamic, the other as established and conventional,” he said. “The beneficiaries will be the homebuying and selling public that will have robust apps and tools and an ever-increasing database of property information.”