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Home » How does Zillow make money? Zillow iBuyer, Zillow Offers, Zillow Mortgage, Premier Agent and more!

How does Zillow make money? Zillow iBuyer, Zillow Offers, Zillow Mortgage, Premier Agent and more!

How does Zillow make money? Zillow iBuyer, Zillow Offers, Zillow Mortgage, Premier Agent, and more!

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How does Zillow make money?
Home sales, investment management, and mortgages make up the three components of Zillow’s revenue. Zillow launched in 2005, and they were relying solely on advertising for revenue at that time. The company believed that focusing on a single-user niche would provide advertisers with more engaged and focused clients. So to better understand how Zillow drives shareholder value, let’s take a closer look at those three segments.

Homes Segment
Zillow’s database contains information on over 110 million American households. Zillow has information on virtually every house in the United States, and that’s 128 million households as of 2019. Zillow Offers was launched in 2018, and it capitalized on all of this data. It was based on the iBuyer concept that was pioneered by such companies as Opendoor and Redfin. iBuyers, or instant buyers, analyze big data sets of market data, seller data, and information from brokers so they can make instant cash offers to the sellers out there. Frequently, they purchase homes below market value due to the speed and convenience of the sales process. Very often, this happens because sellers want to dispose of these homes quickly. Furthermore, the algorithms are becoming more accurate with each order, allowing the iBuyer to make more informed purchases over time. The Zillow’s Offers program started in Las Vegas and Phoenix, essentially or effectively achieves this. Anytime the corporation sells a home for more than they purchased it for, less closing costs, it makes money. Zillow makes money.

Mortgages Segment
When Zillow bought Mortgage Lenders of America back in 2018, they became licensed mortgage lenders. Zillow Home Loans was launched later as a relaunch of the service. Borrowers can take out loans or refinance their properties. Zillow makes money by charging interest on mortgages in their home loan section. Interest rate is determined by the loan amount, the term, and the amount of down payment. Zillow also collaborates with other lenders through its platform, and the company’s platform led to creating collaboration with over 50 other lenders in the marketplace. Zillow is compensated on a cost-per-lead model. Each time a potential borrower is connected, they must pay a predetermined price. Zillow charges for this based on the terms of the agreement they have with the lender. Zillow charges a monthly fee for its connect service. Lenders and agents can use Zillow’s tools for more visibility. The mortgage industry generated $174 million in 2020, and that’s up from $100 million in 2019. The majority of its revenue comes from the home loans business, with a tiny fraction coming from advertising on its websites and subscriptions.

Internet, media, and technology segment
Zillow makes money by offering its software and marketing services through its I.M.T., and that’s internet, media, and technology divisions. Premier agents and premier brokers are provided with various revenue-sharing programs by the company. Agents, brokers, and other real estate professionals can use both programs to organize their work, track their leads, and market themselves through the Zillow platforms. Zillow earns money based on cost per lead, and cost per lead can vary up to and over $100 for properties over $500,000. Zillow agents can connect to their customers on Zillow’s website and other platforms such as Trulia, StreetEasy, and HotPads. The rental and other revenue is generated by selling advertising to rental professionals and landlords for rental revenue. Or inspectors, home builders, home improvement specialists, and photographers. Zillow’s compensated on the number of leads it’s generated. However, market competition determines that fee. According to the annual report filed for the fiscal year 2020, the company made $1.5 billion in I.M.T. revenue. Premier agents accounted for most of these revenues generating $1 billion in 2020.

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