Spencer Rascoff, Co-Founder, heyLibby, Pacaso, Zillow
Illustration by Lanette Behiry/Real Estate News

It’s ‘game-on again’ for home search portals, says ex-Zillow CEO 

An ambitious challenge from Homes.com for consumer market share and agent dollars has reignited the portal competition, says former Zillow CEO Spencer Rascoff.

September 8, 2023
4 minutes

Key points:

  • Zillow has become “a household word,” making it harder to unseat than it might have been a decade ago, said Rascoff.
  • But Homes.com is positioning itself as an alternative — and a more “ethical” business model.
  • A verdict in the NAR commissions cases could diminish the value of buyer leads, potentially hurting Zillow and helping Homes.com, Rascoff added.

Zillow has long held a comfortable lead among home search portals. As of July, it dominated the space with a 43% market share; add in the company's sister sites — Trulia and Streeteasy — and that share approaches 52%.

But it wasn't always that way. Zillow and Trulia were once fierce rivals for consumer eyeballs and agent dollars. In early 2015, Zillow acquired Trulia, and the company has remained well ahead of its next-nearest competitors for years. 

In recent months, however, a new challenger — CoStar Group and its Homes.com platform — has stepped up to compete with Zillow head-on. 

Serial entrepreneur and former Zillow CEO Spencer Rascoff spoke with Real Estate News about the portals' renewed competition for consumer attention — and agent business.

This is the second of a two-part interview with Rascoff. Read part one here. (This interview has been edited for length and clarity.)

What does the competitive landscape among portals look like today?

There are a couple of differences between the portal wars today and the portal wars before the creation of Zillow Group — when Zillow acquired Trulia. 

Number one, consumer preferences are more mature today than they were back then. Today, Zillow is a really strong brand with strong brand affinity, is a household word, and a verb. It is harder to unseat than it was five or ten years ago. 

Secondly, from a business model standpoint, it's fascinating that CoStar has chosen a very different business model for Homes.com and thrown a lot of shade at the Zillow and Realtor.com business model. 

With respect to the current portal situation, it is a super interesting time. You've got CoStar coming in guns blazing, you've got a resurgent Realtor.com with a new CEO who has a lot to prove and is not content as a number two — and surely not content to become number three should CoStar achieve their ambitions

So it's game-on again for the first time in a couple of years. And you also have a Zillow that is now refocused on its core business after the distraction of iBuying and looking to protect its core, which is under attack from both sides.

Homes.com offers a different business model. Should Zillow and the other leading portals be worried?

Andy Florance flat out said he thinks the Zillow and Realtor.com business model is a bait-and-switch, is unethical, and that it's anti-consumer and anti-industry for leads to go to a buyer's agent rather than a listing agent. And he's also thrown shade in the product. 

If you look at Homes.com and go to a home's details page, you'll see the lead form explicitly says something like "No fake agents. Your contact information goes to the proper agent who has been hired by the seller and knows something about the house." 

I mean, it is very direct in trying to educate the consumer that they ought to seek the listing agent rather than a buyer's agent. Whereas back in the day, Zillow and Trulia had the same business models. And here, you've got Zillow and Homes.com with very different business models. 

What kind of effect could the commissions lawsuits have on the competition between Zillow and CoStar, and portals in general?

It is possible that if these dominoes fall — that if cooperative compensation goes away — the value of buyer leads is suddenly diminished and the enormous money-making machine that is the Premier Agent business of Zillow is suddenly called into question because of the lower value of buyer leads in a world without corporate competition. 

Along comes CoStar with a business model that charges listing agents, not buyer's agents, and they might very well find themselves in the right place at the right time with the right product. Now, a lot of things have to happen for that all to fall into place, and nobody knows how it's going to happen.

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