Zillow Business Model: How Does Zillow Work and Make Money?

Zillow Business Model
Source: www.zillow.com

What is Zillow?

Zillow, or Zillow Group Inc., is an American online real estate marketplace. The company started its operations in 2006 through Rich Barton and Lloyd Frink. Both founders were former Microsoft executives and also founded Expedia. Rich Barton is also well-known for being one of the most accomplished tech entrepreneurs. The primary goal behind this company was to allow users to generate content themselves.

At the time of its incorporation, there was a significant information asymmetry in the housing market. The founders encountered a high level of frustration and insecurity when seeking a new house. Similarly, public housing data was difficult to obtain. This data existed in various archives and databases across the web and bureaus. On top of that, they encountered realtors who gave them different offers for the same property.

Realizing the opportunity, the founders started working on a new platform. They also hired Stan Humphries, an Expedia analytic team member. His team spent months gathering housing data from multiple sources. Once they had the data, they digitalized it and made it publicly available. This information was a part of Zillow’s website, where it still exists.

The founders also hired Spencer Rascoff, who was a Harvard graduate. He was also the co-founder of Hotwire in 1999. At the time, Rascoff was a part of the Expedia Group. Later, he joined the Zillow Group and made significant contributions to the product. At the same time, the founders received $32 million from two venture capital firms. These fundings allowed them to increase their workforce and present Zillow for launch in 2006.

Zillow was an instant success among users at the time. The website hosted 2 million visitors in only two days since its launch. Although it crashed the website, it was a high success point for the team. However, their product didn’t include information from various sources. It also offered a unique service known as Zestimate. Through this service, users could assess the value of a given house based on the available information.

Over the years, Zillow’s product has changed significantly. However, its primary market and users have stayed the same. The company also expanded its services to other platforms through its mobile apps. On top of that, it also partnered with various media outlets. It allowed Zillow to develop insights on housing prices in a given city. These partnerships also allowed the company to access other real estate data.

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Zillow also went public in 2011, where it raised $69 million. The company also received a valuation of $540 million. At the time, it was one of the most visited real estate websites in the US. The company also faced controversies and other issues. Zillow also faced competition from other competitors that used a similar business model. The company is also active in buying and flipping homes in various markets.

How does Zillow work?

Zillow works differently based on the kind of user. The website allows various types of users to register and use its services. Usually, the primary users for the website include its agents and real estate buyers. On top of these, the company may also serve other user types. The features these users may use depend on how they intend to use these services.

Zillow Listings

One of the primary features of the Zillow website is its Zillow Listing feature. Users can list their homes using this feature as an FSBO seller or through a real estate agent. Similarly, Zillow provides these services free of charge. Once users list their homes as FSBO, the website markets them to real estate agents as potential leads. Those agents can content the user and help them sell their home.

The Zillow listing feature also requires users to provide information about their homes. Usually, it needs photos and the price. For that, users can use the Zestimate tool. Similarly, users can monitor their listing’s views to get insights into their offers. Users can then receive offers from buyers interested in their homes. However, the process may require them to use real estate agents.


Zillow Zestimate is one of Zillow’s most well-known tools. Through this tool, users can get access to home values. The Zestimate tool is free and includes a combination of algorithms and local data. It comes up with a detailed analysis of the real estate market. Similarly, Zestimate has been one of the attractive features on the website. However, it has also received significant criticism in the past.

The Zestimate tool is free to use. Users can get on the website and use this tool to get estimates for their homes. This tool analyzes several factors, such as physical attributes, tax records and user-submitted data. Once it does so, it provides an estimate for a given property. However, it may not provide an accurate figure based on several reasons.

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Apart from the above tools, Zillow also offers various other features. These features relate to the primary sources provided by the company. However, some of these may also include specific products or services. Therefore, they may not apply to every user. Despite that, these tools provide features that help users with their real estate goals.

What is the Zillow business model?

Initially, Zillow started as a free services website. However, the company still made money. Zillow’s business model at the time was ad-based. The company generated revenues by displaying ads on its platform. However, the Zillow business model has evolved significantly over time.

Currently, Zillow uses a combination of business models to generate revenues. One of the primary sources of money for the company is through homes. The company uses its services to purchase houses. Later, it flips those houses for a profit. This feature comes under the Zillow Offers section of the company’s operations. Similarly, it falls under the home segment.

Zillow also makes money from the sale of marketing services. Similarly, it sells software and other technology solutions. Within this segment, the company has several products. Zillow uses the Premier Agent product, a Software as a Service (SaaS) tool. Similarly, it makes money by selling advertising services to various users.

Zillow has also ventured into the financial business model. The company offers mortgages to buyers to help them with their purchases. Once it provides that finance, it charges interest on it. Therefore, this business model allows the company to make money from loans. However, these revenues fall under a different market segment.

How does Zillow make money?

Zillow generated revenues of $3.34 billion in 2020, which was its highest to date. These revenues increased by 21.76% in the year. In contrast, the company had total sales of $2.743 billion in 2019. However, Zillow has held a net loss position for several years. Overall, a summary of the company’s performance for the last decade is below.

YearsRevenues (in millions USD)Net Income (in millions USD)

Zillow segregates its revenues into three segments. These include the Home, IMT and Mortgages segments. An explanation of how the company makes money from these segments is below.

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The Home segment for Zillow primarily consists of the Zillow Offers service. The company holds data on a significant number of homes in the US. Through this data, the company allows its buyers to purchase properties instantly. Zillow also acquires houses below the market value. Then, it sells them for a profit.

In 2020, Zillow generated revenues of $1.715 billion from this segment. These revenues increased by 51.38% from the $1.365 billion in 2019. Similarly, the Home segment accounted for 51% of the company’s net sales in 2020. However, this segment only made 49% of those revenues in 2019.


The IMT segment generates revenues from the sale of marketing services. Similarly, it includes software and other technology solutions. IMT stands for Internet, Media and Technology. Within this segment, the company offers Premier Agent, Rentals and Other. Premier Agent revenues come from the Premier Agent and Premier Broker Programs. These are SaaS tools that allow agents and brokers to offer services on Zillow.

Within the Premier Agent program, Zillow makes money on a cost-per-leads basis. On the other hand, Rentals and Other revenues come from selling advertising services. The company sells these revenues to professionals and landlords. Similarly, it may include inspectors, photographers, builders and home improvement professionals.

Zillow made $1.45 billion from the IMT segment in 2020. These revenues increased by $173 million from the $1.27 billion in 2019. Similarly, the 2020 revenues made 43% of Zillow’s total net sales. On the other hand, the 2019 revenues accounted for 46% of the total.


The Mortgages segment is fairly new compared to the others. The company acquired Mortgage Lenders of America, through which it provides mortgage facilities. However, these facilities are not a significant part of the company’s total revenues. Zillow primarily makes money from the interest it charges on those mortgages.

Overall, Zillow made only $174 million from this segment in 2020. It increased by 72% from the $101 in 2019. These revenues accounted for 5% and 3% of the company’s total sales in both years, respectively.


Zillow is an online real estate marketplace for buyers and agents. The company provides several tools, including Zillow Listings, Zestimate and others. Overall, Zillow’s business model consists of several revenues sources. The company makes money from three segments. These include the Home, IMT and Mortgages.

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