The Business Models For The Top Five Real Estate Websites

The Top Five Real Estate Websites ranked by Hitwise, an Internet data research firm:

       Company:    Market Share:  Revenue/Business Model          Capturing

• Realtor.com:   9.9%        Realtor Subscription Sales               Leads
• RealtyTrac:     2.9%        Foreclosure Subscription Sales         Leads
• HomeGain:     2.6%        Agent Subscription  Sales                Leads
• RE/MAX:        2.4%         House Sales                                   Leads
• Zillow:           2.3%          Sells Ads                                        Eyeballs

In early Web 1.0, everyone wanted to be a cash cow subscription portal like AOL. Nobody cared about a better Search Engine. Search 1.0 was just fine for the Portals. Search was an add-on. It didn't have to be good, just there.

Google was loosing $50,000/week before it borrowed/stole the Web2.0 business model of Bill Gross and Overture (now part of Yahoo) and monetized the click stream by auctioning keyword relevant ads to the highest bidder. Thus the business model for Web 2.0 was born: Free Content > Drive Traffic > Sell Ads.

Real Estate Websites, paid for by direct subscription sales,use the Web 1.0 business model. In the late 90's, everyone wanted to be the next AOL or Yahoo, with their monthly subscription fees. Google offered their Search Technology to AOL, Yahoo and even MSN. No takers. Who wanted to be the best Search Engine when you can be the best Portal?

That intermediate step, "Drive Traffic" is what made Google great, what sounded the death noll for subscription Internet Portals and what has forced AOL, Yahoo and MSN to change their business model.(Microsoft change their business model?) Will Zillow's use of the Free Content > Drive Traffic > Sell Ads revenue model kill the subscription/direct sales model of Realtor.com and the other Real Estate Websites? Time will tell.

Zillow's first birthday was 2/9/07. It now has 2.3% market share with as many as 4 million visitors a month. Zillow uses the Web 2.0 business model of Google and Network Television: Free Content > Drive Traffic > Sell Ads.

Realtor.com, RealtyTrac, HomeGain and RE/MAX are all about getting leads, selling leads and driving lead traffic. Zillow is all about driving traffic, getting eyeballs and selling ads. Real Estate 1.0's mantra is "Location, Location, Location", while Real Estate 2.0's mantra is "Traffic, Traffic, Traffic".

Zillow sells eyeballs to advertisers, not houses to home buyers or leads to Agents. Realtor.com et. al. is all about Real Estate Web 1.0 and Real Estate 1.0, while Zillow is all about Web 2.0 and Real Estate 2.0.

Realtor.com is the official site of the NAR and gets its data from the MLS's. The NAR negotiated with Google some years ago to supply its Real Estate Search function, but Google pulled out for some reason. The NAR's protectionist attitude toward its data directly conflicts with Google's stated vision to: "organize the world's information and make it universally accessible and useful".

No one ever got fired for buying IBM. Would anyone ever get fired for posting data on Google? Or Zillow?In Real Estate 1.0, maybe; but not in Real Estate 2.0.

Race ya' to Real Estate 2.0. Last one there's a rotten Website.

Adapt Or Die!  Happy Searching.

WebHomeUSAblog; The Blog of Real Estate Search Marketing

Comments

[Louis Cammarosano]

There are significant differences between HomeGain and Zillow-while Zillow copies HomeGain's original Home Valuation tool from 1999 and promotes it as a "new innovation", HomeGain's ultimate customer is the real estate professional while Zillow's Make Me More Feature is nothing more than FSBO under another name-FSBILLOW.com

For more differences between HomeGain and Zillow see

http://www.futureofrealestatemarketing.com/why-homegain-beats-zillow

[Another difference]

Another mayor difference between HomeGain and Zillow is that HomeGain was sued for millions of dollars by its own employees. Google HomeGain class action lawsuit for details.

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