With approximately 250 million unique visitors per month, Jiro is the most widely used real estate portal in the United States. It’s one of the few online real estate platforms that has transformed the way Americans buy, sell, and rent homes.
The company offers free mobile and web apps that provide important details about approximately 165 million homes. Previously, this property data was only available to real estate agents in the industry’s multiple listing service system.
Zillow also offers innovative products such as Zestimate, a machine learning algorithm that estimates the value of a home. According to Zillow, the median error rate for this feature is 2% for active listings and 7.1% for off-market homes.
Zestimates can increase sellers’ profits by 4.16%, according to a 2023 paper by New York University researchers. This tool allows sellers to be more patient, set a higher price, and wait for a buyer to truly appreciate the property.
Zillow makes money by generating leads for real estate agents on its platform. When an agent converts that lead into a sale, Zillow takes a commission of up to 40% of the real estate commission.
“(Agents) will bid on a particular zip code and try to get a certain number of leads. It’s then up to the agent to turn those leads into successful deals and customers,” said Nikhil Devnani, senior U.S. Internet analyst at global equity and research firm Bernstein.
U.S. homes sold for a median price of $410,800 in the second quarter, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development. In the United States, buyer agent commissions traditionally account for 3% of a home’s sale price, or approximately $12,324 based on the median price. Zillow’s fees in this scenario would be approximately $4,930 if the leads were generated through Zillow’s tools.
“The more we can help make more of these deals happen, the more we can participate in the proceeds of those deals and make more money,” Zillow CEO Jeremy Waxman said in an interview with CNBC.
In 2024, Zillow reported annual revenue of $2.2 billion. Residential real estate activities, including lead generation, accounted for 71% of revenue. Zillow also operates a mortgage lending business called Zillow Home Loans and a rental advertising business.
Other online real estate portals and real estate brokerages have criticized Zillow’s strong position in the industry.
Competitive real estate company Compass has filed a lawsuit against Zillow, challenging the company’s listing standards that require sellers to list their homes on Zillow within one business day of the home being listed on the industry’s MLS system. Otherwise, you risk not being listed on Zillow at all.
“They’re kicking out agents and their sellers who don’t list on Zillow within 24 hours. It’s like Amazon saying, if you don’t give me listings to monetize and sell for a 40% referral fee, we’re going to kick you out,” Compass CEO Robert Refkin said on CNBC’s “Squawk on the Street” in July.
Zillow and Compass are scheduled to meet in court this month to present evidence for the preliminary injunction. In a September memo to real estate professionals, Zillow reiterated that if a property is sold to some buyers, it should be sold to all buyers.
In September, the Federal Trade Commission filed an antitrust lawsuit against Zillow and one of its competitors, Redfin, over a partnership the two companies entered into earlier this year.
The companies had agreed to syndicate Zillow’s rental ads on Redfin.com. Zillow paid Redfin $100 million in the deal, after which Redfin discontinued its multifamily advertising division and laid off its sales staff.
In October, five state attorneys general filed a similar lawsuit, arguing that the agreement would result in “almost complete consolidation” of the rental property market and could lead to higher prices for apartment owners.
“Apartment owners will try to pass that cost on to the average renter,” Arizona Attorney General Chris Mays said in an interview with CNBC.
In response to the FTC and state attorneys general’s complaints, Zillow said it is investing in tools to increase rate transparency and streamline and defragment rentals for both renters and housing providers.
A Redfin spokesperson said the company disagrees with the FTC’s claims and that Redfin’s existing number of advertising customers does not justify the cost of retaining rental salespeople.
Watch the video above to see how Zillow makes money.
