After announcing in November that it would be quitting the business of iBuying and cutting 25% of its workforce, Zillow Group has unveiled a new growth strategy in the form of a “housing super app,” a digital platform aimed at creating an easier and more streamlined moving process for customers.
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“Anyone who has been through a move knows how challenging it can be to research, shop, select, finance, appraise, close and have to connect all these separate vendors and spend time taking down information and managing the process yourself,” Zillow Group CEO Rich Barton told analysts on the company’s fourth-quarter earnings call Thursday.
“Sometimes you do all of this and still end up losing out on your dream home, especially in this competitive market.”
Moving can add up between $26,000 to $40,000 of extra expenses.
According to Zillow, 6.1 million existing homes changed hands in the US in 2021. The company estimates that approximately 4.1 million of those homebuyers, or 67%, used Zillow’s sites and apps.
Executing the plan looks like this:
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- Engage with the roughly 4.1 million homebuyers currently using the product by offering personalized, immersive and curated experiences, including 3D tours with interactive floor plans and tools to understand affordability
- Increase the number of homebuyers trying to connect by leveraging its acquisition of for-sale home touring reservation system ShowTime, offering digitized mortgage offerings and developing seller solutions to create new, more asset-light services
- Couple the product improvements with an “enhanced partner agent network” to focus on working with high-performing agents, and Zillow will integrate its home loans service to ensure users can get pre-qualified for a mortgage before finding an agent
Zillow’s efforts are expected to translate into $5 billion in annual revenue and a 45% adjusted profit margin by the end of 2025.
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The new strategy comes as the company reported a loss of $261 million in the fourth quarter and $528 million for the year, primarily due to the winding down of its iBuying business. Total revenue was $3.9 billion for the fourth quarter and $8.1 billion for the year.
The company sold 8,353 homes during the quarter, beating previous guidance of approximately 5,000 homes, and ended the quarter with roughly 10,000 homes in inventory. Zillow saw an average of 198 million monthly active users on its mobile apps and websites during the fourth quarter, which drove 2.3 billion visits.