Zillow bets new normal for real estate is virtual tours, digital processes, machine learning
Zillow is opening its Zillow Offers home buying service again to buy and placing technology bets on virtual and self-tours, machine learning and e-signings to speed up real estate digital transformation.
And the digital transformation accelerant is the COVID-19 pandemic. Zillow reported solid first quarter results and said business has bounced back. The company reported a net loss of $163.3 million on revenue of $1.12 billion. Adjusted EBITDA was $5.1 million.
Zillow has three units. Zillow Offers buys and sells homes. There is also a media unit (IMT) that generates leads for realtors and a mortgage business. Rival Redfin said it will also open its home buying service and leverage technology for a low-touch real estates buying experience.
- Digital business transformation accelerates: Just ask NCR, Zillow, Axon
- Zillow awards $1 million to data scientists for improving its Zestimate algorithm
- Digital Transformation: A CXO's Guide
Richard Barton, CEO of Zillow, said remote work and online education puts a whole new spin on home ownership.
Whether they're dreaming about an extra room for an office, a bigger yard, a less dense neighborhood, or for many of you maybe, a new second home, there's evidence that the experience has uncorked new aspirations and hopes of what home can be and needs to be. With each passing day, it becomes clear that we are not going back to the way things were.
On March 23, Zillow pulled its guidance and said visits to its site fell nearly 20% from a year ago. Since then, shopping activity on Zillow has returned to double-digit growth.
- During times of uncertainty, innovation must fuel your business growth engine
- What does the new normal look like post COVID-19? 15 CXOs answer
Zillow's business -- now and in the future -- revolves around its ability to buy property at the right price, renovate them and sell. Barton said the real estate market has passed peak fear. The plan now is to accelerate its lead.
Here are the components of Zillow's rebound plan.
Open up Zillow Offers. Zillow reduced its inventory in the first quarter to about 1,800 homes, down 1,000 from the end of 2019. "We expect to begin home buying within the next few weeks," said Barton. "There are a number of factors we are considering that will influence the timing, including: one, the health and safety of our employees, customers and partners; two, local orders and public health concerns; three, local housing market factors; and four, confidence in our ability to price and transact."
The company also said it "made improvements in applied machine learning techniques to our selling process that helped us hit the right price faster."
Deliver a more virtual real estate experience and buying process. Barton said Zillow will "accelerate technology to deliver seamless and now more virtual real estate shopping and transaction experiences, or Real Estate 2.0."
Continue to allow employees the remote work option. "We did this in order to give our employees the visibility and flexibility to make important life decisions, like did I renew my lease in the city or move closer to my family, without fear of losing their jobs," said Barton. "We've been impressed by how productive people have been given the circumstances. Our valuable people have been truly appreciative of this flexibility, and this policy sets us up well to potentially take advantage of a whole new way to work post-COVID."
Close transactions without much human contact. "We are still watching antiquated processes like in-person appraisals, filings and closings cause unnecessary friction in real estate during this crucial time," said Barton. "Our proprietary 3D tours and floor plans appointment-based virtual tours, physical self-tours, e-signings and remote closings are providing necessary solutions for social distancing today. Adoption is accelerating."
Indeed, Zillow created 525% more 3D home tours in April than in February. "The virtual tools home shoppers need for safety today will become their expectations for convenience tomorrow. Our focus now is not just on managing our way through this crisis. We're also moving faster to the future. Our vision of Zillow 2.0 is becoming a reality even sooner than we had planned," added Barton. "You're seeing years of technology progress get accelerated down into months."