Friday Flash: Sell, sell, sell

Note: This may hit you as very inside baseball, and a bit of a ramble. I guess it is. But sometimes you need to go deep into the game to think about things that may lead, ultimately, to a win or a loss. Or whatever. There’s just so much swirling around right now, so many cross-currents… maybe I’m just thinking out loud.

…..

I’ve heard a lot of people say something like this over the past few months:

Listing agents had it so good for so long… a lot of ‘em are going to have to learn all over again how to sell a house.

OK, yeah. But it’s not just them. Everyone’s a little exposed on the sell side.

Even Zillow.

Zillow built a $2 billion dollar business selling buyer leads to agents. They more or less left the sell side alone, a curious move to people in the industry, who know that seller leads are the primo stuff, of course.

When iBuying came into the picture, Zillow used it for what it was: a marvelous piece of bait with which to attract and hook high-intent sellers. The original Zillow Offers play focused on realizing this benefit while routing the people who actually wanted an instant sale to investors. Light and easy.

Then they went all-in on iBuying and got their ass handed to them.

Now, they are leveraging Opendoor, itself now ass-in-hand, to take another run at using iBuying as a catalyst of seller lead-gen. Because seller leads are the best, remember?

Moreover, with demand on ice, their buyer lead business contracting, and the looming threat that the entire buy-side commission model fueling their business will get zapped, figuring out how to make money off sellers and listing agents is pretty much imperative for Zillow.

This explains their announcement, made in tandem with their earnings release, of two new advertising products for listing agents and brokers.

Here’s how Zillow CEO Rich Barton explained it:

“…we plan to launch Listing Media Services and Listing Showcase, two new listing agent marketing tools from ShowingTime+ to help agents win their next listing. First is Listing Media Services, which is a photography service and comprehensive media package that captures all aspects of a home for agents and gives potential buyers an immersive digital home shopping experience.

Alongside Listing Media Services is Listing Showcase, which is a complete media and placement package that will showcase the seller’s home with the most cutting-edge interactive, immersive listing presentations on the Internet. And importantly, we’ll put the listing agents’ brand front and center.”

Look at that! Some old-school featured/enhanced listing stuff reminiscent of Realtor.com circa 2005. It’s smart, but kinda funny how things come around.

There’s a lot more to unpack here (for example, how CoStar, which appears to angling toward a data aggregation and portal play heavily focused on listing agents, may be influencing this shift) but I’ll leave it at this for now: Zillow is moving hard to hedge its near-total dependency on the buy side.

And then there’s Opendoor.

I won’t break down their Q3 earnings report. I’m not financially sophisticated enough to make sense of terms like “contribution profit,” which was offered as some sort of positive within an absolutely catastrophic quarter. Even claiming $3.3 billion in “revenue” for the quarter feels absurd when you lose almost $1 billion in 90 days.

For the past few years there’s been so much hyperventilating about iBuying, the bulls waxing transformational, the bears hurling stones nervously (admittedly, I’ve participated in this, and will cop to at least some moderate panting on the bull side), but at this point … who really knows the long-term future of iBuying? The debate seems a little beside the point for the time being.

The most interesting part of Opendoor’s reporting was the focus on their full-on, no-MLS-needed, buyer-seller marketplace, Exclusives, which features homes the company owns and, now, homes it does not own.

For the better part of a year, Opendoor has been selling some of the properties it owns online, directly through opendoor.com. The user experience is ecommerce-like. This allowed Opendoor to build demand — an audience of buyers drawn to this exclusive inventory — and spin up a two-sided marketplace in which Opendoor rakes 5% while paying no co-broke commission.

Now, “third-party” sellers can get an offer from Opendoor, then consider it alongside offers from Opendoor’s audience of buyers.

The company hopes 30% of all its transactions in 2023 are for these third party sales. CEO Eric Wu said this marketplace is already “…from a velocity standpoint, not too far behind what would be full distribution.”

In other words: who needs the MLS?

Opendoor, like Zillow, is working hard on the sell side.

As I suggested above, it may not really matter whether or not iBuying ever scales to meet the grandiose projections of its early days. If you have instant offers baiting sellers and exclusive inventory baiting buyers, well, maybe you’ve created something even bigger than iBuying: a true direct buyer-seller marketplace.

Thing is, Opendoor may not survive to see that ambition realized. But you know who might? CoStar, which reported a positively rosy Q3.

What you see here is that Opendoor, Zillow, and darn near every productive agent in America are working hard to deepen their capacity to market and sell homes, in ways both old and new.

Have a good weekend.