Zililow Group Inc. (NASDAQ:Z) (NASDAQ:ZG) recently added another consumer-facing website to its tool kit with the express purpose of reaching out to millennials and first-time homebuyers. The site, RealEstate.com, has the company's traditional advertising appeal for real estate professionals, the look and feel of Zillow home listings, and adds some new features that it hopes will appeal to first-time homebuyers. The company said the site lets users search for property using the monthly payment and down payment they can afford and aims to help them stay within their budget.
Clues as to how the company came up with the idea for the site are contained in its October 2016 report on consumer housing trends.
First-time buyers, a group that makes up almost half (47 percent) of the buying market, have a median age of 33 and nearly six in 10 are Millennials (56 percent). They spend a median of $200,000 on a home. They are more likely than repeat buyers to be torn between buying and renting, with almost four in 10 seriously considering renting (37 percent, compared to just 12 percent of repeat buyers).
Almost half of homebuyers being novices is reason enough for Zillow to jump into this space with both feet; add the fact that 56% are millennials and this brand could have a major new audience.
Zillow wants to give you what you need
It can be daunting to ask questions when you don't know where to start because of lack of experience. Zillow has created a resource that allows first-time homebuyers to educate themselves on the basics before talking with anyone. It explains the jargon of homebuying and lets people compare the costs of ownership versus renting.
RealEstate.com helps people "crunch the numbers like a pro" and its homebuying calculator aims to give potential homebuyers a realistic look at costs. Starting with the upfront costs, the calculator estimates closing costs based on the price for a home and adds that to a down payment so the buyer knows their all-in upfront cash requirement to buy the property. Then it takes into account a variety of components of a typical monthly payment such as mortgage payments, property taxes, insurance, home owner association dues, and utilities to estimate the buyer's all-in monthly cost.
The bottom line is the first-time homebuyer will have a good idea before they contact anyone the cost to buy a house, what they can afford, and if they want to take the next step in the process.
One of the first things you notice about the new site are the language offerings. You can browse homes in English, Chinese, or Spanish. If you choose to contact an agent from the ad on a listing page, the agent will immediately know your language preference. It would seem reasonable that in time agents fluent in specific languages will advertise based on those skills.
How does this make money for Zillow?
The same concept of real estate professionals advertising on home listings applies to RealEsate.com as it does to all the other Zillow Group branded consumer-facing sites. There is one additional side benefit.
When working with first-time buyers, there is no need to wait for a home to sell before the buyer can make a purchase. This can be important information to agents who are advertising with Zillow as it allows them to segment the leads and have specific agents who may be more attuned to working with first-time customers serve those people. And those leads can be converted quickly to sales once the right home is found.
Zillow is once again showing its creative ability to stay ahead of the game. By utilizing its own data, the company recognized a need in the market to provide service tailored to new homebuyers. By creating a set of educational tools and putting them all in one place, the company has created a resource that people can use as a reference and it seems to aim particularly at millennials who love technology and data. If they have a good experience, they may tell their friends.
Real estate professionals will be attracted to a site where they can advertise to reach a segment of the population (millennials) that has been difficult for them to contact. By being able to segregate new homebuyers, brokers and lenders will be able to create programs within their own office to cater to the specific needs of first-timers.
It seems like a win for first-time homebuyers, a win for real estate professionals, and hopefully a win for Zillow shareholders.