The Fool is exploring Seattle. Today, CEO Spencer Rascoff introduces us to Zillow (Z 3.84%), telling us how the online home and real estate marketplace works, what he considers its greatest strengths, and what investors should know about it.
Spencer is unconcerned by a rival's report criticizing the quality of Zillow's listings. He points out a series of strengths that the report doesn't take into account, as well as the company's database of 110 million homes.
Austin Smith: There was a recent Redfin report that came out, I believe, that targeted you and Trulia for somewhat dated data. It's been a knock against the Zillow part for a while. I'm wondering if you have a reaction to that.
Spencer Rascoff: The way I look at it is, when you talk about listings accuracy or listings information, you have to see the whole picture.
Three percent of all the homes in the U.S. are for sale by agent in the MLS at any point in time. Those are commoditized listings. They're readily available on Zillow and pretty much every other major real estate website.
We put a lot of importance on making sure that those listings are accurate and timely and fresh, and we've improved quite a bit over the last year or so. But those are commoditized listings. At Zillow we also have over a million other listings, which are not going to be on any other sites, like the ones that you mention; foreclosure listings, Make Me Move listings, new construction listings, rental listings, and for sale by owner listings.
Those typically aren't available on sites other than Zillow, and then of course Zillow has information on every home in the country, 110 million homes, with seven years of user-generated content around a third of all those homes that have been edited or improved upon by their owners.
When you look at listings quality, I think sometimes competitors focus much more narrowly on listings information than Zillow's perspective, which is to look at the entire housing stock rather than a small portion of the housing stock.
Austin: Based on your answer then I'm sure I can guess your reaction to this question. Would it, at some point, make sense for you guys to get a brokerage license, if nothing else, to get that MLS-direct plugin?
Spencer: We are not a brokerage. We sell ads, not houses. We don't intend to compete with brokerages. Brokerages do a great job, doing a completely different thing than what we do.
We've always said to agents, brokers, and MLSs, "If you want your listings on Zillow, fantastic, but we're not going to use the rules that you set up to our advantage by being a paper brokerage, being a fake brokerage, and getting listings that way." That seems very competitive to the broker business model to me, and that's not a path that we've pursued.
