2. 1. Evolving role of portals
2. Insight into iBuyers
3. Technology vs. psychology
4. The big risks
3.
4. The railroads are in
trouble because they
assumed themselves to be
in the railroad business
rather than in the
transportation business.
— Theodore Levitt, 1960
“
”
5. The strategy is multi-dimensional. Real estate
portals are operating along two axes.
Closer to the transaction
Far from the transaction
More of the
transaction
Less of the
transaction
6. The global leaders have positioned themselves
across the map with a variety of strategies.
Closer to the transaction
Far from the transaction
More of the
transaction
Less of the
transaction
7. Each portal’s product strategy and M&A activity
show the direction it is moving.
Closer to the transaction
Far from the transaction
More of the
transaction
Less of the
transaction
8. There is a clear trend towards the upper right,
typically via the bottom right quadrant.
Closer to the transaction
Far from the transaction
More of the
transaction
Less of the
transaction
9. Portals are moving towards much larger revenue
pools, expanding their total addressable market.
Closer to the transaction
Far from the transaction
More of the
transaction
Less of the
transaction
Advertising
Finance
Agent
Commissions
Moving
Utilities
Title
Insurance
Note: Bubbles not to scale; each market is different.
10. Recent big moves by Zillow, realtor.com, and IS24
show clear strategic intent.
Closer to the transaction
Far from the transaction
More of the
transaction
Less of the
transaction
Zillow Offers, acquire
mortgage broker
Acquire Opcity
for $210 million Acquire Finanzcheck for
$330 million
11. Zillow acquired Mortgage Lenders of America in
August 2018.
• Originated around 4,000 loans
last year.
• Average revenue per customer
of $9k-$12k.
• Offers advantage for Zillow
Offers program.
• Around 300 employees.
Zillow goes from $3.60 per mortgage lead to ~$9k per mortgage customer.
12.
13. Over the past year, there has been over $730
million in M&A from the major real estate portals.
Finanzcheck
Opcity
Hometrack
Calcasa
Mortgage Lenders of America
14. Activity across the value stream is varied by portal,
with some common trends.
Home inspiration
Home services and
repairs
Valuation and data
Agent profiles
Mortgages
Insurance
Conveyancing
Moving
Utilities
15. The big acquisitions are in familiar categories: data
and finance.
Home inspiration
Home services and
repairs
Valuation and data
Agent profiles
Mortgages
Insurance
Conveyancing
Moving
Utilities
$330 million
$93.5 million$38.9 million
$65 million
16. 2018 is shaping up to be a big year in overall M&A
activity for the major real estate portals.
Source: Company data, investor reports.
17. With their massive acquisitions, Move and IS24
move up the rankings in overall activity.
Note: Zillow does not include the Trulia merger.
199%
157%
157%
56%
22%
21%
1%
18. The strategy is multi-dimensional. Real estate
portals are operating along two axes.
Closer to the transaction
Far from the transaction
More of the
transaction
Less of the
transaction
19. The traditional classifieds model is a search engine
for property. But that’s changing.
Closer to the transaction
Far from the transaction
More of the
transaction
Less of the
transaction
Search Engine
20. Portals are evolving from providing search results to
providing actual services to users.
Closer to the transaction
Far from the transaction
More of the
transaction
Less of the
transaction
Search Engine
Service Engine
22. The Phoenix market is seeing good growth, with
most market share going to Opendoor.
23. Included Excluded
Single-family detached, townhouse and condos New homes
Short sales and pre-foreclosures Mobile and manufactured homes
Normal sales through MLS and outside MLS Bank-owned homes
Investor purchases and sales GSE-owned homes
Maricopa and Pinal counties HUD-owned homes
All price ranges Trustee sales
Sheriff sales
IRS sales
Sales under eminent domain
Bulk sales (e.g. investor to investor)
8,220 + 8,220
204 + 226
= 2.6%
I’ll show you my denominator if you show me
yours.
September:
24. Offerpad’s gross margins are higher, but both are
being pushed down over time.
Note: Gross margin is the difference between what an iBuyer buys a home for and subsequently sells it for. It excludes all holding costs.
25. Zillow’s margins are significantly lower.
Note: Gross margin is the difference between what an iBuyer buys a home for and subsequently sells it for. It excludes all holding costs.
40. At scale, the players with the most traction have
around 10% technical staff.
7%
Source: LinkedIn company stats, February 2018.
10%
4%10%
Duproprio
41. At scale, the players with the most traction have
around 10% technical staff.
7%
Source: LinkedIn company stats, February 2018.
10%
4%10%
Duproprio Compass often describes
itself (and is valued) as a
technology company. Is it?
48. There is a strong correlation between keeping
people involved in the process and traction.
Traction
Peopleinvolvedinprocess
In other words,
tech-only solutions
have limited
traction.
52. Production (the average number of transactions per
agent per year) is a reflection of efficiency.
Source: Public statements and disclosures, based on full year results and number of agents at the midpoint of that year. Industry average of 7/year
based on various Inman reports and Real Trends report for 2016. Purplebricks based on 78% listing-to-sale completion ratio.
53. Production (the average number of transactions per
agent per year) is a reflection of efficiency.
Source: Public statements and disclosures, based on full year results and number of agents at the midpoint of that year. Industry average of 7/year
based on various Inman reports and Real Trends report for 2016. Purplebricks based on 78% listing-to-sale completion ratio.
54. Production (the average number of transactions per
agent per year) is a reflection of efficiency.
Actually more efficient
More efficient?
Source: Public statements and disclosures, based on full year results and number of agents at the midpoint of that year. Industry average of 7/year
based on various Inman reports and Real Trends report for 2016. Purplebricks based on 78% listing-to-sale completion ratio.
55. • Buying a house
• Selling a house
• Getting a
mortgage
• Getting new leads
