Why Zillow Is Destined To Be A Real Estate Sector Leader

Kaitlyn is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

With the real estate market improving, many investors look to home improvement stores such as Lowe's and Home Depot for investment deals, but online real estate companies are also profiting from the housing recovery. 

With the recent merging of real estate and mobile, the online real estate market is rapidly growing as home buyers are using their mobile devices to search for available homes instead of a traditional agent. With advertising sales to real estate professionals and by connecting home and mortgage lenders to potential home buyers, real estate websites are changing the way that they drive traffic to their sites for revenue growth. 

Shares of Zillow (NASDAQ: Z) have recently soared, increasing 138% in the last year due to high traffic volume and record-breaking revenue. With several new product launches, Zillow has zoomed past competitor Trulia (NYSE: TRLA) and diversified its portfolio for long term revenue growth, 

The Home Improvement Game 

With home improvement spending rising, Zillow Digs is a place where home enthusiasts can go to browse project ideas as well as get an estimate from start to finish for the project. This summer, more than 60% of homeowners are planning to make a home improvement or make an addition on their house. Users can browse over 44,000 photos from 110 million U.S. homes for all their home improvement needs. With 37% of the population finding inspiration online, this Pinterest-like app is number 3 when it comes to inspirational websites for home improvement. 

Move (NASDAQ: MOVE), which owns Move.com, Moving.com and Realtor.com, also has services that help add value to the home, such as DIY projects in lawn and gardens, as well as bathroom remodeling ideas and kitchen makeovers. Trulia also competes in the online real estate game, but growth for Realtor.com has not seen the boom in traffic compared with Zillow. Realtor.com brought in 22 million unique monthly users, compared to Zillow's 46 million. This is due to the fact that Zillow has created a seamless integration system with Digs, drawing in users that not only want to remodel a house, but search for their future home with a specific feature in mind, such as vaulted ceilings or a timber-frame home. 

Unique Services 

Zillow has also come up with some unique products that distance themselves from other online real estate sites. Zestimates, a service that estimates your home value, updates every time the valuation of your house changes and sends you an alert. This service is useful for potential home sellers who are timing the market, evaluating when is the best time to sell their house. 

Mortgage Marketplace, a service for home buyers can "shop" for loans for their future home. More than just a mortgage estimator, the service brings together potential home buyers and lenders, profiting from the marriage of buyers and banks willing to loan money.  

Zillow just recently broke 100 partnerships in the Zillow Pro for Brokers Program. This program provides a free five-point program that improves listings accuracy, provides better reporting and increases the visibility of listing agents for participating brokers. Trulia just launched Trulia Suggests, which asks viewers to ‘follow and like homes and catering new property suggestions based on their taste preferences, the site still had traffic just over 2 million compared to Zillow's 2.8 million unique visitors. 

The Bottom Line 

With Zillow gaining so much market share with variety of new products that influence the real estate market, they have created a moat around their own products by introducing unique products onto the market. Not only have they created a listing service that draws in more views than competitors Trulia and Realtor.com, but they are creating new ways for the average home buyer to become a real estate expert.

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Kaitlyn Tokay owns shares of Zillow. The Motley Fool recommends Zillow. The Motley Fool owns shares of Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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