Zillow: 3 Key Takeaways for Long-Term Investors
Zillow's preferred agent model now earns 35% more per connection than its legacy ads, yet management admits the housing market is softening.
Zillow, on its third-quarter 2026 earnings call, disclosed a revenue of $724 million, underscoring the challenges facing the housing sector. To counteract this, the company is broadening its rental marketplace, incorporating multifamily apartment property managers and individual landlords. The advertising revenue from multifamily rentals surged by 35% year-over-year, as property managers upgraded their advertising packages, demonstrating the potential of this expanded service.
Zillow is also transitioning to Zillow Preferred, a model wherein real estate agents pay the company after transactions close. This model has been shown to raise conversion rates and enhance revenue per connection. In markets where this model has been implemented for a longer period, Zillow has seen adoption rates of about 20% for Zillow Home Loans, providing a roadmap for the company's potential growth across the nation.
Despite housing affordability pressures and slowing home purchases, Zillow is leveraging cost discipline and the growth of rentals revenue to offset market softness. The company is maintaining a focus on fixed expenses while selectively investing in high-return areas. By controlling costs and scaling transaction software as housing activity recovers, Zillow aims to expand its market share in rentals, residential real estate software, and mortgage origination.
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