couple receiving keysThe great thing about Zillow being a public company is that they confess their strategy to their investors. In their Q4 earnings reports, Zillow laid out an impressive and visionary strategy that makes total sense for consumers and creates an enormous challenge to real estate brokers who are not taking the full cycle of homeownership seriously. Zillow calls this strategy the “housing super app.” To me, it looks like an exact copy of the strategy being deployed by

The rental lifecycle of housing has been synthesized by Ishay Grinberg. We all go through this cycle when we gain housing independence from our guardians. Our first housing cycle is move-rent-rental maintenance–move–rental maintenance–move. That is a cycle that is being addressed by the rental MLS company, Rental Beast – and thankfully it is being adopted widely by traditional MLSs. Zillow did not really talk about their rental strategy in the earnings report, but they are deep into rentals because that is where the consumer relationship with housing begins. The economics of move is being dominated by Updater, who has gained massive penetration into rental movers. This includes setting up mail, internet, utilities, garbage, etc. Nobody has really dominated rental maintenance – which is mostly renters’ insurance. Landlords do the rest of the maintenance.

All of this changes when the consumer shifts from rental to purchase. This is where realtors come into the picture, along with the MLS. With few exceptions like the Houston Association of REALTORS®, or those who have deployed Rental Beast – our nation’s MLSs have not put enough energy into developing a community for people who rent. Agents don’t make much money on rentals and the data management for homes for rent is very different. It’s easy not to bother with this, however very short sighted. Rentals is where homeownership starts.

Once a consumer gets into the first time home buying mode, they go directly to Zillow today. Now that Zillow is a broker, they are well on their way to being the most trusted source of information and property options. Today, Zillow is passing off those customers through referrals to Premier Agents. I wonder how long that will be true. They can become a look-alike broker to EXP overnight and probably blow that company’s impressive growth out of the water. We will see if that happens.

What is happening now is the focus on the “housing super app.” Not much has been said about the features of that app, but I imagine that they are going after the same goal as Dustin Gray and the team at Milestones view homeownership in four cycles – which is a slightly different cycle from rentals: Buy-move-homeownership-sell. If Zillow nails this before the real estate industry, which I fear they might, they will absolutely blow away their forecast of $5 billion in annual revenue and 45% margins on EBITDA by the end of 2025.

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Buying a home is not really broken today. Property search is available everywhere. Showing services are available everywhere. Contract management is available everywhere. However, where it breaks is in the closing. There is awful integration between title, mortgage, and insurance during the buying process. Many brokerages have developed ancillary companies to provide a “full service” experience. But none of them have combined those services into a seamless and integrated experience the way that Milestones has imagined it. With Milestones, the consumer goes right from the search experience into the closing experience in the same homeownership portal. It’s one place where the broker, agent, and ancillary service providers collaborate to help the consumer.

The next step is move. Right within Milestones, the consumer can manage their entire move. They can do as much or as little as they like – from full service to do it yourself. The important step here is the consumer experience. Most real estate companies hand the customer a vendor list (on paper), or may offer the free use of the broker’s moving van. These are weak and disjointed value propositions to the consumer. They want to click a box and have the items they choose completed efficiently and for a competitive price.

Once a consumer moves, the broker, agent, title, loan officer, fall away. Often never to be heard from again. The consumer’s trusted advisors leave the relationship entirely, or they pass off the consumer to some form of pre-formatted vanilla drip solution with an occasional phone call asking for referrals.

family packingHere again, Milestones solves this issue with homeownership hubs. Of course, the purchase contracts, loan docs, and other material transaction documentation is stored here. The homeownership portal also reminds the consumer to change HVAC filters, drain water heaters, find and maintain service providers for repairs. Milestones stitches together the many other services that are siloed and disjointed today, right down to the paint chip selected 5 years ago during the bedroom remodel.

More importantly, Milestones acts as a financial center for homeowners. It provides multiple AVMs for home value. Monitors the debt-to-equity ratio in the home. Meters interest rates to suggest refinance opportunities. Feeds information about other neighborhood listings and sales.

The best part is that the service providers are all seated in the proper handrail of Milestones. As the consumer is living in the homeownership part of the cycle, professionals are always on hand to answer questions or offer help. They never left.

In the next phase of the cycle before it all starts again, the agent can relist the home, the loan officer can prequalify them to buy their next home, moving checklists and estimates are created, and the homebuyer journey begins again.

If Zillow beats the industry to this, it will be a profound success. Once again, it is up to the industry to have vision and execute on that vision ahead of Zillow. This is a huge opportunity for Zillow or any brokerage group today. Someone will win homeownership.

WAV Group is the leading research firm focused on Data as an Asset and Customer for Life. We are also personal investors in Milestones and Zillow. Our founders have also made investments in many other companies like MooveGuru and Buyside that have pieces of homeownership software solutions. We have no doubt about the future of homeownership hubs. They are coming.