Last week Zillow's stock crashed about 25%. CNBC reported that this was due to slowing sales and the general slowness of the market.
I do not think this is what is killing Zillow off primarily. There are three other stronger factors
1) Their prices jumped 3X per lead last month. Zillow released a new platform offering better concierge services and "better" leads. The average cost of a lead in NYC went from about $80 to $230, based on what I am directly seeing. Do to these fees they lost their biggest client in LG Fairmont and many others are leaving as I write this article. Their clients are not just leaving do to the increased costs but do to the overall bad taste in their mouths. "Better Clients", then what has their clients been paying all that money for over the past ten years. It is very disheartening.
2) Competition. It seems everyone is getting into the lead sales game. Agents and brokerages now have many options and some have even learned how to do it themselves. As with anything that is very valuable, competitors will come. Realtor.com is picking up the most of Zillow's fallen clientele.
3) The customers IQ is rising. As customers learn that they are being bought and sold, many times to services that have little experience and even less care in what their wellbeing, these pay and grab websites are being avoided. I spoke to a notable lead buyer last week who told me that many of his newest leads are the least "market savey" he has ever seen. Sadly this made him happy as it meant an easier sale, but it showed me that the more experienced consumers are now avoiding websites or at least lures on these websites that grab their info and lead them in a bad direction.
I am excited to see what comes next in our world of Rea estate, I hope its true transparency and open and an even platform for all.