When SEO is not enough to win

The story of Zillow vs. Opendoor is about SEO not being enough sometimes, aggregators competing with integrators, and how focus wins.

When SEO is not enough to win

The story of Zillow vs. Opendoor is about SEO not being enough sometimes, aggregators competing with integrators, and how focus wins.

Zillow’s shares dropped over -30% after the company announced to close down its home flipping business unit and lay off 25% of its workforce in early November. Despite their undoubted superiority in Google’s search results, Zillow wasn’t able to fence Opendoor, the industry’s leading newcomer, in.

Zillow is a textbook aggregator play: as a real estate marketplace, it connects buyers and sellers through real estate listings. Sellers add their home for rent or sale, which creates an inventory of different home types that drives organic traffic through keywords like “houses for rent”, “places near me”, or “houses for rent in las vegas.”


Opendoor, on the other hand, gets about 350k monthly visitors from organic search but is lightyears away from Zillow. Instead, they won with a razor-sharp product strategy and superior IP.

Zillow’s Growth strategy

Zillow’s early growth came from Zestimate, a tool that provides a price estimate for real estate properties (Zestimate = Zillow + Estimate). It’s useful for buyers because they can compare offers and for sellers because they get a sense of what their home is worth.

Zestimate leveled the traditionally intransparent real estate market and solved the chicken-egg problem for Zillow. Every marketplace needs demand for supply and vice versa. Zillow solved that problem by attracting both sides with a tool. Come for the tool, stay for the inventory.

Today, zillow.com gets over 120m monthly visitors and is the 52nd largest site on the web (US, November, desktop), according to Semrush. It’s the largest real estate site, owning Trulia (11m average monthly visits from SEO) and Hotpads (1.2m).

Before entering the home flipping market, Zillow made money predominantly from ads and services. Sellers can pay for eyeballs, real estate agents for leads. Since 2018, Zillow provides also mortgages under its Zillow Home Loans product.

Opendoor’s Growth strategy

Opendoor makes money from fees and house selling profits. They sell houses for a higher price than they bought them, after renovations and appreciation. Their competitive advantage is two-part: on one hand, they focus on very specific markets (cities) and avoid luxury homes or fixer-uppers.

On the other hand, Opendoor’s deep learning IP allows them to find underappreciated houses on the market. In a sense, it’s Zestimate - just integrated and focused on sellers. The attractiveness of the model comes from fast purchases and lower fees compared to real estate agents. It’s a win-win for both sides, Opendoor and sellers, just like Zestimate was.

Opendoor.com ranks in good positions for top keywords like “houses for sale” (1m MSV), “home appraisal” (22k MSV), or “sell my house” (8.1k MSV), but it does so with the homepage and blog pages. Opendoor has category pages like www.opendoor.com/homes/los-angeles, but their traffic is no match for Zillow. Their categories are young and thin in information. That might change with growing inventory and brand strength.

Why Zillow lost

When Zillow entered the home flipping market, their strategy banked on cutting out the middleman. Whereas Opendoor flips homes and sells them through MLS (multiple listing services) or marketplaces, Zillow already has the distribution and just needed the product.

But Zillow gave up after 2.5 years, with more than half of the homes it bought listed under the purchase price [link]. The reason, according to Zillow CEO Richard Barton, is inaccurate price estimates under current market conditions.

Zillow’s early growth stood on price estimation IP, just like Opendoor’s today. Since then, Zillow became a powerful aggregator but missed out on advancing its algorithms. Even being the 52nd largest site on the web didn’t compensate for an inferior tech product.

As a result, Opendoor’s revenue topped Zillow’s in Q3 2021.