Can Rupert Murdoch take an online fixer-upper and turn it into a digital real estate profit spinner? We’re about to find out.
Murdoch’s News Corp. plunked down $864 million in cash and assumed $88 million in costs in November to acquire Realtor.com’s parent company, Move Inc., setting up a testy head-to-head rivalry with the unmatched king of online home-sales information, Zillow Group Inc. Zillow has bounded to the top in part because of a feature that includes price estimates for almost every house in America.
Now, Realtor.com, enriched and emboldened after the News Corp. purchase, is fighting to claw away at Zillow’s mainstay Zestimates, contending they just aren’t that accurate. Realtor.com argues it offers home sellers and shoppers a better online experience by listing more properties with accurate information as opposed to the guessing involved in Zestimates.
“We want to emphasize what’s real,” News Corp. Chief Executive Officer Robert Thomson said. “And the Zestimate’s not real. We’re the real deal in real estate in real time.”
Zillow scoffs at that. The company says it’s constantly updating its estimating technology, which, according to company data, has a national median error rate of 8 percent. CEO Spencer Rascoff said last month that Realtor.com’s efforts to alter the playing field haven’t made much of a difference so far.
“We haven’t seen anything at Realtor.com or News Corp. that has directly impacted Zillow’s business or at least successfully impacted our business despite, perhaps, their efforts,” he said.
The Realtor.com-Zillow rivalry is escalating as the housing market picks up steam on U.S. job growth, low mortgage rates and a wave of millennials entering their prime buying years. More than 90 percent of homebuyers use the Internet in their search process, and 50 percent deploy mobile applications, according to the National Association of Realtors.
At stake for Zillow and Realtor.com is the share of marketing spending by real estate agents, estimated by Goldman Sachs at $9.7 billion this year.
“Both have access to sufficient resources, and both have a strong enough resolve so as to make this a portal battle for the history books,” Stefan Swanepoel, a consultant and author on real estate trends, said in an email.
The competition already features sharp elbows. News Corp. has used its ownership of ListHub, a service for posting homes on the Internet, to try to cut off the flow of listings to Zillow. Zillow is striking deals with local multiple listing services to keep the information coming.
Move Inc. sued Zillow last year for alleged theft of trade secrets after Move’s chief strategy officer, Errol Samuelson, defected to the rival company. Zillow has disputed the allegations. The case is pending in Washington state’s King County Superior Court.
Murdoch appointed Thomson, a fellow native Australian, to head News Corp. before it split from 21st Century Fox Inc. in 2013. Thomson had been editor of the Times of London, managing editor of the Wall Street Journal and editor-in-chief of Dow Jones & Co.
