Connect with us

Real Estate Corporate

Zillow CEO gives you hints during media appearances

Zillow and Trulia are getting hitched, and Spencer Rascoff is leaving a trail of breadcrumbs with the new playbook, as he makes media appearances and statements across the nation.



zillow spencer rascoff

Zillow’s second quarter earnings report reveals a loss per share of $0.05 (more than expected) with revenue hitting $78.7M (also higher than expected). The company raised their full-year revenue outlook to $321-$323M, up from the previous view of $304-$308M. This is the first earnings report released since the announcement that they intend on acquiring competitor,

Zillow CEO, Spencer Rascoff, is an engaging personality who makes the rounds of cable news from time to time, most recently catching our attention with his appearance on Mad Money’s Jim Cramer on CNBC. The full transcript is below, and we’ve italicized the points Rascoff smoothly makes that should tip you off as to the Zillow playbook, so pay attention...

Full transcript:

Jim Cramer: all right. Zillow shares trading slightly lower — couple bucks, come on, after reporting mixed quarter results — well, mixed if you’re a nitpicker. Real estate marketplace is really on fire right now. One of the things that is happening is that they are merging with Trulia. I can’t believe how lucky we are to have Mr. Spencer Rascoff here. We often talk about how he’s here in spirit a great deal. Spencer, when I interviewed you in the spring, I said, come on, if you can’t beat them, join them, go buy Trulia. You said, we’re going to beat them. What changed?

Spencer Rascoff: Well, ask and you shall receive, Jim. You asked me many, many times why don’t you buy Trulia, why don’t you buy Trulia? And we now intend to buy Trulia. I think the combination of the companies provides a lot of benefits for employees, and shareholders, and industry participants. There’s no question that there are a lot of cost savings from the two companies combining, and there will be revenue synergies, and so I’m super excited about the transaction.

Jim Cramer: One of the things I’m concerned about, you have a lot of people signed up, really amazing. Could you run out of inventory to sell?

Spencer Rascoff: We have around 57,000 subscribing real estate agents that buy local advertising from us, but our traffic continues to grow so quickly. We had 89 million unique users last month. So as traffic grows, there are more impressions available to sell. We have lots of impressions available for our agent advertisers.

Jim Cramer: A lot of people at home are saying, wait a second, we see home sales are slowing, we see mortgage numbers, and you do a preapproved mortgage. In reality, you’re not levered to that.

Spencer Rascoff: no, what’s happening is the consumer is rapidly changing their behavior from shopping for real estate in the newspaper classifieds to the internet and increasingly not even the internet on a desktop machine, but actually to a mobile device. That migration is swamping any macro headwinds. Housing is slowing somewhat, but the user is shifting so quickly to the internet that we’re benefiting from that.

Carlos Quintanilla: People are looking at visitor growth, desktop decelerating. Is mobile making up for that desktop deceleration?

Spencer Rascoff: more than making up for it. We’re now over 200 homes a second on mobile, and when I was on your show three years ago at the IPO, just three years ago, it was 20 homes a second. In three years, that’s 10x the mobile growth in three years’ time. It’s astounding what’s happening with the mobile devices.

Jim Cramer: One of the things I thought was most interesting, I’m from summit, New Jersey, and you did a special call out about a broker, and I just want you to walk people through. This is a precipiting broker which usually means Realogy to me — I probably know the broker personally, but you talked about the number of leads that is generated with $ 5,000 a month, and how many lead conversions. I want people to understand why the brokers initially reluctant to use Zillow are now all in.

Spencer Rascoff: agents who advertise with Zillow, they spend money with us and they make a lot of money. I think you’re referring to an agent I tweeted about yesterday, who I met at one of our Zillow Summits, which is these local events where we meet hundreds of agent advertisers, and this agent was just telling me, he was thanking me for how much money we’ve helped him make. And when he gets a Zillow lead, he follows up on it incredibly quickly and he usually converts that lead into a transaction and he makes a lot of money. that’s why our ARPA, average revenue per agent is growing so quickly, it’s now over $300, is what the typical agent is advertising a month.

Jim Cramer: But you know, yelp had good ARPA basically, but they didn’t sign on enough new agents. You also didn’t sign on as many agents as some thought. How come you’re getting a pass on that?

Spencer Rascoff: Well because I think our revenue is growing so quickly. The premier agent revenue growth is up 82% year over year, that’s the fourth quarter in a row of accelerating agent advertising revenue. So you’re right. We are focusing more on a smaller number of top producing agents who are willing to spend more because they value our audience more, and that means we are we bringing on fewer total subscribers and fewer total advertisers, but at a higher rate. I’ll take that tradeoff, and the tradeoff is working, clearly, total revenue from agent advertising continues to grow, with the law of good numbers, it’s harder to continue to increase your growth rate as your numbers get bigger, but we’re finding a way to do it on agent advertising.

Carlos Quintanilla: Here’s a macro question. Journal does a piece this week on Oklahoma City. People moving there because they are being priced out of the coasts. Somebody wrote this week that the millennial story will be moving not because a job is better in another city, but because the houses are cheaper. Do you think that both of those things are true?

Spencer Rascoff: well, it is true, but there’s an anchor around American homeowners which is negative equity. Still around 20% of all Americans with a mortgage are upside down on their loan. And so there may be a job in some fracking state like North Dakota or Oklahoma, but if they are underwater at their house in New Jersey because they bought in 2006, it doesn’t matter if there’s some better job elsewhere, they can’t sell. That’s what keeps job ability lower than we’d all like.

Jim Cramer: this preapproved mortgage, people felt that was just dying on the vine, but the numbers there, you revealed that program when you were on the show last time.

Spencer Rascoff: That’s right.

Jim Cramer: how can that be going up in this environment?

Spencer Rascoff: we created the product which is the only place on line now where you get preapproved for a mortgage. The normal preapproval experience is a pretty painful experience; and now online on Zillow Mortgages you can actually get preapproved and have a letter that you can then go and look at houses with. That’s a big deal.

Jim Cramer: I imagine that Trulia, a lot of these things you’ve put through, for StreetEasy New York, for preapproval, Trulia, and you don’t need all that spend, that ad spend that Trulia’s doing.

Spencer Rascoff: Look, you told me years ago, buy street easy, and we did. Then you said buy Trulia, so what’s should we buy next?

Jim Cramer: I’ll get to you later, but it doesn’t matter, because aren’t you cohosting the 10 and 11?

Spencer Rascoff: you’re cheaper than an M&A investment banker, and your deal flow is better, so you let me know.

Jim Cramer: oh, spencer, thank you. People say Jim, why aren’t you harder on him? Here’s the way we work – stock was at 20, stock’s at 140, I save it for the guys whose stock went from 140 to 20. Spencer Rascoff, thank you.

Spencer Rascoff: Thank you.

Lani is the Chief Operating Officer at The Real Daily and sister news outlet, The American Genius, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

Real Estate Corporate

Has REX Homes finally ceased operations?

After two rounds of layoffs, a restructure to join MLSs, and swirling rumors regarding leadership, staffers tell us the company has crumbled.



Empty office REX Homes

Real estate brokerage REX Homes became famous in recent years for spearheading an anti-trust lawsuit against Zillow and the National Association of Realtors, accusing them of being a ‘cartel’ to edge out non-MLS participants. But it appears that as of today, the company has ceased operations.

Numerous staff reached out to us directly to indicate the company’s last day was Tuesday and that a companywide call on Friday outlined the end of REX Homes. While the entity of the brokerage still exists, we are told there are no longer offices, staff, leadership, or agents.

Staff at the Austin, TX and Woodland Hills, CA offices (both in Texas) have confirmed that as of today, the doors are literally closed. It is unclear what REX’s plans are for wrapping up any current contracts that haven’t closed.

The company’s website remains live with no notification of any service interruptions and there have been no changes to the faces that appear on the staffing page.

Many Glassdoor users have begun leaving reviews asserting that operations have ceased. To thicken the mystery, we’ve already seen several recent reviews disappear, but it is unclear if that is Glassdoor or REX’s doing.

Several LinkedIn users formerly employed at REX Homes are putting their #OpenToWork signs up, stating the company has closed – some indicate departments dissolving, others that the entire company has collapsed.

What has been especially interesting with this company is staff’s consistent fears of CEO Jack Ryan, consistently citing a fear of retribution not just professionally, but personally, and several told us we should worry about our own personal safety, having been the only news outlet covering REX’s unraveling.

Also consistent is that everyone we’ve spoken to in the last year has cited an imminent demise of the company as a whole.

In August of 2021, REX Homes laid off 60 staff without severance, and on October 7th, 2021, REX Homes had their second round of layoffs – both times, staff said they were not initially given severance pay, but report to us that after our coverage, they began seeing payment.

Also in October of last year, they shut down their New York and Chicago offices, and announced internally that they would be joining MLSs. They called it a restructure. The joining of any MLS shocked many as the premise of their structure was always that their magical proprietary tech as well as their bypassing of the MLSs to save consumers thousands of dollars.

They earned several rounds of private equity funding and never went public. Several staff told us that going IPO had been a talking point from Ryan, often used to lure them to the company in the first place and accept lower pay with the idea that shares would soon be coming their way.

Between the August and October layoffs, they closed their Series D round of funding, but never disclosed the amount, closing date, or investor. It is therefore unclear how their investors feel about the company’s status, but it is also possible that they’re who initiated the pulling of the plug.

It is also unclear what this means for their ongoing lawsuit against Zillow and NAR and how a non-existent company can pursue a class action lawsuit, but no filings have been made in the past week regarding the case.

As with all REX stories, we have reached out for comment. Because we track all emails, we have always seen them open every press inquiry within seconds, but it is of note that our current request for comment has yet to be viewed

Continue Reading

Real Estate Corporate

Zillow seeks a patent to fill out forms electronically – sounds familiar…

(TECHNOLOGY) In yet another broad patent application, Zillow is aiming for ownership of the ability to fill out “transactional documents” electronically.




In yet another obscenely broad patent application, Zillow is aiming for ownership of the ability to fill out “transactional documents” electronically.

The official patent application describes “generating electronic transactional documents using a form generating system” and “using a design tool that allows a user to place data entry fields over an image or snapshot of a transactional document.”

If that sounds familiar, it’s because virtually every website that allows customers to e-sign anything already does this. Some concerns also address the fact that services such as DocuSign – a service in which both Google and NAR invested – and even Google Forms might fall under this category.

Should Zillow see this patent approved, it could spell disaster for a huge operational segment of any real estate sale: the actual signing of a contract.

What’s odd about this patent application is the bizarre, gaslighting-lite language it uses to pitch the idea of something that is already used widely on the internet. In the background section, the patent claims that “Most of the time the parties are not in the same physical location when the offers, counteroffers, and acceptances are signed. Fax machines are often used to facilitate the process, as well as emailing scanned documents.”

The background continues with, “Sellers, buyers, and their agents are often not in the same contemporaneous physical location. Therefore, signed documents are often faxed between parties, with original signed copies being retained for the closing.”

Using the implied inconvenience of a physical fax machine as an argument for the efficacy of electronic documents makes sense, albeit in an obvious kind of way; however, using this argument to support the notion that Zillow should be able to claim a patent that gives them domain overall electronic forms in the real estate microcosm seems particularly villainous.

It’s also worth noting that, should this patent be granted any time soon, the likelihood that the world will still be in the grips of the COVID-19 pandemic is high. From the patent office’s standpoint, restricting the remote signature options of any real estate firm not affiliated with Zillow during a period of time in which purchasing property is already laborious and dangerous shouldn’t even be an option.

Time will tell whether or not Zillow is successful in achieving its bid for e-signing. Other document-signing services may be able to dispute the patent, but Zillow’s history of scooping up unlikely patents is undoubtedly on their side.

Continue Reading

Real Estate Corporate

Zillow hit with another lawsuit after iBuying collapse, claiming they misled investors

(REAL ESTATE) Stockholders are suing, alleging that Zillow publicly praised the iBuying program despite knowing it was dying, and they claim to “suffer significant damages.”



Zillow landing page on laptop

Zillow Group was hit late Thursday with yet another investor lawsuit on the heels of the collapse of their iBuying program (“Zillow Offers”). Hillier v. Zillow Group, Inc. et al in the Western Washington District Court is seeking class action status in this federal securities lawsuit, alleging that Zillow failed to disclose to investors that they did not have the ability to price homes for their Zillow Offers program, and that paired with a known supply and labor shortage, led to an inventory backlog.

The suit claims that under these conditions, Zillow (ZG) knew they would have to end the iBuying program, which would hurt their bottom line, something investors were not made aware of. In fact, this suit notes that company leadership continued to speak positively in public, making “materially false and/or misleading statements” about the program despite their overpaying for numerous homes and selling them at a loss.

In the Notice of Related Cases filed, Braua v. Zillow Group, Inc., et al., and Silverberg v. Zillow Group Inc., et al. were cited, both of which are seeking damages for allegations of misleading investors. The Hillier suit is specifically seeking to certify a class of Zillow stock buyers who made purchases from Aug. 7, 2020, and Nov. 2, 2021.

The new lawsuit outlines the following (our words, not theirs):

  • Zillow launched the home buying program in 2018 to rapidly flip properties.
  • By close of 2019, they were in 22 markets, and the program accounted for half of their annual revenue ($1.4B).
  • On August 05, 2021, the company released Q2 earnings, citing $772M from the iBuying program, roughly 60% of their annual revenue. In the release, Defendant Rich Barton said that their “iBuying business, Zillow Offers, continues to accelerate as we offer more customers a fast, fair, flexible and convenient way to move” and “is proving attractive to sellers even in this sizzling-hot seller’s market.”
  • In October, RBC Capital Markets began cooling on Zillow, lowering their price target for the stock, warning that Zillow Offers would likely miss quarterly expectations, dragging ZG down from $91.40 on October 01 to $85.68 on October 04.
  • Shortly thereafter, in October 2021, Zillow announced they would be halting the program through year’s end, and stocks continued to slip.
  • In November, the company released their Q3 financials and simultaneously declared an end to the program and a 25% workforce cut.

It appears that the crux of the Hillier case is that leadership continued to praise the program even as it declined, right up until the Q3 earnings statements went public and it could no longer sustain the program.

“As a result of defendants’ wrongful acts and omissions, and the resulting declines in the market value of the company’s securities, plaintiff and other members of the class have suffered significant damages,” the suit concludes.

As recently as this week, InvestorPlace said, “it’s going to be a while before ZG stock could make a comeback,” noting that Zillow’s house is not in order.

Continue Reading

Our Partners

Get The Daily Intel
in your inbox

Subscribe and get news and EXCLUSIVE content to your email inbox!

Still Trending

Get The American Genius
in your inbox

subscribe and get news and exclusive content to your email inbox