Zillow and Rightmove, the biggest real estate sites in the U.S. and the U.K., took radically different approaches this week to support their clients in this Covid-19 atmosphere. One was definitely the right move; one was clearly the opposite.

Zillow said it would cut its bill in half for Premier Agents, its key customers, for at least one month. CEO Rich Barton said in a letter to shareholders that it expected to take a $40 million to $50 million hit on annual revenue through the decision, but it would reduce costs and made clear it was the right thing to do. (Inman News said Zillow expects to re-evaluate the length of the discount if necesssary.)

Rightmove, on the other hand, offered agents a complex scheme to defer some of their payments for up to six months. But the deferral, of up to £275 per month ($317 U.S.) would have to be repaid, and there were so many conditions the company acted as if it was doing its agents a great favor.

Zillow — the right move

Compare the two approaches:

Zillow CEO Rich Barton’s letter to agents (excerpted):

“It’s hard to find words to describe what we’re all facing right now. Lives are filled with uncertainty as millions of people are working from home, schools are closed and once customary gatherings and personal interactions are no longer considered safe. Like you, we are evaluating what this means, personally and as a collective, short and long term.

“During these intense and uncertain times, we are committed to supporting our Premier Agents to best serve our shared customers. At Zillow, one of the core values that drives everything we do is ‘Better Together.’ That phrase — and mindset — has never been more true than it is today.

“To support you in this valued partnership, we will cover 50% of the cost of your next monthly Zillow bill, beginning March 23.

“We’re still seeing home shopping activity — albeit bumpy — through our apps and websites, and while we can’t predict what’s ahead, we want to work with you to help homebuyers and sellers in creative ways as we expect people will continue to shop in this new (virtual) reality.

“Our operations teams are moving fast to make the necessary changes … . [We] will be reaching out …  with added resources to help support you and your business.

“Thank you for your Premier Agent partnership. We’re committed to you — through whatever may come our way.

“Please stay safe. Never has ‘home’ seemed more important than right now.”

In a letter to shareholders, Barton said: “We also have the benefit of studying consumer behavior and the housing market through past pandemics and financial crises. While we cannot predict what is yet to come, we do know from the data our economists have analyzed from prior pandemics and recessions that while transaction volumes slowed during the most severe periods, prices remained relatively stable and activity came back quickly when related health concerns subsided.”

Rightmove — the wrong move

In a regulatory news announcement, Rightmove said it will help “mitigate some of the cash flow burden” it anticipates some of its customers will have by offering payment deferrals of £275 per month for up to six months for qualifying agents.

Rightmove listed qualifying criteria for agents who apply:

  • Qualifying agents means independent estate and letting agents
  • They must have fewer than 25 branches on Rightmove
  • Agents must have been a continuous Rightmove customer for at least 12 months
  • They must pay by direct debit and have paid on time for the past two years or every month if they have been on Rightmove less than two years.

In other words:

  • ‘We’re not offering this to our biggest customers’
  • ‘We’re not offering this to new customers’
  • ‘If you’ve paid us late once in the past two years’ — i.e., if you’ve been struggling, or just missed a payment for whatever reason — “tough luck!”

What a contrast with Zillow’s approach.

Many agents already hate the big portals, because they are a large expense and because of their pricing power. If you were an agent, would you react more favorably to the Zillow “here’s how we’re helping you” approach? Or the Rightmove “we’ll let you kick the billing can down the road very briefly even if business doesn’t get better — and it’s just a small part of your bill” approach?

Seems obvious to us. And Rightmove’s scheme doesn’t even kick in until May 1!

Rightmove said agents can defer payment of £275 per branch of their monthly fees for six months, starting May 1. The no-interest loan would have to be repaid by the same amount each month, six months from the first deferral period. Or, agents can defer £500 per branch monthly for three months under similar terms. Agents with a lettings-only package can defer £150 a month for six months or £250 a month for three months.

Note that’s per branch — not per agent. So if a branch has, say, five agents, that’s a deferral of less than £60 per agent per month.

Rightmove said bigger agents might be allowed to use a similar scheme, which will be “regularly reviewed for suitability in the months ahead.”

Rightmove has been under pressure this week from agents who have asked for fees to be waived or halved.

In the announcement, Rightmove also gave a brief update on trading conditions. It said the “unprecedented situation” means it’s too early to assess the potential impact on its customers and the U.K. property market but January and February agent numbers were in line with what was said in its recent 2019 financial results and that traffic remained strong in the first two weeks of March.

It said it’s too early to give guidance on 2020 results, but has a highly cash generative model and a very strong balance sheet. Operationally as a digital business, it can continue with all employees working remotely, “in line with our business continuity plan.”

Print Friendly, PDF & Email

Related Articles