Zillow sits at the top of the mountain in online real estate, with a market value of $8.8 billion.
But neighborhood social network Nextdoor is moving into the block, announcing new features today that connect real estate agents to the more than 150,000 neighborhoods on Nextdoor. The new service is interesting, in part because Nextdoor shares some common DNA with Zillow: Rich Barton, co-founder of the Seattle real estate giant, sits on the board of Nextdoor, and was one of the company’s earliest backers.
Nextdoor’s new service lets agents advertise on the hyperlocal site, creating another outlet for real estate advertising dollars, traditionally a big moneymaker for Zillow.
“With Nextdoor’s new real estate section, neighbors can discover local listings and the real estate agents who know their neighborhoods best,” the press release announcing the new service proclaims. Among other things, the new Nextdoor service will allow real estate professionals to purchase “Branded Listings” to associate a Nextdoor profile with their neighborhood listings.
That sounds like Zillow, which has built a business around connecting real estate agents with consumers.
But Nirav Tolia, CEO of Nextdoor, doesn’t think his new offering is competitive with Zillow.
Tolia called Zillow the “800-pound gorilla,” and said Nextdoor’s new real estate service will not encroach on Zillow’s turf.
“This is really more about creating a place for neighbors to have discussions about real estate and then enabling real estate agents to be a part of that conversation,” Tolia said of Nextdoor’s new service. “Ultimately, when you are in market looking to buy or sell a home, we think there is no better place than Zillow to do that. That isn’t something we have the expertise to do for our members, nor is it something that we aspire to do.”
Tolia does see an opportunity to possibly team up with Zillow in the future. He envisioned a situation where potential homebuyer on Zillow would have the option to post questions about the surrounding neighborhood to the corresponding Nextdoor group.
If they choose to partner, Tolia will certainly know where to turn at Zillow, given the connections that he has to Barton.
GeekWire reached out to Zillow, and we will update this post if we hear back.
Zillow in the past tried something like Nextdoor, an offering called Neighborhood Pages that was designed to better connect home owners to their local communities. But the idea didn’t really take off.
Nextdoor’s new real estate section is now live in 10 markets: Atlanta, Austin, San Francisco Bay Area, Dallas-Ft. Worth, Houston, Los Angeles, Phoenix, Portland, Sacramento and San Diego. Tolia said Nextdoor is looking to introduce the new real estate section to all of its 150,000 U.S. neighborhoods as soon as possible.
Creating a real estate section was a natural way to further the tens of thousands of conversations about real estate occurring daily on the site, the company said. As CNBC notes, the move is also a way for Nextdoor, which achieved a valuation over $1 billion two years ago, to open up a new revenue stream through real estate ads.
Until this year, the company noted in a blog post, Nextdoor had been funded entirely by its investors. Those include Benchmark Capital, where Barton is a venture partner; Silicon Valley heavyweights like Greylock Partners (an investor in Seattle real estate brokerage Redfin) and Kleiner Perkins Caufield & Byers; and the investment arms of tech giants like Google Ventures and Amazon CEO Jeff Bezos’ Bezos Expeditions.
Zillow’s command of the real estate market has been challenged lately by several big tech companies. Facebook recently launched its first ad product designed specifically for residential real estate brokerages. Dynamic Ads for Real Estate allows real estate brokers and agents to advertise directly to Facebook and Instagram users who have already searched for properties on that brokerage’s website.
The product goes after a key money maker for Zillow, which allows real estate professionals to advertise to prospective home buyers and sellers on its site.
And then there’s Amazon. A placeholder web page on Amazon that said “Hire a Realtor” with an option to enter your zip code and “Coming Soon” below popped up last month, prompting speculation that the company may be expanding into the real estate referral business and driving Zillow’s stock down that day. That page has since disappeared, and it is unclear if Amazon still plans to move in that direction.
Update: In Tuesday’s earnings call, Zillow CEO Spencer Rascoff responded to a financial analyst’s question about competition from the likes of Facebook and Amazon. “I do think it is very difficult for horizontal players to compete with vertical companies that are focused on the vertical, and that have as big a brand as our family of brands have,” he said.