As the coronavirus pandemic and the associated impact upon global economies spreads, the world’s leading real estate portals are all making big moves in response. Significant discounts are being rolled out for customers, new products are being launched, and sobering revenue projections are being shared.

The Leading Portals React

Strict quarantines, market uncertainty, and travel restrictions are causing plummeting real estate transaction volumes in many markets. Portals are facing -- and will face in the coming weeks -- a significant drop in traffic and leads. In France, top portal SeLoger noted a 40 percent drop in traffic, while in The Netherlands, leading portal funda noted a 35 percent drop in leads (more on this in a future analysis).

The drop in traffic and leads, in a market where transaction volumes are dropping by up to 80 percent, is causing portals to roll out significant discounts for their agent customers. 

In the U.S., leading portals Zillow and realtor.com announced deep discounts on agents’ next monthly bills, with Zillow cutting 50 percent and realtor.com 60 percent. While a welcome savings to an agent’s bottom line, it comes at significant cost, with Zillow estimating a $40–$50 million hit to revenue. It’s unlikely the crisis will be over in a month, so there’s a good chance the discount may be extended beyond April.

The leading portals in the U.K. are following a similar approach, but with deeper and longer-lasting discounts. Rightmove is slashing 75 percent off agent bills for four months -- at a cost of £65–£75 million. For a business that booked £289 million in revenue during 2019, that’s a material hit.

The #2 portal, Zoopla, is being even more aggressive with its discounts. Agents can get 3–5 months completely free, or nine months free if the customer leaves Rightmove and commits to an 18 month contract.

In Australia, leading portal REA Group is postponing its July price rise (8 percent), and offering free re-listings of premium depth products. 

Germany’s Scout24 is offering to defer one month’s payment for up to nine months, and is offering free private listings for consumers. And in France, SeLoger is deferring March fees and making April fees free. Both Scout24 and SeLoger are also offering free premium products to agents at the end of the crisis.

Product Improvements

In addition to discounts, some fast-moving real estate portals are making product improvements in response to the dynamic situation. Sweden’s Hemnet rolled out live streamed open house viewings for its agents last weekend, and is working on further product improvements to streamline transactions with limited direct human interaction.

In The Netherlands, funda kicked off a week-long hackathon to respond to changing customer needs. The focus is on providing fresh data and insights for customers, and enhanced support for remote viewings.

Observations and Strategic Implications

I note a few key takeaways from the evidence above:

• The discounts will cause a huge impact on revenue. Rightmove is projected to take a £70 million revenue hit -- or 27 percent of total revenue in 2019. Zillow’s revenue hit could approach 10 percent (of premier agent revenues) or more. These revenue hits don’t include customers that cancel their subscriptions or simply go out of business during the year.

• There is a significant spread of discounts being offered, from simple deferments to multiple months completely free. The more competitive the market, the more competitive the offers are in order to retain or attract customers. The discounts are deepest in the U.K.

• Certain markets, including Australia, Sweden, and New Zealand are vendor-funded, meaning the homeowner pays the portal listing fee, not the agent. The portals in these markets have not yet offered discounts, but will still feel a revenue hit when new listings drop.

It’s a fast-moving, dynamic time in the portal industry. The major players are all making significant moves to retain their agent customers and ease their upcoming financial burden.