To all the agents in the house,
I want to give a special shout out today to the agents in the 720, 303, 919, and 984 area codes, those who rep Denver and Raleigh, North Carolina. You're the ones affected by Zillow's latest change.
As my colleague Brooklee Han reported Thursday, Zillow is booting off agents in those markets who signed contracts to be Premier Agents, agents who pay a monthly fee to pop up when you express interest in a Zillow-listed home.
Instead, agents will pay a contingency fee of 20-35% their commission to Zillow, when a lead becomes a home sale. Also, Brooklee writes, "Only agents selected by Zillow to continue on with the platform will have access to paid leads. Agents not selected for the program will no longer have access to Premier Agent and pre-paid leads in the Raleigh and Denver metro areas."
This is interesting in a few ways. First, the combination of Raleigh and Denver, two cities that I have struggled to find common ground between besides maybe higher than usual elevation? Second, I am curious to know what the agents who signed Premier Agent contracts think about their contracts ending. Please email anonymously.
A couple of more big picture thoughts:
1.) Most people I talk to hate The Eagles, but The Eagles' Greatest Hits is the best-selling album of all time, according to the Recording Industry Association of America.
Similarly, agents love to complain about Premier Agent, but it was the one bright spot in Zillow's runaway train of a business in 2021. Zillow's internet, marketing, and technology segment, for which the vast majority is Premier Agent, generated $545 million in income before taxes as its winding down iBuying division lost $881 million.
Premier Agent is, to speculate here, what gave CEO Rich Barton the ability to cut his losses on iBuying and see a path forward for Zillow as a financially strong company. So any changes, even tweaks like these, are important. I assume that Barton and other Zillow executives feel they can potentially make more money with contingency fees, and are using Raleigh and Denver to test that theory out.
2.) Can they make more money? Many real estate brokerages are locked in an arms race to give agents more competitive splits. Giving 35% to Zillow strikes me as making Premier Agents prohibitively expensive to agents who can find leads elsewhere. But I could be wrong, given Zillow's continued dominance as the premier consumer-facing website for listings.
Agents, let me know what you think. I can be reached at mblake@housingwire.com.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
P.S. Please fill out RealTrends' AgentPulse survey. It helps us get a pulse on the current market and where you see challenges and opportunities.
.jpg?width=1116&upscale=true&name=FAMB-Real_Trend-2022_Newsletter_Ad_v3%20(3).jpg)
.jpg?width=1116&upscale=true&name=970x250_WOI_2022%20(1).jpg)
EmoticonEmoticon