What’s the Story With Zillow? Specifically, Why Do Many Real Estate Agents Dislike Zillow?

Zillow is arguably the #1 fixture on the American real estate scene, and it has certainly worked hard to earn your trust and patronage. But many people don’t know how Zillow relates to the rest of our industry and why many real estate brokers/agents don’t trust it the way most homeowners, buyers and sellers do.

When I first entered the business two decades ago, Zillow was already in the business of displaying all real estate listings nationwide, as it does now. Its business model (revenue stream) was to sell agents ZIP codes where they would be displayed next to each listing so that buyers who are interested in that listing would click on one of those “premier” agents to see and possibly buy the house.

The cost of being one of those Premier Agents varied by location, and Zillow would sell each ZIP code to multiple agents, so each agent would get a percentage of those buyer leads based on how much they paid.

Keep in mind that to get those leads had little or nothing to do with how good or knowledgeable that agent was. Their qualification was simply that they paid to be there — as much as $1,000 or more per month for each ZIP code. Many agents have built their entire book of business this way, spending thousands of dollars per month to do so.

It has been a very successful business model, and it antagonized listing agents because their name was not shown next to their listings until recently, as I’ll explain below. That’s the origin of the our community’s discontent with Zillow.

Zillow, as you may know, has experimented — usually with success — in capitalizing on their impressive public awareness. The “Zestimate” has been particularly effective, and Zillow’s computer is good at reminding every homeowner with an email address what the current estimate of their home’s worth is.

One of Zillow’s experiments was to enter the “iBuyer” business where they would actually buy homes and flip them for a profit. Their major competitors, who are still doing that, were OpenDoor and OfferPad. Like those competitors, Zillow started losing money when the market softened, but Zillow was smart to exit that business quickly. They appear to have sold all the Denver area homes that they purchased under that program.

A big change that occurred a few years ago was that Zillow became a brokerage itself, which entitled it to receive a direct feed of listings from every MLS in the country. They don’t have a Denver office, but they do have a few agents with Colorado licenses. As you are likely aware, the member brokerages of every MLS can display on their website all the currently active, coming soon or pending listings of that MLS. That’s true of goldenrealestate.com, and it is also true of zillow.com.

This represented a big change for Zillow, because it now had to abide by the same rules as other brokerages, which included displaying the listing agent’s name, phone number and email address, but when you click on “Contact Agent,” the lead goes to a “Premier Agent” who paid Zillow to get website leads like that.

The fact that listing agents are now listed with contact info next to their listings and Premier Agents are not displayed anymore has softened but not completely overcome the antipathy that Zillow created in the past.

Author: Golden Real Estate, Inc.

Golden Real Estate is a prominent member of the Denver/Jefferson County real estate scene. Based in Golden, we service both Denver and Jeffco, representing both buyers and sellers. We're well known for Broker Jim Smith's weekly "Real Estate Today" column published in the Denver and Jeffco editions of the Denver Post's YourHub section each Thursday. The column also appears in several weekly newspapers and is archived at www.JimSmithColumns.com. We have nine agents, all of whom are Realtors and EcoBrokers. Our office is Net Zero Energy since December 2017, and several of us drive electrics cars. Known for our sustainable practices, we accept polystyrene (aka "Styrofoam") for recycling, keeping 200 cubic yards per year out of area landfills.

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