Today we’d like to bring you a real estate industry update. A lot has happened since we last updated you on these topics.
Real Estate Industry Update
Compass Real Estate brought a lawsuit against Zillow over real estate listings. At issue is Zillow’s refusal to display Compass brokerage listings that are privately marketed outside MLS. Zillow wants Compass to market all listings in MLS so Zillow can display them.
Zillow uses agent listings to display on their website, then sell leads back to real estate agents. They do this in a few ways. One way is Zillow has a contact agent button on each listing. That lead goes to a Flex agent who pays Zillow up to 40% referral fee when the property closes. Buyers are surprised to learn they are not dealing with the listing agent and must sign a touring or showing agreement with the Zillow agent before viewing the home. Many times, the Zillow agent shows up at the open house with the prospective agent, and the open house agent and the customer is confused about what everyone is doing.
Zillow Flex agents are under pressure because they have to make contact immediately and document for fear of losing Zillow leads. 40% is a heavy price to pay Zillow when the agent receiving the leads also has a split with their brokerage.
Sellers Astounded
Sellers are astounded to find out when buyers click on their home in Zillow the lead is not going to their listing agent. You know, the agent who knows more about the home than any other agent and is motivated to sell the home. The Flex agent is motivated to sell a home and does not care if it’s that home. Furthermore, the Flex agent may know nothing about the home or neighborhood The home generated a lead but who knows where it’s going?
Homes.com
Homes.com is a large real estate portal like Zillow. The difference is when the home inquiry comes in, it does go directly to the listing agent. The buyer will be dealing with someone that knows the home and the neighborhood, and the seller’s situation. Realtor.com sells leads as well and doesn’t tell you that another agent not associated with the property may be contacting you. While the listing agent is technically identified in a separate part of the page in small print, that is not where the contact agent or email agent inquiry goes to. The agents receiving the lead have absolutely no motivation to sell that home. Sellers may want to ask if their home will be promoted to Homes.com listings. This does cost the listing agent money, but it is worth it. The free listing on Zillow and realtor.com aren’t free when leads go elsewhere when they purchase.
Compass Real Estate
Compass Real Estate is in a conundrum. Not only are they in a lawsuit with Zillow, but they are also at odds with the National Association of Realtors over their clear cooperation policy. Compass wants the ability to market listings outside of MLS, meaning the public won’t find out about them unless they are working with a Compass agent. Some sellers are reluctant to list with Compass and receive less exposure now because of this legal squabble. Zillow slams Compass “Hidden Listing Scheme in response to Compass lawsuit
Compass argues that it might be in the seller’s best interest to not be marketed publicly. Many experts think this stance is ridiculous, while others see some merit to it in certain situations. We do not agree with Compass’ assumption on a mass scale. However, we do believe sellers and brokerages should have the right to market as they please. The customers can decide if this is best practice based upon their personal situation.
Check out our listings on Homes.com. Tell us what you think. As a seller, would you rather inquiries be sold to a random agent or go directly to the listing agent? As a buyer, would you prefer to deal with a random agent, or receive information directly from the listing agent? We’d like to hear your thoughts.
Good luck, and Happy House Hunting!
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