Posted on September 23rd, 2020
Zillow has officially launched a real estate brokerage, known as “Zillow Homes.”
The move is intended to “simplify and streamline” the company’s Zillow Offers platform, which up until now relied upon outside real estate brokerages to manage its iBuying transactions.
While it sounds like unwelcome news for real estate agents, the company said it doesn’t intend to compete with outside brokerages or recruit agents.
Rather, the company will have existing Zillow Offers employees become licensed real estate agents, and they’ll only work on Zillow Offers deals.
What Is Zillow Homes?
- A new licensed real estate brokerage launched by Zillow
- Will be used for Zillow Offers transactions beginning in 2021
- All Zillow-owned homes will be listed on the multiple listing service (MLS)
- Real estate commissions will be paid to agents representing home buyers
In 2018, the company’s iBuying program known as Zillow Offers was launched. Today, it’s operational in 25 markets across the United States.
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At the moment, it functions with the use of outside real estate brokerages, who work with home sellers and Zillow concurrently to quickly offload properties.
In a video message, Zillow chief industry development officer Errol Samuelson noted that this back and forth from outside brokerage to Zillow, while generally problem-free, created confusion for customers.
So going forward, the entire transaction from start to finish will be conducted using only Zillow employees.
The Zillow employees will work for Zillow Homes, a brokerage entity focused solely on Zillow Offers transactions.
And Zillow Homes will be the brokerage of record for Zillow Offers transactions.
He added that current Zillow Offers brokerage partners “will continue to assist with some in-market activities,” and perhaps more importantly, can represent home sellers who decide not to sell their homes via the iBuyer platform.
To assuage any real estate agent fears, he said they are not recruiting real estate agents from other brokerages. Rather, existing Zillow employees will become licensed real estate agents.
Additionally, all Zillow-owned homes will be listed on multiple listing services (MLSs), and the company will be moving from thousands of “disparate data feeds” to MLS Internet Data Exchange (IDX) feeds, the latter of which are offered directly to MLS members.
Is Zillow Squeezing Out Real Estate Agents?
The company says it’s only licensing existing Zillow employees to streamline the real estate transaction.
Obviously, this will save them some money as well, as opposed to having to pay out partner agents and brokerages.
But as noted, these newly-licensed real estate agents aren’t coming from competing brokerages, nor will they work on transactions outside of Zillow Offers.
This means they shouldn’t moonlight as real estate agents for other companies, or try to poach business from other agents.
Zillow makes money from its existing real estate lead service known as “Premier Agent,” and that will likely continue.
As Samuelson pointed out, if a potential Zillow Offers customer decides not to sell their home to Zillow, there’s a good chance Zillow will refer that individual to a licensed real estate agent outside Zillow via Premier Agent.
So really, it depends just how popular iBuying becomes – if in the future everyone uses an iBuyer to buy and sell real estate, traditional agents will play less of a role.
But if it remains a fringe way of buying or a selling a home, it shouldn’t impact most agents.
This is similar to Zillow Home Loans, which was launched back in 2019 to serve as the financing unit for Zillow Offers (though it’s open to anyone).
It doesn’t replace Zillow’s mortgage marketplace, which features tons of outside mortgage lenders and mortgage brokers, nor does it seem to be growing into a top lender.
Like other tech leaders in the real estate space, Zillow is looking to control the entire transaction, and profit from it too. Just consider Redfin Mortgage.
With title and escrow offered through Zillow Closing Services, mortgages via Zillow Home Loans, and now its real estate brokerage Zillow Homes, the puzzle appears to be nearing completion.
Zillow is the most visited real estate website in the United States, with 200 million unique monthly visitors.
About the Author: Colin Robertson
Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.
Published at Wed, 23 Sep 2020 22:57:19 +0000