Zillow to pilot invitation-only Flex model in two metro areas
Starting May 25, “several hundred” real estate agents in the Raleigh, North Carolina and Denver metro areas will no longer have access to Premier Agent, thanks to major changes coming to Zillow’s lead generating platform.
In a letter posted on Zillow Group’s blog page on Wednesday, SVP of business operations Stephen Capezza told agents that Zillow would be moving to a “post pay” or “success fee” payment structure in Raleigh and Denver. Instead of agents paying Zillow a monthly fee for Premier Agent’s lead generation services, agents will be charged 20-35% of their commission on successfully completed transactions based on leads from Zillow. The percentage an agent pays depends upon the sale price of the property.
However, 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. Any leads they pay for outside of these metro areas will not be impacted and the agents will be able to maintain an agent profile on Zillow for free, as any agent, regardless of Premier Agent status, is currently able to do.
In many ways this move is an expansion of Zillow’s Flex program, which uses a success fee payment structure and is only available to agents by invitation. Zillow said it selects agents for Flex based on customer satisfaction, work rate and conversion rate.
Capezza wrote that this move is part of the company’s overall plan to create a more “seamless, integrated experience” for agents, Zillow’s service partners, as well as home buyers and sellers by connecting the various services and products Zillow offers.
Through the new pilot program, homebuyers in Raleigh and Denver who reach out on Zillow will be connected with a “Zillow Advisor” who will “help them be prepared to transact.” In addition, Capezza wrote that the company is “exploring ways to integrate financing with Zillow Home Loans for our customers, with the goal of connecting more transaction-ready customers with our partners.”
Capezza said that this program will give Zillow the chance to experiment and “pilot new products and services designed to help customers move quickly and be competitive buyers,” before rolling them out nationwide. In the letter, Capezza justifies the move to a “Flex-only” model in these metro areas by stating that Flex’s post pay structure minimizes the financial risks to agents in the program as Zillow introduces and tests these new programs.
“We believe we have both the ability and the need to change the real estate experience as we know it for today’s customers,” Capezza wrote. “To make that a reality, we need to stitch multiple experiences together more seamlessly. I am really excited about the opportunity ahead, and I firmly believe that the products we’re building will bring efficiencies to our agent partners while also positioning them to take part in more transactions.“
These changes to Premier Agent come just months after Zillow shuttered its money-hemorrhaging iBuying business. In 2021, Zillow lost $528 million, but the company did report $8.1 billion in revenue, more than double the revenue it saw in 2020. However 73% of its 2021 revenue come from home sold in its now closed iBuying program.
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