From January 2021, transactions on Zillow’s Homes division (the name of its iBuying operation) will be handled by full time contracted real estate agents hired by the company itself. Initially Zillow agents will be present in only three of Zillow’s iBuyer markets (Tucson, Atlanta and Phoenix) but the model is likely to be rolled out to all 25 iBuyer markets Zillow operates in eventually.
Currently, the responsibility for the transactions are farmed out to a network of third party agents through local partnerships for both the buying and selling of homes acquired through Zillow’s iBuying. These third party agents will not be cut off entirely, as they will still get the valuable seller leads from Zillow if a user decides not to take up Zillow’s iBuying offer for their home.
The move is perhaps a long time coming, but no less controversial for it. Zillow started obtaining brokerage licences some years ago despite assurances to its broker customers that it was not about to step on their toes. While Zillow Group’s Chief Industry Development Officer made a point of starting a video explaining the move with the words “we value your partnership” before going on to explain the move as one being driven by user experience considerations, the move has generated some sharp criticism in other corners.
With iBuying rival OpenDoor already enjoying market dominance over Zillow and about to get the ammunition to accelerate its growth even further via its SPAC IPO, a move by Zillow to squeeze more out of its iBuying division comes as no surprise. As industry expert Malcolm Myers espoused as a panelist at Property Portal Watch yesterday, the growth potential for portals and classifieds players is limited if they continue to work exclusively in the advertising and ancillary revenue streams. Zillow is a good example of a company that has recognised this and is moving towards the transaction with every step it takes.