Zillow Wars: Tech Giants vs Trade Warriors

It's hard to find a person over 30 who hasn't downloaded the Zillow app. With online scrolling being part of most people's favorite past time, terms like "real estate porn" have been invented to describe the escapism found in fantasy house hunting. Even A list celebrities like Brad Pitt have their own saved "wish lists" on the app as mentioned during a recent interview on the podcast, Armchair Expert. Although Zillow wasn't the first company to provide a public facing platform for houses listed in the MLS, their product quickly became the go-to search tool with functionality far more intuitive than its competitors. Launching in 2006, it is now the number one website in the world for home searches, attracting on average 275 million viewers per month (combined with their other aquired site, Trulia). So with all this success and popularity, why would Zillow ban over 7,000 listings from it's platform today?

How does Zillow work?

Zillow gains access to listing information provided by the licensed real estate broker for that particuclar property via their local Multiple Listing Service (MLS), which is paid for by the realtors. Zillow then displays listings, maps, loan calculators, and other features such as a "book now" touring option which connects buyers with a local real estate agent to set up a time to see the property. Zillow does not connect the consumer with the actual listing agent for the property, but sells that lead to a real estate agent who pays into a monthly contract to Zillow or a significant referral fee (a large percenatge of the sales price) on the sale once it closes.

So who are these agents that work with Zillow? Some are newer agents who are just starting off, and since being freshly licensed isn't necessarily a desireable quality when someone is looking for the help of a real estate professional, buying leads is sometimes the quickest way to your first client. Other types of industry people buying in are owner's of brokerages or real estate team leaders, who spend tens of thousand's of dollars per month for an agreed upon amount of leads for a certain zip code who then refer out those leads to agents under them for anywhere between 50-75% of that agent's commission check at closing. Other agents who dip in and out of the Zillow model tend to be established broker's who are looking to supplement their business during slower market seasons.

In 2024 there were a total of 4 million homes sales in the U.S. It has been reported from Zillow's public financial disclosures that the company generated around 17 million home sale leads, and sold approx. 22 million leads to agents through their Premier Agent program (you read that correctly, some leads were sold multple times to different real estate agents). And yet, in spite of this massive data brokering "sell back" machine, Zillow is in the hole and shareholders are worried

The Chaos and the COMPASS

Compass is the highest ranking brokerage by sales volume in the country. They pride themselves in their tech superiority and embracing non-traditional practices such as the "pocket listing", which are exclusive listings either not marketed on public platforms such as Zillow right away, or not at all. With the dramatically changing landscape of real estate brought on by stubbornly high interest rates, these type of unorthodox strategies started gaining popularity outside of Compass and adapted by many agents around the country. And boy, did this put a bee in Zillow's bonnet.

On April 10th, 2025 Zillow announced they will be implementing new listing standards, stating "a listing marketed to any buyer should be marketed to every buyer". This new standard would require that every listing shown through a mention on an instagram post, a sign in the yard, or brokerage website must be posted to the MLS within one day and published on Zillow and other sites that receive listing feeds. Failure to do so will result in a permanent blocked status from publishing during the life of that listing.

On Monday June 23rd Compass clapped back and filed a lawsuit against Zillow. The lawsuit centers on Zillow's 24 hour rule, accusing Zillow of running a monolopoy and violating anti-trust laws, stifling competition.

Robert Reffkin, Compass’s founder and chief executive, said his brokerage’s lawsuit was about protecting consumer choice. “No one company should have the power to ban agents or listings simply because they don’t follow that company’s business model. That’s not competition. It’s coercion,” he said. “Consumers should have the right to choose how they sell their homes.” You can read more about that here in the New York Times article.

What is there to win, and to lose?

To start, Zillow has already been losing. Hundreds of millions to be exact. There are many reasons for this but simply put they have over extended themselves with software company buyouts, and taking on too many roles outside their wheel house such as mortgage lending, and flipping houses. Ironically, the venture responsible for one of their biggest losses ($880 million) was their ill conceved ibuyer program, purchasing homes off market - a practice they are currently penalizing brokers for doing, and attempting to flip for a profit. They clearly cannot afford any further financial stressors, and stay solvent as a company. This explains their seemingly random and agressive stance against pocket listings. Because for every day a home is marketed offline, with buyers connecting directly with agents, Zillow experiences massive losses as the middle man being cut out of the deal. The fewer days on market a home has, the fewer leads Zillow is able to sell on that home. This is a trend that Zillow most likely cannot survive if it isn't stopped.

If Zillow succeeds, and is able to continue to block listings from agents and sellers who have a difference of opinion on how to best sell a home, then the real estate industry loses.

I personally experienced the benefits of advertising a home offline in a soft launch "Coming Soon" strategy recently. The property was unique, and there were zero recent sales like it - making it almost impossible to price out. By pre-gaming the marketing with a for sale sign in the yard, and flyer posted with the homes info three weeks before going live on the market, I was able to get real life feedback from people in the neighborhood curious about the house. Our pricing looked to be in a healthy ballpark based on the reactions we received, and by the time we went live on the market the house had been fully vetted by all serious buyers, receiving multiple offers, and eventually closing $50,000 over asking.

What a shame it would be to have an over imposing corporation prohibit agents like me from delivering these kind of results in the future. Results that all of our clients would love to see.