Syndicated post from InmanNews.
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Zillow is finally on the other side of a nearly yearlong legal battle with Compass over its Listing Access Standards, which Compass claimed were anticompetitive and violated federal antitrust rules.
Both companies endured a four-day evidentiary hearing but never reached a jury trial, as Compass voluntarily dropped the lawsuit in mid-March after Zillow adjusted its rules to be more lenient, leaving room for listing agents and their clients to properly market coming-soon listings on its platform and others. The NYC-based brokerage’s leaders framed the portal’s decision to edit its LAS as an about-face; however, that’s not how Zillow Chief Operating Officer Jun Choo and his colleagues see it.
Jun Choo
“We haven’t changed our stance on transparency, and we’re continuing to be an advocate for the consumers. We talk to everyone in the industry, and what we think is best for homebuyers hasn’t changed,” he said. “I think where we want to draw the line is that we don’t make the rules, and we understand we don’t make the rules. NAR can, if they want to.”
“But we want to serve agents and brokers and teams, and we want to serve them in the best way possible, which means doing so in compliance with whatever rules are present in their market,” he added. “I think we’ll continue to be loud about what we believe is best, and we’re going to continue to have standards, because we’re free to run our business how we want. But we’re going to stop short of making up rules for the industry. We know our role, and we know the MLS’s role.”
The following conversation has been edited for length and clarity.
Inman: We’ve been in a bit of phone tag since the beginning of the year, so let’s jump into it. I’d love to start our conversation with the hot topic of the moment: AI. How have you been approaching the further integration of AI into Zillow? And how are you handling the lingering fears agents have about AI and whether what’s helping them now might replace them later?
Choo: I want to highlight that machine learning and AI are not new. The Zestimate was built on AI. Zillow Showcase was built on computer vision. With that said, we’re in a transformative moment in AI. It’s going to transform every job. But if you think about home purchases, how infrequently they happen —about once every seven years for most people — and how big a financial commitment they are, consumers still need that human touch.
While I fully expect that AI is going to make some of the tasks, the preparation and a lot of the digital experience before selling the home different, there’s going to be a moment when you’re going to want a trusted advisor by your side, someone who’s gone through this process multiple times, who knows how to ask the right questions, who considers things you’d never consider, and will give you the peace of mind to know this huge decision you’re making is the right one.
I think the agent role is really going to evolve and continue to, in some ways, become easier and allow them to focus more on the human side, the sales side, the customer service side of the job, which is why they probably got into the first place, because who likes busy work? That’s something agents tolerate, but we’re trying to build these agentic AI tools, like the updates to Follow-Up boss.
I think you’re going to see a huge separation between the top performing agents who really know their stuff, who know their neighborhood, who know how to provide great client service and use AI, and those who don’t. Those agents who use AI will be more productive. If they’re maybe doing 15 transactions a year now, they may be able to do 30 or 45 with [AI at their side]. I think that’s a great outcome for consumers because the industry is quite fragmented right now, and having fewer, more productive agents means you’re probably working with a better agent.
One thing with AI is the trust and transparency factor. People want to know enough to understand that the tool they’re using is safe. Zillow often talks about trust and transparency. How is Zillow maintaining that as you dive deeper into AI?
We’re sticking true to our mission. AI doesn’t change how we think about our customers or our products. It just gives us a tool to do our jobs better. But I’ll give you an example of how we build trust, which is a timely one.
With the launch of Zillow Pro, which is going nationwide very soon, there’s a feature called My Agent. If we generate a lead for an agent and they connect, and we know they’re working together, we make sure that that agent is in front of that homebuyer on Zillow. If a buyer is already working with an agent, it’s a waste of everyone’s time for us to try to generate a lead and shift them to another agent. We want to make sure that’s the best experience for the consumer and the agent.
We’re now allowing agents to also create those My Agent relationships with anyone in their sphere of influence, any lead that they got from any other source, so any client in their prospect data isn’t put in front of someone else as a lead. And frankly, that’s directly taking revenue out of our business that we could generate.
I know there’s been some misconception out there, someone saying that we take 90 percent of the commission on Zillow Preview, which is completely false. For all of these Zillow Preview listings, a consumer can contact the listing agent, in which case that is the listing agent’s lead, free and clear.
If they click the ‘I’d like to schedule a tour’ button, it goes into our Zillow Preferred program partners, where we take a referral fee of about 35 percent if that lead becomes a transaction. But what we’re doing is taking our 35 percent down to 25 percent and giving the 10 percent we would have made back to the listing agent.
So it’s exactly the opposite of what some people have been saying. I think the best way to build trust in this trade is to put our money where our mouth is and do things that provide value to agents and do things to show them that we’re not out here to make money at their expense.
Yes. Someone brought to my attention Rory Golod’s LinkedIn post and Errol [Samuelson]’s response. Obviously, there are big players in the industry who see value in the Zillow Preview. And others have criticized it, saying it will lead to more fragmentation and represents an about-face, which I know your team disagrees with. How are you taking in the critiques? What do you feel is fair? What do you feel is unfair?
We tried to build our version of a pre-market product that we believe fits both Zillow’s mission of being transparent to consumers and putting consumers first, while meeting the needs of homebuyers and meeting the needs of sellers, who want more options for how they want to sell their home. And by extension, [meeting the needs] of listing agents who are working for them.
No one’s gonna buy your product 100 percent of the time, but the fact that this many brokers lined up in such a short time is a strong indication that we met the goal. As for the criticism and what’s fair and what’s not, I think it’s fair to say that, over the course of history, we’ve focused more on buyers than sellers. I mean, I think that’s because our brand, the audience is largely built on people looking at homes.
In the last few years, we’ve focused more on sellers. But that’s been a journey of a few years rather than 20 years, and I think what’s fair to say is that we came around to the insight that we should be offering sellers more options for how to sell their home. I think Preview fits in really well with a comprehensive marketing plan for a listing agent to present to a homeseller on how they can get their home the most exposure.
We were never against the idea that sellers should have options like this. I think where we got caught up is that MLSs have highly variable rules. In some places, it’s zero days, and in other places, it could be two weeks or longer, and trying to navigate all that was difficult. We want our product to be compliant with whatever the rules are in your market.
We believe the broad marketing of a home is the best thing for a seller. So while we believe in pre-marketing homes, we don’t believe in putting homes behind a black box of limiting inventory. I mean, think about how bad that is for a buyer, and there’s this thing called private listing networks, and there are a bunch of homes that are being sold by Compass agents. And if you’re not working with a Compass agent, you can’t see them.
All we’re trying to do is make sure that buyers, regardless of which brokerage or agent they’re working with, have access to see more homes.
