OPINION:
Zillow is partnering with several real estate brokerages to launch Zillow Preview, a supposedly new way to bring “pre-market” housing listings to the public. This “new way” is predictably being pitched as a victory for transparency.
Yet “pre-market” is the same as a “coming soon” listing, or a private listing, where a seller quietly tests the market before officially going public.
I thought private listings such as these were meant to be existential threats to the real estate industry as we know it. That was what we were told a few months back, when Compass and Redfin announced a similar collaboration. Nothing is wrong with Zillow taking similar steps, but it was a critic of the collaboration for weeks.
Zillow is changing direction alongside a moving market, no longer resisting the change sellers have been demanding, and is now trying to promote it as anything but the about-face it is.
Zillow previously banned private listings from its platform, even after the National Association of Realtors updated its rules to allow them. By now stating that Zillow Preview follows local MLS rules, this announcement should be read as an acknowledgment that the Compass-Redfin deal had been compliant from the start.
Zillow’s attack pieces on that agreement demonstrate that organized real estate, with Zillow at the forefront, was the gatekeeper of change and innovation. It was threatening agents and sellers with exclusion if they refused to follow a predetermined path for listing a house.
These leaders were intent on limiting visibility for outliers and restricting what consumers could see — until they weren’t.
The Zillow Preview announcement, on the tail end of the Compass-Redfin partnership, is a victory for choice, affording sellers multiple approaches, including phased strategies, when marketing their homes to the public.
Gary Keller, co-founder of Keller Williams and a partner in the new Zillow Preview initiative, entered the maelstrom of discontent after the Compass-Redfin partnership, declaring in HousingWire that nothing can match the “reach, competition or fairness” that MLS brings.
However, even as he questioned whether private listings benefit the seller in the long run, he accepted that sellers should have the unfettered right to choose how to market their homes.
In a press release announcing the Zillow partnership, Chris Czarnecki, Keller Williams’ CEO, goes even further. He acknowledges that sellers are driving this change, saying, “When sellers choose to market their property to the public before it officially hits the market, it can create energy and demand around their listing.”
This never should have been so controversial.
Yet Compass was accused of manipulating the market when it launched an integrated strategy that offered private listings as an instrument for price discovery. Giving agents and sellers the opportunity to receive real-time feedback and avoid pricing errors that can cost a seller tens of thousands of dollars has always made sense.
Looking closely at the Zillow Preview announcement, it is worth noting a change Zillow has made. Here, it provides a prominent link to the listing agent’s contact information. This is a stark difference from its practice in its standard MLS listings, where that information is essentially hidden.
If the sale is ultimately completed with a Zillow partner agent, an important revenue stream in Zillow’s advertising strategy, then the listing agent “may receive a share of Zillow’s revenue” on the transaction.
It’s easy to understand why Zillow was happy with the status quo.
Compass should have been applauded for making private listings widely available through Redfin. Instead, many in the industry spun the partnership as a threat of fragmentation.
In light of the Zillow Preview announcement, whose similarities with the Compass-Redfin collaboration are obvious, what do we make of the outcry over the past weeks?
Redfin economists recently estimated that “housing inventory could increase by 6%-12%” when a phased marketing strategy is available. The inability to test pricing strategies and the fear that price drops or increased days on the market hurt negotiation positions has kept many houses off the market.
It’s clear that phased marketing strategies, which Zillow has belatedly embraced, will open up inventory without excluding buyers from the market.
It is fair to say that much of the sound and fury was never about protecting consumers or about concern that private listings would reduce inventory. It was about protecting revenue streams.
• Charles Sauer is president of the Market Institute and author of “Profit Motive: What Drives the Things We Do.”
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