Zillow just announced shifts in its pre-pay for leads Premier Agent program to a “post pay” model.

Zillow‘s Premier Agent Program to Shift Payment Structure

Zillow just announced that real estate professionals who participate in the company’s Premier Agent program in Denver CO and Raleigh NC will no longer be charged upfront for leads.  Instead, those professionals in Denver and Raleigh will shift to a “post pay” model, effective May 25.

Most immediately, Stephen Capezza, Zillow’s senior vice president who oversees the company’s Premier Agent program, explained that the program will collect a “post pay” or “success fee” from agents when they close deals based on Premier Agent leads.


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Cost of New Payment Structure

How much is this new form of payment or success fee?”  35% of the participating agent’s commission.

Let’s assume, and this is a BIG assumption due to the variability of agents’ commissions, that a real estate contract indicates a total 6% commission with that commission being split evenly to agents on both sides of the deal at 3%.  The Premier Agent participant involved in the transaction would pay Zillow 35% of her/his assumed 3% commission.

Capezza described this shift to “post pay” as a win-win for agents because “they’re not paying up front to meet with customers, they’re only paying if they’re successful.”

New Payment Structure Expands Zillow’s Premier Agent program known as “Flex.”

“Flex” has been, since its inception some months ago, a by-invitation-only program.  Not all of the Premier Agents in Denver and Raleigh will be invited into the Flex program – only those Premier Agents who satisfy Zillow’s “success” metros such as customer satisfaction and conversion rates plus, according to Capezza, “…how excited you are to test new ways to bring this experience forward.”  (Whatever that means?)

Will this shift to a “post pay/success fee” model be replicated in other Premier Agent markets?  Zillow hasn’t yet identified future markets but Capezza said he doesn’t anticipate the conventional pre-pay Premier Agent model to disappear.

Additional Changes to Premier Agent program?

Aside from shifting to a post pay strategy and the likelihood (Zillow intention?) to shrink the ranks of Premier Agents, there are additional elements that will be revised within the Premier Agent program.

The most significant, in our view, is that a consumer who reaches out to Zillow about a property will be initially assigned to a Zillow advisor, not a Premier Agent.  That advisor will “evaluate” the consumer’s real estate “needs from top to bottom,” according to Capezza, and then be referred to a Premier Agent.  Zillow calls this shift in policy and practice the difference between the existing “low touch” approach (soon to be former approach in Denver and Raleigh) to a “high touch” approach.

Zillow’s goal in this “high touch” approach?  To get the consumer more immediately “connected” with ancillary Zillow services and products such as the company’s mortgage lender, Zillow Home Loans.  In other words, according to a letter Zillow sent out to Premier Agents in Denver and Raleigh, “This is all part of our efforts to create an ecosystem of integrated solutions designed to empower customers and partners through the real estate process – from start to finish.”

To all you Premier Agents out there, pay attention here and find out all you can about how all aspects this “revision” from a pre-pay to post pay model would affect you.  And, think through what a post pay model of having to give Zillow 35% of your maximum 3% commission would mean to yourbottom line.

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