A new Morgan Stanley study concludes that Zillow is enabling agents to increase the number of dual agency transactions through Zillow ads. “Zillow is enabling premier agent advertisers to increase the number of transactions within which they represent both the buyer and the seller, known as a dual agency transaction,” according to Morgan Stanley’s AlphaWise study published today.

Takeaways:

  • A Morgan Stanley study concludes that Zillow is enabling agents to increase the number of dual agency transactions through Zillow ads.
  • The study shows that 60 percent of the agents surveyed found that advertising on the portal enabled them to increase their number of dual agency transactions and drove a 30 percent increase in these transactions.
  • The study also found that Zillow is effective in generating leads for seller transactions, as well as buyer leads.

A new Morgan Stanley study concludes that Zillow is enabling agents to increase the number of dual agency transactions through Zillow ads.

“Zillow is enabling premier agent advertisers to increase the number of transactions within which they represent both the buyer and the seller, known as a dual agency transaction,” according to Morgan Stanley’s AlphaWise study published today.

In a dual agency situation, agents retain the commission from both “sides” of the transaction and therefore earn a commission of 6 percent vs. 3 percent if representing only one “side.”

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Double-side transactions are regulated by state real estate agencies and have been controversial because an agent must represent both the buyer and seller in a transaction.

Real estate expert Saul Klein said, “The laws are different state by state, and often agents’ and even brokers’ interpretation of the laws in their jurisdiction might be inconsistent. Agency has always been a subject confusing to many in the industry.”

Consumer advocates have argued that seller-paid commissions can create a conflict of interest for the agent or the broker representing both sides of the transaction and may result in unfair or sloppy representation of the buyer.

Some agents and brokers avoid dual representation because of the conflicts of interest.

The study shows that for 60 percent of the agents surveyed, advertising on the portal enabled them to increase their number of dual agency transactions and drove a 30 percent increase in these transactions.

The study also found that Zillow is effective in generating leads for seller transactions, as well as buyer leads. “On a weighted-average basis, agents indicated an equitable 50 percent split in terms of buy versus sell transactions generated from Zillow.”

The new report says that the dual agency opportunity increases the agent’s return on investment (ROI) for Zillow leads:

“A single dual agency side enables an agent to recoup 50 percent to 100 percent of their total annual Zillow ad spend. When factoring in the other side of the dual agency transaction, agents stand to generate an ROI of over 50 percent to 100 percent on their total annual ad spend from this single transaction.

“This has the effect of meaningfully bolstering an agent’s total ROI when considering income from additional converted Zillow leads.”

Josh Tucker in North Carolina said he sees an increasing number of dual agency transactions from Zillow.

“Once ListHub quit syndicating Zillow listings I think a lot of large brokerages and MLSs worked deals with Zillow to have exclusive representation on all their listings, meaning agents that purchase buyer leads ‘ZIP codes’ wouldn’t show up on the exclusive leads,” Tucker wrote in a Facebook post.

He also said a lot of listings on Zillow in his market have exclusive listing representation, which would increase dual agency. “In order to get my listings exclusive with Zillow, I had to purchase a minimum of $1,000 per month of buyer leads, which I did, just so I’m the exclusive agent on my listings,” Tucker wrote.

“At Zillow, we take great pride in connecting buyers and sellers with the best real estate agents,” wrote Amanda Woolley, senior manager of corporate communications at Zillow, in an emailed statement.

“We offer consumers a broad choice of both listing agents, whose information is on each listing, and of buyer’s agents, who advertise on most Zillow listings. Additionally, our more than 1 million agent reviews can help buyers and sellers make the choice that is best for them,” wrote Woolley.

Dual agency may also represent a breakdown in the MLS as more and more listings are allegedly being withheld from the MLS so agents can benefit from dual agency.

Morgan Stanley started coverage of Zillow Group in July of this year.

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