Zillow quietly removed language from the contract of its newest lead generation tool after Realtors complained and wondered if the contract’s requirements would have them violate the Code of Ethics and Standards of Practice of the National Association of Realtors.

Zillow quietly removed language from the contract of its newest lead generation program after some Realtors complained and wondered if the contract’s requirements would force them to violate the Code of Ethics and Standards of Practice of the National Association of Realtors.

In the initial contract for Zillow’s Premier Broker Flex Pricing program  — unveiled by the company in September 2018, initially only in Florida, though it has since expanded to New England and the Midwest — participating brokers were required to share with Zillow information about each transaction they completed during the term and for six months after the term, including those transactions completed with clients entirely outside of Zillow.

Transaction information included sales information about the transaction as well as the name, email address, phone number and mailing address of both the buyer and seller. By providing this information, brokers would essentially be handing Zillow insights into clients who had never used Zillow, nor intended to.

Brokers could either share with Zillow through a spreadsheet the company provided or by opting into dotloop, Zillow’s transaction management company. Such a requirement forced every agent to connect their profile to dotloop.

“[It] seems like this runs directly counter to Realtors’ requirements for confidentiality,” one broker told Inman.

The broker that spoke with Inman wasn’t the only one who voiced concern; others were also confused by the inclusion of the requirement, a Zillow source confirmed to Inman.

The Zillow source said it was not the company’s intention to create additional burdens on brokers, so Zillow quietly updated the agreement in December to remove the disclosure clause.

The Code of Ethics and Standards of Practice of the National Association of Realtors specifically states Realtors are not allowed to share confidential information about their clients unless the client grants them prior consent.

“The obligation of Realtors to preserve confidential information (as defined by state law) provided by their clients in the course of any agency relationship or non-agency relationship recognized by law continues after termination of agency relationships or any non-agency relationships recognized by law,” the code of ethics states.

It specifically notes that Realtors, during or following the termination of professional relationships with clients, must not use confidential information of clients for a Realtor’s advantage or the advantage of third parties, unless consent is granted.

Many agents do elect to share client information with third parties – such as mortgage lenders or title companies – throughout the normal course of a transaction. Per the code of ethics, all brokers and Realtors should be disclosing all potential third-party uses, and Zillow is no exception.

A Zillow source said the company was originally collecting the information in an effort to improve their lead referral algorithm. For example, if an agent had closed a deal but the company didn’t know about it, that agent would seem like a poor performer and impact the quality and volume of connections they received.

The old Premier Broker Flex Pricing contract stated:

“Transaction Data may be used by Zillow to ensure the Performance Advertising Expense is paid by Participating Agents, to determine how PB Flex Connections are distributed, for other internal purposes relating to the provision of the Premier Broker Flex Pricing program, and for any purpose relating to the provision of Zillow services to Broker or a Participating Agent. Zillow will not use Transaction Data to generate leads for any agent other than the corresponding Participating Agent.”

Zillow’s Premier Broker Flex Pricing was a big break from Zillow’s traditional lead generation program, allowing brokerages to receive a limited number of leads with no upfront cost, compared to Zillow’s traditional lead funneling program, Premier Agent, in which brokers pay upfront. In Premier Broker Flex Pricing, brokerages pay Zillow a portion of their brokerage commission once a deal is closed — which Zillow refers to as a “performance advertising expense.”

Since initially launching in Florida, the program has expanded into other states, though Zillow did not immediately confirm in which markets it is operating. The company said the program will only operate in counties where Zillow has more home shoppers than Premier Agents to service the connections.

Email Patrick Kearns

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