Zillow is shoring up its Home Loans business by ratcheting up pressure on Flex agents, who refer clients to the mortgage arm or risk losing future leads, tech advisor Mike DelPrete writes.

This article was shared here with permission from Mike DelPrete for Inman Intel, a data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.

Zillow continues to double down on its mortgage business ahead of third-quarter earnings, this time by compelling Flex teams to send back leads interested in learning about Zillow Home Loans — or risk getting kicked out of the program.

Why it matters: Zillow is leveraging its immense market power and forcing its partner ecosystem to change behavior, all in an effort to meet its revenue goals.

The following chart, provided by Zillow to its Flex partners, clearly outlines its performance expectations.

  • Underperformance, in terms of not converting buyer leads or not sending leads back to Zillow Home Loans, can result in “disengagement” — no more leads.

  • While Flex teams that convert leads and send customers back to Zillow Home Loans are eligible to get more leads.

Zillow asks Flex agents to send back leads that have expressed interest in learning more about Zillow Home Loans.

  • Consumers “express interest” through a checkbox on the initial contact form, which is checked by default — so it’s really an option to opt-out rather than opt-in.

This is another clear signal of the critical importance of Zillow Home Loans to Zillow’s long-term strategic plan to double revenue.

Perspective: While Zillow is strongly leveraging its power on the market, it only affects a very small percentage of agents and transactions.

  • Less than 5 percent of the U.S. real estate agent population works with Zillow (with far fewer Flex agents), and Zillow only touches around 3 percent of U.S. real estate transactions.

The bottom line: Zillow is curating a small, exclusive ecosystem of agents that are willing to play by its rules, which now includes tight integration with Zillow Home Loans.

  • Zillow continues to lean heavily into mortgage as part of its broader strategy, even though Zillow Home Loans has lost $283 million since 2017.

  • At the end of the day, there is only so much Zillow itself can do; it is reliant on its agent partners, and Zillow is exerting immense pressure on those partners to achieve its goals.

Mike DelPrete is a strategic adviser and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.

lenders | Zillow
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