Zillow is going all-in on Preferred, and CEO Jeremy Wacksman says there’s room for more agents at the table.
The Seattle-based home search giant reported $724 million in third-quarter revenue Wednesday, a 7 percent increase from a year earlier, as growth in rentals and mortgage lending helped offset a sluggish housing market and declining revenue from its core residential business.
The company nevertheless fell short of its revenue outlook of $745 million to $760 million and reported a net loss of $158 million, compared with a $10 million profit a year earlier. The loss included a $165 million charge tied to a securities class-action settlement involving its now-defunct Zillow Offers business, net of expected insurance recoveries. Adjusted EBITDA rose to $182 million, within the company’s previous guidance.
Zillow’s revenue from home sales-related services, including its residential and mortgage businesses, was flat year over year at $489 million. Residential revenue declined 4 percent, while mortgage revenue climbed 32 percent. Meanwhile, rentals revenue jumped 26 percent, driven largely by growth in multifamily advertising.
Rentals now account for 30 percent of Zillow’s total revenue, up from 21 percent two years ago, according to its shareholder letter, underscoring the company’s growing reliance on businesses outside traditional home sales.
Looking ahead, Zillow projected total fourth-quarter revenue of $635 million to $665 million and expects both for-sale and residential revenue to decline roughly 9 percent to 15 percent year over year.
During a call with Inman ahead of Wednesday’s earnings release, Zillow CEO Jeremy Wacksman discussed the company’s transition to its Preferred agent program, its competitive position in online home search and the ongoing industry debate over listing transparency.
Zillow Preferred takes center stage
Zillow is accelerating its transition toward Preferred, the performance-based agent partnership program formerly known as Flex, with two-thirds of buyer connections now going to Preferred agents, up from roughly one-third a year earlier.
The company expects more than 75 percent of connections to flow through Preferred by the end of 2026, reaching 100 percent during the first half of 2027.
Under Preferred, participating agents pay Zillow a referral fee when a transaction closes, rather than purchasing advertising upfront through its legacy Premier Agent model. Zillow said Preferred connections convert into closed transactions at a higher rate and generate 35 percent more revenue per connection than the legacy advertising model.
When asked what the transition means for agents who have traditionally relied on Premier Agent advertising — and whether Zillow is moving toward working with a smaller, more selective group of agents — Wacksman emphasized that Preferred is part of a broader strategy to serve real estate professionals.
“Preferred will be 100 percent of our connections, and agents have many paths to work with Zillow,” Wacksman told Inman.
He said Zillow is continuing to bring additional agents into Preferred as its connection volume and participating agents’ capacity increase. One pathway, he explained, is through Zillow’s other products and services, including Follow Up Boss, Zillow Showcase, Zillow Preview and dotloop.
“We have a really complementary strategy where we’re trying to help all agents grow their business,” Wacksman said.
He characterized Preferred as an additional layer of Zillow’s broader agent business, rather than the entirety of its relationships with real estate professionals.
“Preferred kind of sits on top of our overall agent strategy,” he said. “Our goal is to help all agents digitize a transaction, to help all agents find a way to make their businesses more efficient.”
Wacksman did not specify what the transition would mean for existing Premier Agent advertisers who do not qualify for Preferred, instead emphasizing the other products and services Zillow offers agents.
Zillow touts consumer traffic as Google expands into home search
Zillow’s share of the online real estate audience reached an all-time high in the third quarter, even as its own reported traffic declined.
Citing figures from third-party analytics firm Comscore, Zillow reported that it attracted 77 percent of the real estate category’s average monthly unique visitors, a record share. According to those figures, Zillow’s audience grew 1 percent year over year, while the broader category declined 10 percent.
Separate from Comscore figures, Zillow’s own internal traffic measurements showed a 3 percent decline in average monthly unique users to 215 million, while total visits fell 5 percent to 2.3 billion.
The company also reported that approximately 80 percent of its traffic comes directly to Zillow rather than from third-party sources such as search engines. Those figures come as Google expands its presence in online real estate search through an advertising product developed in partnership with HouseCanary.
In June, Zillow told Inman that Google’s offering appeared to resemble the pay-per-lead advertising business Zillow was moving away from, and that the company had seen no meaningful impact on traffic.
Asked Wednesday whether that assessment had changed — and whether Google could eventually become a meaningful competitor in home search — Wacksman said Zillow continues to see little effect from the offering.
“We still see no impact from them, and I don’t think our answer has changed,” he told Inman.
Wacksman characterized Google’s offering as another advertising product, rather than a direct substitute for Zillow’s broader transaction platform.
He noted that less than 5 percent of Zillow’s traffic comes from sponsored search or search engine marketing, while approximately 80 percent comes directly to Zillow.
“There’s always going to be ad placements and ad products to buy,” he said. “It’s just not much of an impact for us at all.”
Wacksman pointed to Zillow’s brand recognition and consumer engagement as reasons the company believes it can maintain its competitive position.
Wacksman welcomes growing industry focus on listing transparency
When asked by Inman whether Zillow intends to continue pursuing its claims against Midwest Real Estate Data (MRED) following a September ruling sending the dispute to arbitration, Wacksman declined to comment on the ongoing litigation involving MRED and Compass. He nevertheless welcomed what he described as growing industry support for listing transparency.
“Seeing an increasing focus on transparency across the industry is great,” Wacksman said. “It’s a great thing for consumers. It’s honestly a great thing for all your agent readers too, because agents need the housing market to remain transparent for them to do their job effectively.”
His remarks come amid an expanding industry debate over office exclusives, premarketing practices and the extent to which brokerages should be permitted to market listings outside traditional multiple listing service channels. Wacksman said the conversation is increasingly extending beyond individual companies and becoming an industry-wide discussion about consumers’ access to real estate information.
“The internet is not going to go back in a box,” he said.
He also connected that debate to the emergence of artificial intelligence in real estate, suggesting that widespread access to property information will become increasingly important as consumers adopt new technology.
“Agentic AI is coming to this category, and that’s what buyers and sellers are going to use,” Wacksman said.
For Zillow, he said, the focus remains on developing technology that helps agents and brokers serve consumers, with access to listing information serving as a basic foundation for that work.
This story will be updated after Zillow’s earnings call at 5 p.m. ET.
