Zillow is on the other side of a nearly year-long legal battle with Compass over its listing access standards, which Compass claims are anticompetitive and violate federal antitrust rules.
Both companies endured a four-day evidentiary hearing, but the case did not reach a jury trial. Compass voluntarily dropped the lawsuit in mid-March after Zillow adjusted its rules to be more lenient, leaving more room for listing agents and their clients to properly market upcoming listings on its platform and elsewhere. Leaders of the New York-based brokerage framed the portal’s decision to edit LAS as a change in direction. But Zillow Chief Operating Officer Jun Choo and his colleagues don’t think so.
Ju Jun
“Our stance on transparency hasn’t changed and we continue to be the voice of consumers. We’re speaking with everyone in the industry and our belief in what’s best for homebuyers hasn’t changed.” “I think where we want to draw the line is we don’t make the rules. And we understand we don’t make the rules. NAR can do that if they want to.”
“But we want to serve our agents, our brokers, our teams, and we want to serve them in the best possible way, and that means doing so in compliance with all the rules that exist in the market,” he added. “We’re going to continue to be vocal about what we believe is best, and we’re going to continue to have standards because we have the freedom to run our business the way we want to. But we’re not going to go so far as to create the rules for the industry. We know our role, and we understand the role of MLS.”
The following conversation has been edited for length and clarity.
Inman: We’ve been on the phone a little bit since the beginning of the year, so let’s jump right in. I’d like to start the conversation with the hottest topic right now: AI. How have you worked to further integrate AI into Zillow, and how are you addressing any concerns that agents have about AI or that what’s helping them now might replace them in the future?
Choo: I would like to emphasize that machine learning and AI are not new. Zestimate was built on AI. Zillow Showcase was built on computer vision. That being said, we are in a moment of AI transformation. It will change every job. But when it comes to homebuying, consumers still need a human touch, given how often it happens (about once every seven years for most people) and how big a financial commitment it can be.
While I fully expect that AI will change many of the tasks, preparations, and digital experiences before selling a home, there will come a time when you want to have a trusted advisor by your side, someone who has been through this process many times, knows how to ask the right questions, considers things you would never consider, and can give you peace of mind that this big decision you are making is the right one.
I think the role of an agent is going to really evolve and become easier in some ways, allowing them to focus more on the human side, the sales side, the customer service work. That’s probably why they were adopted in the first place. Because no one likes busy work. That’s something agents can tolerate, but we’re trying to build agent AI tools like follow-up boss updates.
I think you’ll see a big difference between top-performing agents who know their job, who know their area, how to provide great customer service and how to use AI, and those who don’t. Agents using AI will be more productive. If you currently perform 15 transactions per year, you may be able to perform 30 or 45 transactions. [AI at their side]. I think this is a great outcome for consumers. Because the industry is currently quite fragmented, and having fewer agents and increasing productivity probably means working with better agents.
AI has elements of trust and transparency. People want to be knowledgeable enough to know that the tools they are using are safe. Zillow talks a lot about trust and transparency. As we delve deeper into AI, how is Zillow keeping it that way?
We are true to our mission. AI doesn’t change the way we think about customers or products. It simply gives us the tools to do our jobs better. However, I will give you an example of how to build trust in a timely manner.
Zillow Pro will launch nationwide soon and will add a feature called My Agent. If you generate an agent lead and the agent connects and you see that they’re working, make sure that agent is in front of that homebuyer on Zillow. If a buyer is already working with an agent, it’s a waste of everyone’s time for us to capture the lead and try to transfer it to another agent. We want to make sure it’s the best experience for consumers and agents.
Agents can now create “My Agent” relationships with anyone in their sphere of influence and with any leads they receive from other sources. So a client in your prospect data will never be placed in front of someone else as a lead. And frankly, that would directly take away revenue from the business that we could have generated.
I understand that there are some misconceptions. Some people say that we take 90% of the commission on Zillow Preview, which is completely untrue. For all of these Zillow Preview listings, consumers can contact a listing agent. In this case, the listing agent is free and clear.
When they click the “I want to schedule a tour” button, they are routed to a Zillow Preferred program partner who will take a referral fee of about 35 percent if that lead turns into a deal. But what we’re doing is reducing the 35 percent to 25 percent and giving back to the listing agent the 10 percent that they would have gotten.
I mean, it’s exactly the opposite of what some people are saying. I think the best way to build trust in this industry is to put your money where your mouth is, do things that provide value to your agents, and show them that you’re not here to make money at their expense.
yes. Someone brought to my attention Rory Golod’s LinkedIn post and Errol [Samuelson]’s reply. It’s clear that there are major companies in the industry who see value in Zillow Preview. Also, some critics say this will lead to further fragmentation and mean a change in direction, but I know your team doesn’t agree with that. How do you handle criticism? What do you think is fair? What do you feel is unfair?
We sought to build a version of our pre-market product that we thought would fit both the needs of homebuyers and the needs of sellers who want more choice in how they sell their homes, while also meeting Zillow’s mission to be transparent with consumers and put the consumer first. And as an extension of that, [meeting the needs] To list the agents working for them.
Although no one will buy 100% of your product, the fact that so many brokers lined up in such a short period of time is a strong indication that we achieved our goal. When it comes to criticism and what’s fair and what’s not, I think it’s fair to say that throughout history we’ve focused more on the buyer than the seller. I think it’s because our brand, our audience, is primarily built around people looking at homes.
In recent years, we’ve put even more emphasis on sellers. But I think it’s fair to say that it’s been a multi-year journey, not 20 years, and we’ve come to the insight that we need to give sellers more choice in how they sell their homes. We think previews fit very well into a comprehensive marketing plan for listing agents to show home sellers how to best promote their home.
We were never opposed to the idea that sellers should offer options like this. I think what we got caught up in is that the rules of MLS are very changeable. Some places took zero days, others took more than two weeks, and it was difficult to get through them all. We want our products to comply with all market rules.
We believe that marketing a home extensively is in a seller’s best interest. So while we believe in pre-selling homes, we don’t believe in putting them inside the black box of limited inventory. I mean, think about how bad that is for the buyer. We have something called the Private Listing Network, and we have a lot of homes for sale by Compass agents. And if you’re not working with a Compass agent, you won’t be able to see them.
All we try to do is help buyers see more homes, regardless of which broker or agent we work with.
Email Marian McPherson
