As Zillow and other online real estate companies keep playing a bigger role in the sales process, they’ll keep taking a larger portion of agents’ commissions.

What is Zillow doing to real estate commissions? 

I think the better question is, “What are technology companies doing to real estate companies?” Aside from Zillow, this includes OpenDoor, Redfin, Purplebricks, and other companies that have appeared in the last few years. 

The reality is, there are several steps in the sales process from which we real estate agents collect our fee: lead generation (or prospect generation), prospect conversion, search and service, negotiations, and contract to close. What technology companies have started doing is participating in the lead generation step—in exchange for generating prospective buyers and sellers for us, they collect their own fee.

“In exchange for generating prospective buyers and sellers for us, they collect their own fee.”

More recently, they’ve also taken part in the second step of the process. Not only are they generating the consumers, but they also have inside sales associate teams at their corporate headquarters who can qualify prospects and send those qualified prospects to us agents. In exchange, they’re taking a larger portion of the overall fee we typically collect from the entire process. If they continue expanding, they’ll keep taking a larger and larger share of agents’ commissions. 

So the question then becomes, what’s next? 

I have a lot of thoughts on that topic. As we look to next year, we’re making a lot of changes on our team to refashion ourselves as more of a technology company. To summarize, I think our main competition isn’t each other anymore—it’s technology companies. 

If you want to talk more about this topic, don’t hesitate to give me a call or send me an email. I would love to speak to you.