On the 438th episode of Mail-Right Show, Robert Newman and Jonathan Denwood discuss lead generation providers— Zillow Premier and Flex. Robert Newman is the founder of a real estate marketing company called InboundREM, which focuses on inbound marketing methods like SEO and story lead attraction conversion methodologies. On the other hand, Jonathan Denwood is the joint founder of Mail-Right, which builds great-looking websites on WordPress with CRM, a lead-generative platform, text messaging, email, and a social media calendar.
About Zillow
When Zillow consolidates its operations, it is expected to direct most high-quality leads to its own Zillow teams. In contrast, less qualified leads will be distributed to other agents. This approach allows Zillow to prioritize its salespeople, take a significant percentage of the revenue, and effectively manage its lead distribution.
Buying leads from Zillow means funding one of its strongest competitors, which may increasingly pose a challenge over time. Despite this, many agents overlook the issue, assuming it is not an immediate concern. As more funds flow to Zillow, the platform becomes more sophisticated, making it increasingly difficult for individual agents to operate independently. Zillow also trains new agents, who often become accustomed to working only with Zillow leads.
Google, which holds considerable influence in the real estate sector, is considered a significant competitor to Zillow. However, Google is generally seen as a less aggressive player than Zillow, which is perceived as actively seeking to undermine real estate agents. Embracing a hyperlocal strategy may be the key to countering Zillow’s dominance, as Google is less likely to threaten the real estate profession directly.
The Basic Outline of Zillow Premier Agent
Zillow’s Premier Agent program is what the company built its business on, primarily focused on selling leads through its main platform. When users visit the Zillow website to search for properties, they encounter pop-ups, sidebar advertisements, and other ads designed to capture their name, email, and phone number.
One particular feature of Zillow Premier is the display of specific properties with an agent’s name listed underneath, often leading users to assume that this agent represents the seller or buyer. However, this agent may have no real connection to the property, which can be misleading. The lead generated is then sold to a group of agents, and the allocation of leads is managed through a computerized system that evaluates various metrics, such as how quickly an agent responds to the initial lead. This system uses multiple inputs to determine, on a rotational basis, who will receive the lead in a specific area.
Zillow Flex Payment Structure Explained
Premier Agent is a demand-based pricing program. Pricing is not flat; the cost can be as low as $600 if there are available zip codes and leads. However, if demand is high, prices can rise to $3,000 per zip code or area, with no guarantee against competition. Over the years, Zillow Premier has attempted to improve lead quality by verifying them through calls.
Agents used to be frustrated when leads became renters after paying $600. In highly competitive territories, such as urbanized cities, the cost per lead increases significantly, as does the quality and rotation of leads. The price varies greatly depending on the agent’s location, whether in a major city like Los Angeles or Las Vegas, a state like Florida, or a small town in Kansas.
Furthermore, Zillow Flex is an invite-only program with no upfront fees, but it takes 35% of the commission on property sales. Agents must record conversation details and progress in a specific app, and Zillow periodically reviews their performance. Payment can be made through the title company or by check, and Zillow is strict about collecting fees. Agents must be top-tier performers with a credible track record to qualify for Flex.
Overall, Zillow needs to lower its prices as the market has become more challenging, and agents not making a substantial profit from buying leads will struggle.
Zillow Premier Agent vs. Zillow Flex
Zillow Flex competes with a division of Realtor.com, formerly known as Opcity, which is a performance-based pay and plan. Premier is their standard advertising plan. Although the brand names might be unfamiliar, many agents have used, used, or will use these plans.
The effectiveness of any lead generation program, including Zillow Premier, depends heavily on the number of users in your area. However, Zillow is known for not being transparent about its information, making research difficult.
As it offers limited opportunities, agents without sales experience should avoid high-priced zip codes with Zillow. It’s better to practice and improve skills before investing heavily in such lead programs. Effective use of Zillow leads requires prompt responses and polished scripts. Failure to do so can result in fewer leads being sent your way.
Zillow Premier Agent and Zillow Flex Key Strengths and Weaknesses
In terms of quality, Zillow Flex is superior to Zillow Premier. However, experienced agents or small brokerages with power teams might find better alternatives like Google Local Service Ads or Facebook. Owning your lead source is crucial; Google is a better option as it charges a lower percentage of your business. A Google lead costs about 3% of a Zillow lead, making it 97% more cost-effective.
Flex can be a good opportunity for new agents if expenses are low and there is a strong desire to learn. Although it involves giving up a significant portion of income, the skills learned through Zillow and the broker can be invaluable. Experienced agents generally avoid Flex due to the high costs and prefer Premier if the leads are of good quality and have high conversion rates. Owning your lead source is vital; even if market conditions worsen, you retain the platform and its potential to generate leads.
Certain scenarios and situations, as well as specific agents, can benefit from the Flex system. Flex is a rebranding or enhancement of the Premier service that targets brokers. Brokers select an agent, who then receives a portion of the commission. However, if an agent can accept this, they will likely only earn around 20%. Flex may not be worthwhile for those who are young, inexperienced or have limited experience at a particular brokerage.
For agents who frequently move between brokerages, Flex might seem appealing. However, it’s usually the veteran agents who discuss alternatives to Flex. Many new agents, especially those in their first five years, consider discount systems like Zillow Flex and Opcity. These systems offer significant support and customer leads, making them valuable for gaining experience.
Working with paid leads for a year can benefit those starting in real estate, as it involves being guided and supported by much of the work done by others. At least 50% of the real estate business consists of finding customers. After that, selling homes and managing transactions becomes crucial, but continually sourcing new clients is one of the biggest challenges. The lower the price point in a marketplace, the more clients agents need to find.
Agents may need 30 to 50 deals annually in states like Louisiana and West Virginia to earn a significant income. While Premier can provide decent buyer leads and average seller leads, it’s only highly recommended if agents have a budget and need leads for a team. In most cases, local service ads and Google advertising, driving traffic to an agent’s website, yield better conversion rates. Determined agents or brokers would benefit more from building internal systems like Zillow’s, managing the entire process independently.
