Real estate listings are the “lifeblood” that allows Zillow to make money, and faced with the prospect that rule changes and brokerage shifts could lead to fewer listings on Zillow, the portal prepared for a war.
The ammo it gathered for the fight earlier this year? Carrots and sticks. The stick, in this case, was Zillow’s decision to ban individual listings if they aren’t shared in a place the portal can obtain and display them within a business day. It was a plan that company leaders debated internally in the spring.
Jeremy Wacksman | Zillow CEO
“In my head, we would have lined up a group of deals (say eXp, KW, Anywhere) and then jointly announced them AND announced our stick plans publicly,” Zillow CEO Jeremy Wacksman wrote in an internal group message in April. “But given how fast things are moving — should we consider just announcing each deal as it comes? So as soon as we sign eXp, we announce it and our plans?”
That message is part of a trove of documents filed last month as part of an ongoing lawsuit Compass filed against Zillow. The documents — which Inman has been reviewing since they became available in the court filing system — include deposition transcripts, internal messages and strategy documents, and other materials that shed light on both companies’ tactics. Among other things, they specifically offer insights into Zillow’s efforts to ensure that its source of revenue-generating listings stayed intact.
The documents also hint at how seriously Zillow took the situation, with, for example, one executive — TG Gallaudet, senior director of broker development — pointing out in March that the company was facing “a war where we don’t have many friends.”
The conversations came as Zillow grappled with the proliferation of private listing networks. It’s an effort most associated with Compass and the brokerage’s 3-Phased Marketing strategy, though a number of other brokerages have also rolled out their own such networks.
“We need to give people pause,” Errol Samuelson, chief industry development officer, wrote in a message to other Zillow executives in April.
The ensuing moves kicked off the public fighting in the war that Zillow knew was coming, one that it didn’t want to fight alone, and one that could still decide how real estate listings are marketed in the future.
In December, Inman sent Zillow a series of questions about the documents. This week, the company responded in an email, stating that “exhibits used in this story were selected and provided by the plaintiffs to construct a narrative to support their case, not to serve as an accurate representation of Zillow’s business or strategy.”
“The filings include cherry-picked words from one-off scratch pads and brainstorm conversations that were abandoned without being seriously considered,” Zillow’s statement continued. “Our Listing Access Standards — as announced and widely publicized — are Zillow’s strategy, as multiple Zillow executives testified to in court. The facts conveyed in court tell the real story about how Compass’ leadership intentionally misled its agents, their seller clients, investors and the broader real estate community. Any attempt by them to mischaracterize Zillow documents to promote a narrative is just another example on their growing list of lies and misrepresentations.”
Zillow’s ‘stick’ plans
Among other things, the documents show that in March, while weighing in on a separate debate the company was having, Samuelson laid out the stakes for Zillow when it came to private listings: “Listings are the lifeblood of our company. No listings, no eyeballs, no sales.”
“Even a degradation of our listing content will reduce leads and [Premier Agent] revenues,” Samuelson added. “And we can’t sell Showcase for a listing we don’t have. We lived this reality from 2008 to 2021.”
After months of risk-assessment and preparing for various possibilities, Zillow zeroed in on a strategy: Strike direct listing agreements with brokerages and franchises, announce them, and hope to turn the tide on private listing networks.
By early April, eXp had agreed to a partnership with Zillow that included publicly supporting the portal’s stance on private listings, the documents and ensuing public statements show. EXp CEO Leo Pareja — who has positioned himself as a proponent of publicly shared listings — was enthusiastic about the partnership for multiple reasons, the documents suggest.
“eXp is very excited to do a press release with us,” Samuelson wrote in a message on April 3. “Leo believes he can use the press release to recruit top teams, position it as eXp ‘aligning with Zillow.’ He believes that PAs at companies operating PLNs are worried about the impact of their brokerage’s strategies on their own relationship with Zillow.”
Leo Pareja | EXp Realty CEO
“The moment the release hits he and his recruiters are going to hit the phones to suggest these agents move to a Zillow-friendly brokerage,” Samuelson continued. “Should be interesting to watch this play out.”
The days leading up to the April 10 announcement that Zillow would ban certain listings were filled with internal efforts to bring more brokerages and franchises on board, the documents further indicate.
“Should I be more specific with Anywhere about the ‘not on Zillow, never on Zillow’ in the next convo — or wait for eXp?” asked Jun Choo, Zillow’s Chief Operating Officer, while preparing for an April 8 meeting with Anywhere’s Chief Strategy Officer Eric Chesin.
“Whenever you have next convo, I’d be explicit and show some teeth so he knows we are dead serious,” Jeremy Hofmann, Zillow’s Chief Financial Officer, replied. “The risk to being specific is it gets back to Reffkin. I think that’s unlikely to happen with his competitors.”
Aside from the so-called “sticks,” the documents also include a document describing the “carrot” side of the strategy. In that case, the carrot included “incremental product features for agents and brokerages.”
Finding others
The documents also shed light on how Zillow leadership approached different industry figures.
“I’m not sure how we would say this nicely, but it would be better to have Anywhere not share this with Pam at Corcoran,” Samuelson said in one message included in the documents. “She doesn’t like us, and I wouldn’t put it past her to leak this.”
At another point, Samuelson and Wacksman exchanged texts about Howard Hanna CEO Hoby Hanna.
“He has finally accepted the difficult news that we will require him to adhere to our listing standards,” Samuelson wrote. “At the same time, we are going to provide him with some real commercial benefits.”
And earlier, in March, a broader team at Zillow discussed how they were going to respond to Mauricio Umansky, CEO of The Agency and co-founder of NAR rival American Real Estate Association. Umansky had long been a foe of NAR’s Clear Cooperation Policy and even launched a private listing network called The Pocket Listing Service. But The Agency was also a customer of Zillow’s Showcase product.
The Zillow team viewed Umansky as a friend. Still, the team wondered what it would do about deals it had in place for upcoming events put on by The Agency, the documents show.
“If their individual agents want to buy our products, fine (at least, fine for now),” Samuelson wrote in an email in March. “But there is no scenario where I think we can, with good conscience, send them marketing dollars or do ‘endorsements’ with them.”
Errol Samuelson | Zillow Chief Industry Development Officer
The documents also show that executives agreed that announcing the new policy and the deal with eXp would help secure other deals with major brokerages and franchises, with Samuelson noting in one message that there is “long-standing bad blood” between Keller Williams and eXp.
“They’ll want to ‘neutralize’ any advantage that eXp may have,” Samuelson wrote. “It was clear during my call with KW that they recognize the value in having more FLEX teams.”
Keller Williams, eXp and The Agency didn’t respond to a request for comment.
Zillow executives hoped Anywhere would also sign a deal, which could then be announced and create the appearance of a “snowball” to gain momentum in the public eye and throughout the industry. A message Wacksman sent to other executives on the evening before the announcement said that Anywhere CEO Ryan Schneider had been briefed and was “excited” about the plan.
Elsewhere, the documents reference other companies, including Windermere, John L. Scott, Howard Hanna, West USA and Keyes, and James Dwiggins’ NextHome.
“Bummed he wasn’t a launch partner but he gets it — and isn’t too fussed it’s just eXp and NextHome,” Wacksman wrote in one message, referring to Dwiggins’ company.
What’s the deal?
While it’s not clear how many companies ended up striking deals with Zillow, the documents provide some insight into what the deals might have entailed.
The documents mention, for example, the brokerages providing Zillow with a brokerage-level “feed.”
They also mention that partnering with Zillow would provide an “accelerated path to qualify for Zillow Flex,” an “alternative to combat Compass,” and support for “their brand, recruiting, bottom line, and ability to stand out against noisy competitors.”
In his deposition, eXp CEO Leo Pareja described the agreement as giving him “discounts” on Zillow’s Follow Up Boss for up to three years as part of the agreement.
The documents seem to focus on where consumer leads from the platform are sent. In a deck that was apparently prepared ahead of the Chesin meeting in April, Zillow showed “for Anywhere listings, route interested consumers to excellent agents within your own brokerage.”
One slide shows what appears to be a Zillow Showcase listing agent’s card on the platform. When consumers go to contact the agent, Zillow could send the lead directly to the listing agent, according to the slide. When consumers requested a tour, the slide shows the request would go to an agent participating in Zillow Flex within the brokerage.
Anywhere, the second-largest brokerage by volume, didn’t respond to a request for comment.
Wacksman said in a deposition that the firm didn’t ultimately sign an agreement with Zillow.
In the end, documents filed earlier in the case note that Zillow reached agreements with three brokerages.
The legal conflict between Compass and Zillow remains ongoing and is likely to last for months or even longer — with an outcome that currently remains very much up in the air. But the trove of documents nevertheless provides insights into how the battle over private listings — one of the defining real estate stories of the 2020s — played out behind the scenes.
