Those not willing to pay more for exclusivity must accept ads for competing agents on their listings.
When Zillow told New York City-based brokerage CORE in December that the price of "featuring" its listings on the portal in 2015 would be four times what it paid in 2014, the company decided to cancel its ad spend.
Instead of paying to feature listings on the site -- blocking advertisements for competing agents in the process -- the brokerage transitioned to Zillow's free Zillow Pro for Brokers program. While that move opened up dozens of listings marketed by CORE's 113 agents on Zillow to ads from other agents, participating in the Pro for Brokers program does provide some additional branding, CORE Executive Vice President Doug Heddings told Inman.
CORE's not alone in having to devise a strategy to address rising ad rates on Zillow, Trulia and realtor.com, real estate's most popular search sites for consumers.
Inman talked to five brokerages that have recently negotiated new contracts with one or more of the big three portals. All of them said ad rates are on the rise -- particularly on Zillow and Trulia, which appear to be playing catch-up with realtor.com.
Brokers who find themselves in similar situations can either pay higher prices for exclusivity, accept ads for competing agents alongside of their listings, or pull their listings altogether. Not an easy choice for many.
While real estate agents and brokerages love to complain about the portals, most have been loathe to break off relations entirely, because many sellers expect their homes will be marketed on the sites.
When brokerages pay for their listings to be "featured" on Zillow and Trulia, they prevent ads for buyer's agents (left) from appearing alongside of those listings. When they pay to "enhance" listings on realtor.com, inquiries submitted through unbranded lead forms that appear next to listings (right) are directed exclusively to the listing broker, and not to competing agents or brokers.
The scale of price increases is hard to pin down. While Inman found only five brokers who say prices are rising, industry scuttlebutt suggests portals are seeking price increases on a more widespread basis.
Zillow Group, which took questions on behalf of both Zillow and Trulia, wouldn't say if the portals were indeed raising prices across the board for brokerages to feature their listings.
"We develop our product pricing differently in every market depending on a variety of factors," Zillow Group spokeswoman Amanda Woolley said. "We also have many unique partnerships that are tailored to meet our partners’ specific needs, of which we don’t discuss the terms of."
If prices are rising, the reasons aren't clear.
But it's well documented that the big three search portals can't sell ads or generate leads for buyer's agents on a significant chunk of their listings, thanks largely to enterprise-level featured listing deals they've signed with brokers and franchisors.
Listing brokers and agents were paying to "enhance" 42 percent of listings on realtor.com, and site operator Move Inc. was looking into raising prices for its Showcase Listing Enhancements ad product, Move CFO Rachel Glaser said last year on a conference call with investors.
Like Zillow, Move declined to answer detailed questions from Inman about its pricing.
"There’s no apples-to-apples comparison when it comes to features and pricing models across the different real estate experiences," Move spokeswoman Lexie Puckett told Inman. She added: "Realtor.com attracts the most transaction-ready consumers, and as a result provides brokers and agents with the highest-quality leads and conversion rates."
Between 45 and 55 percent of listings displayed on Zillow don't display ads for competing buyer's agents, according to a study conducted last June by PAA Research, a firm that provides insights to stock market investors.
By prying brokerages off of their listings, Zillow could open up more ad inventory for its breadwinners: agents.
The $239 million that agents paid Zillow for exposure on the portal last year accounted for nearly three-fourths of the company's total revenue. By comparison, display revenue, which includes revenue from broker- and franchisor-level ad deals, totaled just $58.7 million. (Whether ad prices for agents are also headed up will be the subject of a future Inman report.)
There's a chance that ad products for brokers and agents will look considerably different at the end of the year when the portal landscape's current upheaval settles down. Zillow Group has been digesting Trulia for less than a month, and News Corp. is still in just its third month of ownership of Move.
In a recent Inman guest column, James Dwiggins, CEO of the new franchise brand NextHome, noted rumors have been flying for months that Zillow Group might discontinue broker- and franchisor-level featured listings altogether later this year.
Just raising prices could have unintended consequence for the portals, Brian Boero, the founding partner of real estate design and consulting firm 1000watt, noted in a recent blog post. If the price of featured listings on Zillow, Trulia and realtor.com goes up, that could push brokers to search for a new outlet, such as a national broker portal project currently in development.
Responding to rising prices
In all, Inman spoke to five firms that have recently negotiated renewals of their featured listing ad contracts with at least one of the big three portals.
Executives at all of the firms except CORE asked that their firms remain anonymous because they were either in negotiations with one or more of the portals, or expected to be soon.
The firms that recently negotiated ad contracts with Zillow or Trulia began those talks before Zillow completed its acquisition of Trulia last month -- the price increases they agreed to don't cover both sites. Some of the firms are still in negotiations with Zillow or Trulia.
At some point later this year, Zillow Group, the new entity that houses both Zillow and Trulia, will begin offering a single set of ad products to brokers and agents that will cover both portals, but the firm declined to specify whether new contracts Zillow or Trulia sign with brokerages now cover listings on both portals.