In 2021, Zillow made the switch from individual syndication agreements with brokerages to IDX feeds, allowing it to obtain data directly from MLSs. In court filings in the REX Homes lawsuit, which stems from Zillow’s adoption of IDX feeds, Zillow referred to IDX feeds as the “gold standard source of listings data.”
But if the majority of consumers decide to utilize the new delayed marketing option for their listings, the IDX feeds supplying portals with the latest listings may run dry.
“This will for sure impact them,” said John Campbell, an analyst at Stephens. “But as of right now, we have no idea of how to even size up how impactful that is going to be. Are they going to lose 1% of listings or 40%?”
In a note published this week, Campbell and Stephens associate Oscar Nieves said that it remains to be seen how different MLSs (who have the choice of how long sellers are allowed to delay the marketing of their listings via IDX feeds and syndication) will respond to the new rule.
But while portals like Zillow and Homes.com currently rely upon IDX feeds for listing data, they do have another option.
VOWing to find a solution
Prior to IDX feeds, virtual office websites (VOWs) were the first iteration of brokerages putting listing data online. Unlike IDX feeds that go to open, public-facing websites, consumers need logins to access VOW feeds. These can be provided by their broker.
While sites like Zillow and Homes.com may not have agents hanging their license with them, they are licensed as brokerages, providing them with access to VOW data feeds.
According to a NAR FAQ, delayed marketing listings may be shown on a VOW display. It explains that the purpose of these types of displays is not to advertise properties but “rather to help with the provision of brokerage services to consumers with whom there is an established broker consumer relationship.”
Additionally, NAR notes that MLSs are not able to exclude delayed marketing listings from appearing as part of VOW data feeds. This means that if a portal with a brokerage license chooses, it can transition to a VOW display with minimal interruption to the flow of listings coming to its site.
“They could make the change in a heartbeat,” said John Heithaus, an industry consultant and former chief marketing officer for Bright MLS. “I think if they decided to make the change at lunchtime today, they’d have it done by the end of day and be able to bypass the IDX hurdle. If they decide to do that, I feel like the impact would be pretty minimal.”
Ryan Tomasello, an analyst at Keefe, Bruyette & Woods (KBW), shares a similar view that this type of change would be simple for many of the portals to pull off. But he also thinks it will ultimately come down to execution.
“It will in part come down to how easy it is for the portals to still display these delayed marketing exempt listings without causing too much friction for their users,” Tomasello said, referring to consumers needing credentials to use a VOW site.
Additionally, Tomasello noted that the stringent requirements surrounding a VOW setup may make the consumer experience on portals a bit clunkier than they are accustomed to.
New competition in the portal wars
Heithaus acknowledged that it’s no secret that Compass, one of CCP’s biggest critics, wants to build out their own consumer-facing listing portal.
“They want to draw consumers in by saying, ‘Hey guys, this is the secret cool kids club. If you want the freshest listings, you have to come to us,’” he said. “But competing with Zillow — are you kidding me? The vast majority of time, when people want to look for real estate, they go to Zillow. You can’t compete with that.”
KBW analysts have a similar take.
“Though some agents and brokerages might be reluctant to share listings with Zillow, the company’s dominant traffic might not leave them much choice,” KBW’s Tomasello, Bose George and Jade J. Rahmani wrote in a March 27 research spotlight.
“Of note, before the industry moved to IDX feeds that syndicated all listings automatically, Zillow still had over 90% listing coverage by negotiating disparate feeds from individual brokerages.”
Also complicating any potential competition with Zillow is Rocket Companies’ recent entry into the portal wars through its acquisition of Redfin. With its large market capitalization rate and sizable marketing budget, it should not be ignored as a serious contender in this space.
Going straight to the source
Although some brokerages may choose to create their own listing portals if they choose to lean heavily into delayed marketing listings, not all firms have the bandwidth, funding or desire to compete with brands like Zillow, Rocket or CoStar.
In these instances, industry analysts believe some firms may choose to strike up independent agreements with a portal to post their listings on the site if the seller agrees to it.
“Near term, Compass’s aggressive push with Private Exclusives could present catalysts for the portals in the form of exclusive partnerships — whereby Compass feeds these listings exclusively to a specific real estate portal,” Tomasello, George and Rahmani wrote in their report.
Due to Homes.com’s “Your listing, Your lead” model, which they feel is friendlier to listing agents than Zillow’s Premier Agent lead generation system, they believe Homes.com may have an advantage if this becomes an industrywide practice.
“Compass’s market share stands at roughly 5% and the company is targeting 30% market share in its top 30 MSAs by the end of 2026. Compass has also been acquisitive, which could drive accelerated share gains,” the KBW analysts wrote.
“This suggests that an exclusive deal between Compass and a portal could provide nontrivial unique supply advantages. Following NAR’s new ‘Multiple Listing Options for Sellers’ policy, other brokerages may be inclined to explore similar strategies.”
Ball is in the consumers’ court
While much of the focus on how things play out with NAR’s new policy is on industry players, analysts advise not to discount the role of the consumer in the transaction.
“I feel like the power of the consumer is something that I think gets lost in some of these more aggressive viewpoints around how market structure could evolve so meaningfully toward exclusives or delayed listings,” Tomasello said.
If a seller wants to use a delayed marketing strategy, they will be required to sign a disclosure stating that they’re aware of what they’re agreeing to in the marketing of their property.
“You are going to have a consumer that is now required to sign yet another form that they don’t really understand, and this is why consumer campaigns will matter,” Campbell said.
Although Campbell agrees that it will ultimately come down to consumer decisions, he feels that more delayed listings will come from agents who oppose CCP versus those who support it. The agents who dislike CCP may push the delayed listing option more heavily in their listing presentations.
“It will be a mirror reflection of any survey data you collect. Geographically, where there is a high concentration of agents who are against CCP, we’ll see more of these delayed listings,” Campbell posited.
“Places like San Francisco — where brokerages who are against CCP, like Compass, have significant market share — those will be hotbeds for this. I would not be surprised if the portals, assuming they are still on IDX feeds, all of a sudden have far less inventory than what is actually available in markets like these.”
The jury may still be out on how consumers will respond to their new marketing options. But Tomasello doesn’t think this new policy should cause the listing portals to immediately panic.
“I find it hard to just buy into this very aggressive view that the industry is moving in a direction that disintermediates the portals,” Tomasello said. “I find it hard to imagine how portals still don’t play a very material role in capturing a nationwide audience with their funnels.”