Compare Zillow Flex Program and HomeLight

For Sellers

Referred Agents
25%-40%
Referral Fee
Zillow Premier Broker program does not provide real estate services to home sellers. Instead, this program matches consumers with various real estate agents in exchange for a 25%-40% referral fee. Zillow Premier Broker results suffer from pay-to-play bias because the network does not match consumers with agents unwilling to pay a significant part of their commission.

For Sellers

Referred Agents
25%
Referral Fee
HomeLight does not provide real estate services to home sellers. Instead, this company matches consumers with various real estate agents in exchange for a 25% referral fee. HomeLight results suffer from pay-to-play bias because the network does not match consumers with agents unwilling to pay 25% of their commission to HomeLight.

For Buyers

Referred Agents
25%-40%
Referral Fee
Zillow Premier Broker program does not provide real estate services to home buyers. Instead, this program matches consumers with various real estate agents in exchange for a 25%-40% referral fee. Zillow Premier Broker results suffer from pay-to-play bias because the network does not match consumers with agents unwilling to pay a significant part of their commission.

For Buyers

Referred Agents
25%
Referral Fee
HomeLight does not provide real estate services to home buyers. Instead, this company matches consumers with various real estate agents in exchange for a 25% referral fee. HomeLight results suffer from pay-to-play bias because the network does not match consumers with agents unwilling to pay 25% of their commission to HomeLight.
Question: What is the difference between Zillow Flex Program and HomeLight?
Answer: Both Zillow Flex Program and HomeLight function as a referral fee network that enables broker-to-broker collusion with use of blanket referral agreements.
Compare Zillow Flex Program and HomeLight for home buying and selling. HomeOpenly is an impartial and an open resource focused on trending real estate services, portals and start-ups.

First published: 17 February 2019
Last updated: 25 April 2021

Buying and Selling with Zillow Flex Program

Zillow Flex Program is a real estate referral fee network that is designed to collect undisclosed referral fees from real estate agents. Within this network, Zillow Group screens and refers consumers to real estate agents with a pre-existing "blanket" referral agreements. Zillow Group refers to this referral service as a Zillow Flex Program because it allows brokers to participate without paying any upfront costs to Zillow Group.

As a consumer filling out a contact form on the Zillow-owned (Zillow, Trulia, etc.) web site, "you authorize Zillow to make Real Estate Referral and acknowledge Zillow may be paid valuable consideration for facilitating such referral." Zillow Group does not disclose to consumers how much "valuable consideration" it receives from participating brokers. "The established referral fees are specific to each market in order to account for local pricing trends," according to Zillow.

Zillow Flex Program is a form of pay-to-play consumer brokering product that relies on the use of blanket referral agreements to pay for each referral. Blanket referral agreements between brokers are a per se violation of the Sherman Act. With Zillow Flex Program consumers are effectively pre-screened by Zillow and “sold as leads” to whoever is willing to pay for this information with a share of their commission.

Zillow Flex Program Pricing

Zillow Premier Broker does not offer paid services to consumers directly, instead, the portal generates revenue with estimated 25%-40% referral fees from real estate brokers. Zillow Group declines to disclose the exact fee amount.

Listing Services

  • This Service Does Not Represent Sellers

Buyer's Agent Services

  • This Service Does Not Represent Buyers

Zillow Flex Program Editor's Review:

This review is focused on the Zillow Flex Program program only. Two separate reviews are assigned to Zillow Instant Offers and Zillow MLS aggregator programs. Since Zillow was first founded, it has idolized itself as a real estate Internet company. However, with an introduction of Zillow Flex Program in 2018, this is no longer the case.

Today, Zillow acts as a "paper" real estate broker. This fact allows Zillow to receive referral fees from real estate agents across the United States.

Zillow operates under the following real estate brokerage license in the following States:

Arizona CO580407000
California 01522444
California 01980367
Colorado 100080923
Florida CQ1058944
Georgia 76885
Minnesota 40638657
Nevada B.1002277.CORP
North Carolina C30388
Texas 549646
Washington 21212
Wisconsin 835987-91

Real estate agents are allowed to pay one another referral fees with a narrow RESPA provision that is needed to allow individual agents to refer business to other individual agents outside their service area. Despite being registered as a broker, Zillow does not perform real estate services, it simply sends leads to specific agents within its network and uses a real estate license to collect a back-loaded referral fee in the process.

Referral fee revenue is 32x that of a regular advertisement revenue because it results in an economic process called reverse competition, where consumers suffer from elevated costs and lower service as a result. A referral network is anything but free.

The following are some telling quotes from Zillow itself and a Premier Broker program participants. These words speak for themselves.

  • "We receive listing and buyer referrals directly from Zillow's Premier Broker concierge services. These leads have been scrubbed and vetted before they are directly handed off to you." Source: Sonoma County RE/MAX Marketplace, Zillow Flex Program participant.
  • "We will validate all leads first, then send agent-ready buyers to you." Source: Zillow website.
  • "What happens if you miss a call? Don't worry. You won't lose your place in the queue and we will call you with the next connection we validate." Source: Zillow website.

Zillow Group does not disclose the exact amount in referral fees it collects from Premier Brokers, aside from stating that it is an "industry standard." Similar referral fee networks typically receive 25%-40% of the agent's total commission. This is a good reference for the amount in commissions consumers can expect to overpay for their real estate services with a Premier Broker. Zillow Flex Program is a pay-to-play process that harms the industry as a whole and makes buying and selling homes more expensive.

Why does the Zillow allow for such poor UX? There are thousands and sometimes tens of thousands in fees collected from each transaction effectively hidden in consumer’s commission.

Consumers in the United States have been systematically conditioned to a 6% "standard" commission structure, a non-negotiable fact that needs no justification. Unfortunately, this inefficiency alone breeds uncompetitive behavior where real estate agents can easily pay tens of thousands in fees because they are recoverable with a high commission.

Consumers are truly forgotten in this model as an afterthought. When these exigent commissions are amortized over the first five years of homeownership, these fees are the highest single expense line-item - more than the insurance, more than the interest, more than utilities. Clearly, real estate agents only sign-up with Premier Broker because the price of the referral fee can be easily incorporated into their client's agreement with excessive commissions.

RESPA allows for an exception for real estate agents if and only if “all parties are acting in a real estate brokerage capacity" so that individual agents can refer each other when they are out of the local area. This exception has now been turned up-side-down where a referral network does not act in the capacity of a real estate broker. Zillow Group simply uses a license to collect fees without any tangible services done as defined by said license.

Consumers looking to work with a legitimate real estate agent on fair terms should absolutely avoid Zillow Flex Program and never release their full name, email and a phone number to Zillow Group.

The issue of having all US residential real estate markets heavily subjected to these schemes results in noncompetitive behavior, higher costs to consumers and lower quality of service. Having agents "commonly" pay networks 25%-45% of their commission is the true reason why real estate is broken.

Zillow Group matches consumers with "great, amazing, top-producing, perfect agents" based on who first picks up the phone and who is willing to kick in a chunk of their commission, this is the main basis for this process.

What happens when this flawed revenue model is no longer sustainable due to competitive commissions entering the market? The next stage of real estate innovation will have to account for this reality. In play are now competitive open rates, flat fees and buyer’s refunds from highly qualified real estate agents.

Transparent commission rates will eventually bring and end to a pay-to-play phenomenon in the real estate process where programs like Premier Broker simply cannot exist.

Today, consumers should be careful and only negotiate with agents that have no referral fee agreements signed, this is the only way to negotiate for full service at a market rate.

Where does Zillow Flex Program operate?

Zillow Flex Program currently operates in select areas across Fort Collins, CO, Pueblo, CO, New Haven, CT, Norwich, CT, Phoenix, AZ and Atlanta, GA..

Buying and Selling with HomeLight

HomeLight is a referral fee network designed to collect fees by matching consumers with local real estate agents willing to participate. HomeLight operates as a licensed real estate brokerage in California under BRE License #01900940, but it does not produce any services that are typically offered by real estate agents and does not represent consumers when buying or selling real estate in any State.

When consumers submit information to HomeLight, this information is simply sold to real estate agents who are willing to pay for it with a 25% share of their commission.

HomeLight Pricing

HomeLight revenue comes from referral fees and sale of user data.

Listing Services

  • This Service Does Not Represent Sellers

Buyer's Agent Services

  • This Service Does Not Represent Buyers

HomeLight Editor's Review:

On paper, HomeLight seems to have a great idea – to provide its users with a list of the "most effective" real estate agents that are scrutinized across the board to systematically facilitate better offers for sellers and better terms for buyers.

HomeLight states that "our service is 100% free, with no catch. Agents don't pay us to be listed, so you get the best match." Digging deeper into Terms of Service the actual model turns out to be much less effective - HomeLight is a California licensed real estate broker that collects a 25% referral fee from all real estate agents that participate.

This fee makes it hardly a free service for anyone since referral fees are inevitably passed down to consumers.

More importantly, HomeLight applies this pay-to-play bias towards all matching results, meaning, only real estate agents that have agreed to pay a referral fee are displayed in match results for consumers.

HomeLight audits all transactions because it needs to find out how much money real estate agents receive in commissions, inevitably collecting private details of consumer's agreement for home purchase or sale.

HomeLight further claims to produce higher returns to consumers when selling, but there is absolutely no third-party evidence for this. HomeLight algorithm is self-proclaimed and is based on the data derived from MLS past transactions. There are any number of factors that affect the actual home value with no proven correlation to agent representation. In order to select a proper real estate agent, consumers need an open and a transparent information process that HomeLight is unable to provide.

HomeLight plays fees down to consumers - it states directly that the service is 100% free, but at the same time, it rigidly locks every participating real estate agent into 25% referral fee attached to the back-end of every contract. As a licensed real estate agent that doesn't perform any real estate services or takes any responsibility for the transaction, it is not entirely clear how this process works under the Business and Professions Code and RESPA.

Clearly, real estate agents only sign-up with HomeLight because the price of the referral fee can be easily incorporated into their client’s agreement with excessive commissions.

HomeLight receives the second lowest score because this service is clearly biased and it claims to provide the complete opposite of what it actually does. HomeLight has presented the following facts prior to the review getting published, but did not respond with any comments. HomeLight must be well aware of this issue but continues to operate on pay-to-play methodology in order to collect fees that needlessly make home buying and selling more expensive.

HomeLight Simple Sale™ Product

HomeLight further offers consumers a connection to local real estate developers that buy and flip homes for profit. According to the company, the majority of Simple Sale developers are only interested in purchasing off-market homes. HomeLight itself admits that 91 percent of sellers choose a real estate agent to list their home on the open market, but that does not stop it from an attempt to offer your information to developers as well.

HomeLight states it will show the seller their best iBuyer offer against an estimation for what they can sell a home in an open market with the help of an agent. The reality is HomeLight doesn’t care how your home is sold, as long as it receives a fee for directing you one way or another. It costs absolutely nothing to HomeLight to offer you a bad deal on selling your home to a real estate developer because this company is a referral fee network that is primarily interested in connecting consumers to anything that pays them a fee.

HomeLight does not state how much developers and iBuyers pay them for each successful lead, but according to third-party sources, HomeLight receives a 4% commission from the total value of your home. Remember, this fee comes from the real estate developer, so HomeLight for all practical reasons, works for that developer, not you. A developer will know that your home is off-market and it costs them absolutely nothing to give you a severely underpriced offer.

Typically, iBuyers cost consumers about 15%-20% of net equity from the home sale, when accounting for all fees and reduced cash offer against your home’s true value. Most developers will not take anything less of a 30% margin below market. The reason is developers experience high risks and double transaction costs when making an offer on your home, and HomeLight’s 4% commission on the sale is a very real closing fee to account for. The bank, on the other hand, does not care how you sell your home or for how much. Your mortgage company receives the same amount from the sale of your home, so these all excessive costs work directly against your net equity as a seller. If you are seriously considering Simple Sale offer made to you using HomeLight, the best way to approach it is with your own real estate agent who does not pay any referral fees to HomeLight.

Of course, matching you with a competitive agent to list your home on the open market is something HomeLight is not built for. Remember, HomeLight is a broker that is interested in receiving a referral fee for any match. If HomeLight does not receive payment of some sort from a broker, you will never see them on their platform. When you use a broker sent to you by HomeLight, you are paying for two brokers.

Consumer Steering

Some consumers who receive a recommendation for the three local HomeLight partner agents will often proclaim that the process of selecting a Realtor is very simple and that they have experienced excellent results.

The question stands, why doesn’t the editor’s review for HomeLight extend a similar recommendation? The difference is that the editor’s review focuses directly on the quality of HomeLight brokerage as an information channel, while most consumers tend to combine HomeLight brokerage with an experience provided by HomeLight partner brokers into a single experience. From an editor’s perspective, these are not the same.

The way consumers find a real estate professional must be unbiased and free from pay-to-play incentives in order to be considered as a quality channel.

HomeLight brokerage offers an excellent channel that proactively steers consumers toward a highly selected pool of partner brokers who have a blanket referral agreement with them, in an exchange for a significant share of their commission.

This is a very different experience than having to genuinely rate local agents and offer an unbiased recommendation. HomeLight has a direct financial incentive to steer consumers toward brokers who charge higher commissions.

Moreover, HomeLight brokerage operates by excluding itself from the competition with partner agents. In the United States, it is unlawful for real estate professionals to allocate consumers or organize into broker referral networks by means of blanket referral agreements.

HomeLight is a brokerage and it must compete with other brokers, instead, the company organizes brokers into a network in order to receive a cut of their commission. Real estate professionals working with HomeLight no longer compete for consumers, but rather compete for HomeLight to steer their business.

HomeLight consistently applies a logical fallacy called “Appeal to Authority” where it states that their partner agents are the best simply because the company has done some sort of “black box” research without actionable reasoning to support the claim. HomeLight algorithm is biased by default, simply because it will only match consumers with partner agents, and not all local agents.

HomeLight cannot actually rate all local agents and publically disclose this data, simply because agents who are rated badly will argue that the system of rating is flawed – not all transactions are recorded in the MLS, it is impossible to truly determine the quality of agents based on data provided in the MLS, some agents will underprice homes to sell them quicker, etc. Consumers are legally allowed to rate their experience with services in the United States. Unbiased channels such as Yelp! freely offer unbiased medium with good information where brokers cannot buy their recommendations with referral fees, or offer consumers gift cards to write reviews.

HomeLight only offers three best choices, simply because these agents will not argue with that determination, in fact, they are willing to provide a kickback of their commission for the privilege.

All of these reasons combined are why the editor’s review rating is so much different from positive consumer reviews. The editor’s rating focuses on the fairness of the process, rather than the individual outcome. In order to promote fair practices in the industry, we place a very different value on pay-to-play steering vs. unbiased match results.

Is HomeLight Free?

HomeLight often proclaims that its “service is 100% free.” We find this statement to be false. HomeLight is not free, in fact, this “paper” brokerage adds unnecessary referral fees into transactions that make it more expensive to buy or sell any home.

Eventually, HomeLight is a brokerage and their fees are paid by consumers with higher commissions. HomeLight further claims that “agents don't pay us to be listed, so you get the best match.” This is a use of a “Modal Logical Fallacy” because it specifically concludes that because something is true, it is necessarily true, and there is no other situation that would cause the statement to be false. Simply because agents don’t pay HomeLight to be listed, doesn’t mean that agents don’t pay HomeLight at all. In fact, HomeLight actively steers consumers toward agents who pay them, just after the transaction.

As of 2019, HomeLight claims to have made a successful match for about 390,000 people with agents. The median home price of a home in the United States is about $230,000. Multiplying the two figures yields about $100 Billion in home sales. Assuming a 5-6% commission, this yields about $5 to $6 Billion in real estate commission business generated nationwide. In the recent Crunchbase article HomeLight claims to have “driven well over $17 billion of real estate business nationwide,” which indicates that HomeLight works with homes above the median price. Simply stated, HomeLight has collected a “standard” 25% referral fee on commissions valued anywhere from $5 to $17 Billion since its inception in 2012.

This yields a mind-blowing estimate set at $1.25 to $4.25 Billion in commission kickbacks paid to HomeLight from participating brokers across the United States. Almost all of it is profit since HomeLight doesn’t perform any services typically offered by real estate brokers.

HomeLight advertises a 100% free service, yet it subjects consumers to Billions in added fees in one of the most important transactions of their lives.

Where does HomeLight operate?

HomeLight currently operates in select areas across United States.