Jay Thompson is a former brokerage owner who spent over six years working for Zillow Group. He retired in August 2018 but can’t seem to leave the real estate industry behind. His weekly Inman column publishes every Wednesday.
Zillow’s September 2020 announcement created tremendous buzz in the industry. Headlining that announcement was it would be hiring licensed agents to handle its internal iBuying listings and sales.
If people read beyond the headlines, they would have seen more to that announcement than hiring a few agents. Buried deep was this little tidbit:
“As part of the change, Zillow will also be changing its backend and switching to an IDX feed, which will allow data to flow to and from the company to each local MLS. Previously, Zillow’s real estate portal was populated by listing through a number of disparate agreements between brokerages, franchisors and MLSs.”
Very few people paid any attention to this upcoming change.
My Inman column published two days after the Zillow announcement was titled “Agents, you’re missing the point with the Zillow news.” The Zillow announcement’s major news was not that it would be hiring agents to sell its iBuying listings. Although that got many agents ramped up into a frenzy, the most significant change — securing its listing via IDX — went almost unnoticed, misunderstood or deemed insignificant. It’s far from trivial and equally far from doom and gloom.
Now that the switch to IDX is here, let’s talk about what this means for agents.
What is IDX?
IDX is short for internet data exchange. In simple terms, IDX is how listing data gets from an MLS to an agent, broker or franchise website. If you have a home search on your website, it’s powered by IDX. There are policies and rules established by the National Association of Realtors (NAR) on how IDX can be used. NAR’s IDX policy, along with section 18 of the Handbook on Multiple Listing Policy, spells out in great detail what, why and how IDX can be used.
Based on my experience as an agent, a broker-owner, a Zillow employee, and several years member of NAR’s Multiple Listings Issues & Policy Committee, I’d say the percentage of Realtors who have read all of these documents is quite close to zero. You really should take the time to understand how MLSs and IDX work.
But didn’t Zillow always use IDX?
No. Until this week, Zillow never used an IDX feed to get listing data. Zillow got its listing data from direct feeds with MLSs, brokerages and franchises. Importantly, this is not the same as using IDX — all those policies and handbooks listed above apply rules to IDX feeds, not direct feeds. The rules that govern direct feeds are codified in the data-sharing agreements made between Zillow and the feed providers (600 some-odd MLSs and thousands of brokerages and franchises.)
Herein lies why using IDX versus direct feeds is such a big deal for Zillow and agents, brokers, franchises and MLSs.
Every single one of these data agreements has to be negotiated, codified and implemented. And when the data agreements reach their end dates, they have to be renegotiated, recodified and reimplemented. A single data agreement can take weeks to negotiate and implement. And it takes thousands of data agreements to populate a nationwide listing display.
In other words, it’s an obscene amount of time, labor and work to maintain thousands of data feeds. Agreements aside, every single feed is also a potential failure point. It’s not just work on the data receiver’s (Zillow’s) side, but it’s also work for the feed provider (MLSs, brokerages, franchises) as well.
Condensing thousands of independent data feeds into 600 or so IDX feeds using the same policies and rules vastly simplifies the effort involved for everyone. All the time, resources and money spent on maintaining data feeds can now be better used by everyone.
Won’t this change how Zillow displays listings?
Yes, it will. By using IDX feeds, Zillow has to agree to display listings per IDX policy and local MLS regulations. The most significant change is probably that Zillow won’t be able to display its advertising agents prominently on a listing display.
Despite what some of the devout Zillow brand detractors want to believe and will tell you, Zillow has always displayed more info on listing agents than is required by IDX rules. Right now, Zillow is still displaying both the listing agent and brokerage name, just underneath the property description.
IDX rules only require the listing brokerage to be displayed, and many IDX-enabled sites leave off the listing agent and bury the brokerage name well down the listing page. One can always display more than IDX rules require, but not less.
How can Zillow have a form that sends contacts to a non-listing agent?
Wade into an online discussion on the evils of Zillow, and you’re sure to see the argument, “Zillow steals our leads! How in the world can it send inquiries on a listing to some other agent?!?”
It does it the same way every other IDX-enabled website does. Go to any brokerage, agent or franchise site, and you will see listings from every other brokerage or franchise. KW shows RE/MAX listings. Century 21 shows KW listings, and on and on. If a consumer completes a form on a listing page, does KW send it to the RE/MAX agent? Does C21 send it to KW? Of course, they don’t, and they never have.
Nothing changes here with IDX implementation. Agents, brokerages, franchises and portals, such as Zillow and realtor.com, can send consumer inquiries to anyone they choose.
Does Zillow have to be a member of an MLS to get an IDX feed?
Yes. IDX use is limited to MLS participants. So Zillow will have to join your MLS to receive its IDX feed.
Does Zillow have to join NAR?
Some MLSs require NAR membership; some do not. Because Zillow is joining MLSs, it’ll also have to join NAR. A quick search of the NAR member directory confirms it is already a member in many locations.
If Zillow is a member of NAR, will it have to uphold the code of ethics?
Of course. No NAR membership category says, “the code of ethics doesn’t apply here.”
If it violates the code of ethics, can I file a complaint?
Of course. Use whatever procedure is in your area. Like any ethics complaint, you’ll have to specify which article of the code it is violating, with evidence to support that claim. Remember, “I hate it and its business model” is not a violation of the code of ethics.
Can I opt-out of displaying my listings on Zillow?
Yes, if you opt-out of IDX entirely. Doing that means you can’t put any IDX listings on your site, regardless of the source. It also means your listings won’t be displayed on any IDX-enabled site. IDX rules don’t let you pick and choose which brokerages and MLS participants can display your listings. The Department of Justice and antitrust and restraint of trade laws frown on that sort of thing.
Like it or not, Zillow now has brokerage licenses in all 50 states and D.C. It’s currently displaying listings pulled from IDX feeds, not individual data-sharing agreements. It has the same listing info and quality you will find on any agent, brokerage or franchise site. It is an NAR member, and the same code of ethics that applies to you applies to them.
At some point, it will also become the broker of record on homes it purchases and relists through its iBuying arm, Zillow Homes.
I doubt (but, of course, I can’t promise) that you’ll see “Zillow Realty” offices springing up in strip malls, nor will it broker listings not its own. There is no sea of Zillow buyer’s agents descending upon the general population.
This switch to IDX is a big deal for Zillow. It allows the company to display the same listing data the rest of the industry displays. Gone are the days when some would complain about Zillow’s data quality. Once the bugs are worked out, Zillow will no longer have to spend the time and resources managing thousands of feeds — it can put that time and resources into improving their products and websites instead.
Some probably find that prospect frightening. Some probably don’t like “the enemy” being in their NAR club. But no app, no website, no brokerage is going to put you out of business.
Go forth, serve your customers and prospects well. Focus on them, not on Zillow getting IDX and brokerage licenses.
Jay Thompson is a real estate veteran and retiree living in the Texas Coastal Bend, as well as the one spinning the wheels at Now Pondering. Follow him on Facebook, Instagram and Twitter. He holds an active Arizona broker’s license with eXp Realty. “Retired but not dead,” Jay speaks around the world on many things real estate.