Zillow Flex is a lead generation option for Zillow Premier Agents that allows them to receive Zillow leads without paying any upfront cost. Real estate pros who use it only pay Zillow after a transaction successfully closes. However, participating agents report Zillow Flex costing anywhere from 25% to 40% of the gross commission.
So is it worth it? Zillow Flex is not the first program to offer this referral-style lead generation option, but the major difference is that Zillow has unrivaled home search traffic and consumer adoption. In this article, we’re going to examine Zillow Flex, explore its pros and cons compared to Zillow Premier Agent, and see if paying Zillow up to 40% of your commission is worth the leads.
What Is Zillow Flex?
Zillow Flex is an invitation-only, pay-at-closing lead source exclusively for Zillow Premier agents. The percentage of commission Zillow Flex agents pay if and when the lead closes on a property ranges from 15% to 40%, depending on both the transaction price and your market. Zillow reserves the right to change the percentage at any time. You can view the pricing for specific markets on Zillow’s state-by-state Flex pricing page.
Zillow Flex vs Zillow Premier Agent
|Zillow Flex||Zillow Premier Agent|
|Availability||Multiple markets across the country||Everywhere except Atlanta and Phoenix—Flex is the only option in these markets|
|Upfront Cost||Nothing||$300-$1,000 per month* for a typical user|
|Final Cost||15%-40% of commission||Nothing additional|
|Who Can Participate||Invitation only for Zillow Premier Agents||Anyone|
*Costs associated with Zillow Premier Agent are approximate. To learn more, read our review of Zillow Premier Agent.
Zillow Flex Pros & Cons
The Case for Using Zillow Flex
Zillow Flex might be exactly the lead generation technique you and your business have been waiting for. Here are three reasons why you should consider using it.
1. Leads With No Upfront Cost
Success as a real estate agent can be a bit of a chicken-or-egg scenario: It’s hard to get leads with no budget, but it’s hard to have a budget if you don’t first have leads to turn into closed sales. Zillow Flex solves this problem by allowing agents to pay after a lead has turned into a sale.
Sure, you’re going to make less on each closed sale, but some is better than none, and if you’re new to the biz, the experience is nearly as valuable as a commission check.
2. If You’ve Got a Big Profit Margin, This Is a Nearly No-risk Option
If you’ve got a strong system in place that yields high profit margins but just not enough leads to fill your time, Zillow Flex is a great option.
This is especially true for agents leading a team. Maybe you’ve got buyer agents without enough clients to keep them busy. These agents would probably rather work for a little less profit than sit in the office not working at all. Zillow Flex allows you to capture leads that you can use to fill out your team’s calendar without having to invest extra team resources to get them.
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3. A Viable, Scalable, Brokerage Lead Generation Model
If you’re a broker looking to provide extra value to the agents in your brokerage, being a part of the Zillow Flex program could be just the ticket.
By buying into Zillow Flex at the brokerage level, you could absorb half of the Zillow Flex referral cost, then ask the agent to cover the rest. Once an agent hits their cap, you can pass along the entire lead cost. This model would allow you to scale more agents toward hitting their cap goals and supporting the overall health of the business as well as the success of the real estate agents in your firm.
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The Case Against Using Zillow Flex
It’s true: Zillow Flex isn’t the best option for everyone. Here are three reasons why this program might not be ideal for your business or even the industry at large.
1. These Leads Are Expensive
As paid lead generation goes, these rank as some of the priciest. The cost-per-lead formula that you use on other platforms can’t be applied here because you’re actually not paying for leads—you’re paying for closings.
Here’s an example of what I mean: If you’re a standard Zillow Premier Agent, you’re paying for leads upfront through a monthly package. Let’s say the following conditions are true:
- Your monthly spend with Zillow is $4,000, and that nets you 20 leads a month
- The typical sale price for a home in your market is $300,000
- The typical commission you get for selling a home is 3%
- Your typical closing rate for Zillow Premier Agent Leads is 5% (one out of every 20 leads converts within 90 days of reaching out)
- Your typical nurture rate for Zillow Premier Agent Leads is 10% (two out of every 20 leads converts within one year)
If all of this were true, you’d be paying $200 per lead. If you’re closing one out of every 20 leads presented within 90 days, your cost per closing is $4,000. Given a typical commission of $9,000 ($300,000 x 3%), your cost per closing with Zillow Premier Agent is 44% of each commission.
But, when you factor in the nurture leads that will close within a year, your cost per closing drops to $1,333, or 14.81% of each commission. Plus, you still have the other 17 leads you’ve collected over that time period to keep in your database, continue to nurture, and possibly convert into clients down the road.
Zillow Flex Pricing
Remember, this program is only available for Zillow Premier Agents who are already paying Zillow hundreds (if not thousands) per month. But keep in mind that when you’re using Zillow Flex, you don’t get any of the back-end benefits of the leads you receive. You get a single lead, and if it closes, you pay on it. Your future benefit of Zillow Premier Agent using Zillow Flex is then limited to the possible repeat business from the lead Zillow provided, as well as any referrals they could send your way.
The Zillow Flex fee ranges from 15% to 40%. Using the scenario described above, that means that you’re paying anywhere from $1,350 to $3,600 for each typical closed deal. The math is pretty clear here: Zillow Flex leads are significantly more expensive than traditional Zillow Premier Agent leads. Yes, the risk is lower since you’re not paying for them unless they close, but with lower risk comes a substantially lower reward. And there are plenty of competitors in the space if you’re looking to buy real estate leads.
2. Flex Consolidates Zillow’s Control Over the Industry
The real estate industry is already wary of the influence a single company has over the livelihood of more than 2 million active real estate agents. Zillow Group already owns ShowingTime and Dotloop. Also, Zillow Home Loans has been gaining traction. Zillow Flex is yet another way to tie agents into the Zillow ecosystem—one which has become increasingly difficult to avoid.
Becoming a Flex agent locks you in perhaps even further than Premier Agent. With Zillow Flex, you’re locked in a contract for a minimum of one year. Zillow also has strict performance standards for agents to meet, such as sending a quarter of your interested clients over to Zillow Home Loans, and verifying that you directly ask your clients for an appointment. This is done with natural language processing call listening technology.
With the incredible market share advantage Zillow has in terms of consumer web traffic, the idea of the company becoming a full-fledged broker is concerning. It could give them an even more powerful position in markets across the country, making competition very difficult.
3. Zillow Flex Could Shrink Real Estate-supported Industries
With a lower profit margin on sales, Zillow Flex agents will have less discretionary income to spend on products and services they use to support their work. When agents have less to spend on things like marketing, you can expect to see a decrease in professional photographer contracts, less frequent professional staging, and so on.
For the photographers, videographers, drone pilots, stagers, and other professionals who depend on real estate agents as clients, this could be bad news.
So, Is Zillow Flex Worth the Hefty Referral Fee?
Given all we’ve learned about Zillow Flex, the feedback we’ve gotten from agents who’ve used the program, and the implications of transitioning to Zillow’s referral-based fee model, Zillow Flex isn’t worth the sizable referral fee for most agents. In fact, I’ll go as far as saying that Zillow Flex isn’t a net positive for the real estate industry as a whole.
That’s not to say that there is no application for their program. There are certainly real estate professionals out there whose pool of resources necessitates a lead source with low or no upfront costs. Also, there may be instances when established agents, teams, and brokers will look to Zillow Flex as a means of expanding with little risk to their underlying business.
At this point, Zillow isn’t going away—after all, consumers love being able to virtually snoop out potential homes without an agent. Zillow has refocused its efforts after losing $881 million in 2021 on their iBuying venture. It’s now positioning itself as a “housing super app.” We can expect to see Zillow and its tools continue to become integrated with agents across the country.
If you’re a real estate pro who is already on Zillow Premier Agent and gets invited to be part of Zillow Flex, it may be a way to beef up your business. However, for the majority of agents, in the long run, I believe Zillow Flex isn’t the best choice for building a scalable, long-lasting real estate business.
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Alternatives to Zillow Flex
If you’re not already a Zillow Premier Agent or don’t want to fork over your commission to Zillow, check out our top three alternatives for pay-at-closing leads:
- Best for: Agents seeking prequalified buyers with high conversion rate
- Referral fee: 1% of estimated home value or 25%
- Qualifications: 24 months of experience, minimum eight closed transactions in last 12 months
Rocket Homes is an offshoot of Rocket Mortgage. This program matches prequalified buyers with agents in their area. Because these leads have expressed interest in financing, they are considerably more likely to convert quickly and easily.
Pro: High-value, prequalified leads and a transparent dashboard
Con: Need to maintain a 4.5 rating in their system and work the leads you’re provided quickly and consistently
Learn More About Rocket Homes
- Best for: Tech-savvy agents with experience
- Referral fee: $3,000 (if sales price is less than $350,000) or 1.5% of sales price
- Qualifications: Three years of experience, six transactions in 12 months, & tech-savviness
UpNest is going to be more of a partnership than our other alternatives. Along with high-converting leads generated via consumer-focused marketing, the company offers robust tools and resources to help you bring prospects to the closing table. Like Zillow Flex, you’ll need to keep UpNest posted on the leads you’ve been sent. However, the flat fee could be more or less than Zillow Flex, depending on your market.
Pro: Great resources, dashboard, and mobile app for agents
Con: Three to five agents compete for each lead based on commission rate and reviews
Check out UpNest
- Best for: Agents looking for flexible referral leads
- Referral fee: 25-35% of commission depending on your market
- Qualifications: Undisclosed; the sign-up process is quick but onboarding depends on how many agents are already in your area
If you’re looking to get started working with pay-at-closing leads but don’t have the qualifications to start elsewhere, this is the one I’d recommend. Similar to UpNest, Agent Pronto leads aren’t exclusive, because leads get sent a few agents to choose from. Because of this, you have less ability to convert these leads. However, your referral fee will most likely be less than Zillow Flex.
Pro: Easy sign-up and lower referral fees than others on this list
Con: Leads aren’t exclusive
Visit Agent Pronto
Bringing It All Together
What do you think about Zillow Flex? Are you excited about this option coming to your market, or is this a big no-go for you? Tell us about your thoughts and experiences in the comment section below!