Zillow Flex program and Home Loan Referrals: A Closer Look
The zillow Flex program, designed to connect agents with potential clients in exchange for a portion of their commission (typically 25-40% upon closing), is facing scrutiny over its requirements regarding referrals to zillow Home Loans (ZHL). Recent reports indicate a tightening of rules concerning how agents connect homebuyers with financing options.
Initially, participation in the Flex program required prospective buyers to simply have a brief phone call with a ZHL agent. However, agents speaking to The Capitol Forum report that Zillow has recently increased this requirement, now mandating that roughly 10% of leads generated through the program obtain a mortgage preapproval.
This preapproval requirement is tied to an agent’s standing within the Flex program. Teams failing to meet the quota of preapprovals risk receiving fewer leads, and repeated failures can lead to removal from the program. Conversely, teams exceeding the requirement are reportedly rewarded with increased lead volume and quality. Zillow maintains a team leaderboard ranking agents based on predicted conversion rates and the number of ZHL preapprovals secured.
Agents interviewed expressed concerns that this system incentivizes steering homebuyers towards ZHL, potentially violating the Real Estate Settlement Procedures Act (RESPA) due to a lack of disclosure regarding the financial incentive.They feel “forced” to connect buyers with ZHL services. Concerns were also raised about potential financial disadvantages for buyers, particularly first-time homebuyers, who may miss out on rebate programs or alternative mortgage products offered by other lenders.
Furthermore, Zillow requires agents to manage Flex leads through the Zillow app or Follow Up Boss, a CRM platform owned by zillow Group, leading to concerns about increased oversight of agent-buyer interactions.
In a statement to HousingWire,a Zillow spokesperson emphasized the company’s commitment to consumer experience,clarity,and operating in compliance with applicable laws. The spokesperson stated that Zillow prioritizes providing consumers with facts and services they request throughout their real estate journey and that the program considers multiple factors beyond preapprovals when evaluating agent performance.
