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The Journal · 01 · Real Estate

The Zillow Precedent

No. 017 Essay November 1, 2026 Pieter Studio

Agents already hand a large share of a commission to a portal for the lead that became a closing. The precedent is set and the price is published. What is left to decide is what the agent gets back for that share, and who owns the client when the deal is done.

The showing is the agent's. The lead should be too.Studio
The showing is the agent's. The lead should be too.

The price is published

Agents who object to paying for leads are usually paying for them already. Zillow's own Premier Agent page says the average cost per connection is 223 dollars in major metro areas and 139 dollars everywhere else. Zillow calls these connections, not leads, and calls the figures averages. The agent pays for each one whether or not the person on the other end ever signs anything.

The other model takes its cut at the end. Zillow Preferred, the program that used to be called Flex, charges nothing up front. Its pricing page says the success fee on every seller-originated connection transaction is 40 percent in all markets. Buyer-side fees vary by ZIP code and are not published, and Zillow may change the fee on fifteen days' notice. Mike DelPrete, an independent analyst who follows the portals, wrote in October 2023 that the fee had risen from 35 percent to 40. On a commission of twelve thousand dollars, the portal's share at closing is forty-eight hundred.

The walk-through the agent earned, room by room.Studio
The walk-through the agent earned, room by room.

What agents say they get

The portals do not publish how many connections become closings, and neither does the National Association of Realtors. What exists is what agents report. In a reader survey Inman published in December 2017, about three in ten respondents said one to three percent of their online leads closed, and others reported more. Respondents chose to answer and the sample size was not stated. Agents commonly report closing one to three percent of portal leads, and nobody who holds the data has published a better figure.

Run the two models side by side at that rate. On the per-connection model an agent buys a hundred connections, pays somewhere between fourteen and twenty-two thousand dollars, and closes one to three of them. On the success-fee model the agent pays nothing until a closing and then gives up 40 percent of the side. Either way the portal is paid in full, and the agent has carried every showing, every contract and every weekend in between.

Who owns the client

A lawsuit filed in federal court in Washington state in September 2025, Taylor v. Zillow, alleged that the success fee was hidden from consumers and that buyers were steered toward Zillow's mortgage business. Those are allegations. The court dismissed the complaint in full in July 2026 and let the plaintiffs amend parts of it; an amended complaint has been filed and Zillow's motion to dismiss it is pending. Nothing has been found against anyone, and this Journal takes no view on how it ends. The filing is worth reading for the question underneath it: when a portal introduces a buyer and takes a share at closing, whose client was that?

That question is the precedent, and it is the one that matters to an agent. The portal keeps the search history, the saved homes and the email address. The agent gets one transaction and a 40 percent invoice. When that household sells, the portal connects them with whoever is paying that month.

The portal on the buyer's phone decides who gets paid.Studio
The portal on the buyer's phone decides who gets paid.

What the agent should get back

We do not think paying at closing is wrong. An agent who pays a share of a commission for a client they would not otherwise have met has made a fair trade, and the whole industry has accepted the arithmetic. What should change is the terms.

Three of them, in our view. The lead should arrive with a name and a number, recorded where the agent can see it, so the agent knows what was paid for. The relationship should belong to the agent afterward: the past client, the referral that follows, the neighbor who asks. And the work between the lead and the closing, the scheduling, the contract, the follow-up, should be carried by the same people who brought the lead in, because that is the part of the business the portal never touches. The membership is built on those three terms, and the membership page says what it costs and what it promises. An agent who already gives up 40 percent at closing knows the price of a lead. What the membership changes is what comes back with it.

Sources

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