The Holy Grail Takes Shape at Redfin and Zillow
While major U.S. portals Redfin and Zillow are busily competing on unique inventory, they're also starting to pay buyers to bundle a partner agent with their own mortgage.
Why it matters: This is the Holy Grail in action (search + brokerage + mortgage), and it’s zero sum – every transaction a portal bundles is one that doesn't reach the rest of the industry.
It all starts at the top of the funnel, with Redfin now running a popup on its site claiming the “largest home inventory” in Chicago.
Both portals are offering "bundle and save" programs that discount the transaction for buyers who combine a partner agent with the portal's mortgage offering.
Rocket pays a lender credit of 0.75 percent of the loan, up to $6,000, to buyers using a Redfin, Redfin partner, or Compass agent, rising to $12,000 if they sell with Redfin too.
Zillow just started offering a flat $4,000 to buyers in Colorado and Michigan who bundle a Zillow partner agent with Zillow Home Loans, which is the larger offer for any loan under about $533,000.
Rocket launched its offer in May and Zillow followed seven weeks later.
Opendoor ran a similar play in 2021, lifting its Arizona mortgage attach rate from about 2 percent to 12 percent by offering a 2 percent discount that consumed its entire $5,000 target margin on the loan.
Zillow's lead form is where both halves of that bundle get collected, and it has been rewritten over the past year — changing the agent language and the mortgage checkbox, two things at issue in Taylor v. Zillow, a class action brought by homebuyers.
"Contact agent" became "Contact a buyer's agent," and the tour flow now tells buyers the agent "advertises on Zillow."
The mortgage checkbox went from "I want pre-approval information from Zillow Home Loans" to a generic "I want financing information," and as of today, only appears on some listings in some markets.
Zillow submitted a screenshot of its lead form as evidence in the Taylor case back in February, to show what it discloses to buyers.
Zillow's February court filing shows the checkbox unchecked, but on every listing where it appears today that I found, it is checked by default so the buyer has to opt out of the mortgage pitch.
A federal judge dismissed the class action on July 27 with leave to amend, finding claims of inadequate notice "implausible given Zillow's express, repeated disclosures."
The bottom line: The high-level strategy has been known for a year, and the tactics emerging now reveal where each portal is placing its bets.
These are the industry’s Holy Grail heavyweights, hoping to grow revenue by investing billions into their visions for the end-to-end ecosystem.
Unique inventory decides which portal gets the buyer, and now the mortgage bundle decides what that buyer is worth.