Regulatory commission unbundling favors CoStar over Zillow
The structural shift in US real estate commissions away from pre-baked buy-side broker compensation represents a major tailwind for CoStar's seller-focused model over Zillow's buy-side monetization.
The argument
The discussion highlighted that if buy-side broker commissions are unbundled or diminished following the 2024 NAR court ruling, Zillow's model of monetizing buy-side leads is highly vulnerable. Former Zillow CEO Spencer Raskoff is quoted noting that such a shift would put Zillow's revenue at risk while acting as a 'gift from heaven' for CoStar's listing-agent-centric model.
The thesis, stress-tested
✓ What validates it
- ✓A widespread decline in the percentage of transactions utilizing traditional buy-side brokers in the US
- ✓Regulatory bans on commission sharing across major US real estate markets
▸ Risks discussed
- ▸US homebuyers may continue to utilize and fund buy-side brokers out-of-pocket, preserving the status quo
- ▸Zillow could successfully pivot its monetization model if forced to reinvent itself
Hear it yourself
"So a lot of people in The US may remember the 2024 ruling on real estate agent commissions that had a couple of people thinking that, you know, these five to 6% commission cartel would basically break since it was and is price enabled by the National Association of Realtors or the NAR through their control of the MLS and the listing…"
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