After clashing repeatedly with Hamptons brokers over the past year, Out East is scrapping its subscription model — which required agents to pay a monthly fee to post listings on the Zillow-owned site.
Starting January 1, agents will be able to use Out East for free, the company said Friday. Previously, Out East charged firms a base monthly fee of $1,000 to $3,000, depending on the size of the brokerage. It also charged a per-agent subscription of $60 per month.
“This shift to free listing entry for all is crucial to creating an inclusive marketplace,” Matt Daimler, Out East’s general manager said in a statement. “It will give more agents the ability to post listings not just on Out East, but ensures their listings will also appear across all of Zillow’s consumer websites.”
But some brokers said the move will pave the way for Zillow to monetize Out East, as it has done with StreetEasy, by introducing Premier Agent and other advertising programs. In addition to Premier Agent, which generates buyer-leads for agents who advertise, StreetEasy’s new Experts program puts agent contact info alongside building descriptions where they’ve done at least one transaction.
“A free Out East is essentially a Trojan horse,” said Andrew Saunders, founder of Hamptons-based Saunders & Associates, who said he cancelled his company’s contract with Out East earlier this week. “If New York is the model, there will come a moment in time when [Out East] be charging folks,” Saunders said. “We won’t be drawn into that framework.”
A Zillow spokesman didn’t deny or confirm the portal’s plans. “While nothing is set yet, we’ll likely be moving toward an advertising model in the future,” said Viet Shelton, a Zillow spokesman.
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Zillow has been tightening its grip on the Hamptons since 2017, when it purchased Hamptons Real Estate Online (HREO), the de facto MLS used by Hamptons agent, and rebranded it as Out East. On Friday, Zillow said Out East saw six times the traffic as HREO, which had put the subscription model in place. Although the company declined to provide specific numbers, Zillow said its audience grew 50 percent year-over-year.
But according to Hamptons agents, the transition has been anything but smooth. After switching the back-end system earlier this year, brokers became outraged and alleged the system was buggy and barely worked.
Defensive moves
Sources said Zillow’s decision to scrap Out East subscriptions may reflect the new competitive landscape.
Earlier this month, a group of Hamptons brokerages banded together to form the Hamptons Real Estate Association and launch their own consumer-facing portal, HamptonsRE.com. The group includes the Corcoran Group, Sotheby’s International Realty, Saunders & Associates, Brown Harris Stevens and Halstead.
In New York City, residential firms have been at odds with StreetEasy over Premier Agent and a slew of other fees. (In November, StreetEasy raised the fee to post rental listings to $6 per listing per day.) In response to industry blowback, state regulators plan to tighten rules for real estate advertising.
Earlier this month, Zillow voiced support for the regulations “as a whole” in a public comment filed with the state. “We believe these changes will serve consumers in New York if approved,” the letter said.
But in its own letter, the Real Estate Board of New York accused StreetEasy of “brazen tactics” to steer customers to agents who pay to advertise on the site.
“Consumers need to know that Premier Agent is nothing more than a paid-for status and not an indication of the level of service, experience or the personal qualifications of the broker,” REBNY said.
Even though Zillow has bet heavily on iBuying, Premier agent accounted for more than 67 percent of its revenue in 2018.
But the company (and subsidiary Trulia) has been hit with two class-action lawsuits alleging that Premier Agent is unfiar and deceptive.
In the more recent suit, Queens-based agent Max Brizer of R New York alleged Premier Agent could cause consumer confusion, and result in dual agency transactions. Zillow rejected that notion. “The claims made in this suit are a replica of the meritless claims made a few weeks ago,” Zillow said.