As the Zillow Group Inc. (Z) launches its latest plan to make money from the thousands of real estate rental listings on websites that cater to the New York City market, one of the biggest real estate brokers in the area has decided pass along the fees to its agents for listings rental properties on the Seattle, Wash.-based online real estate database company.
Pamela Liebman, president and chief executive officer of The Corcoran Group, which is owned by Realogy Holdings Corp. (RLGY) , told The Real Deal that the firm has ceased sending its rental listings to StreetEasy.com, one of Zillow's websites. Liebman also noted that Citi Habitats, which Corcoran bought in 2004, has done the same.
A Zillow spokesperson disputed that, however, saying that both firms are still sending the rental listings.
The Corcoran Group did not respond to multiple requests for comment, nor did Realogy's franchise group, Sotheby's International Realty, which also posts property listings in the New York City market. There is at least one rental listing from Sotheby's on StreetEasy.
On Tuesday, Zillow sites, including StreetEasy.com, Zillow.com, Hotpads.com and Trulia.com, began charging agents a $3 a day fee for each New York City rental listing. The Wall Street Journal reported on Thursday that rental listings on StreetEasy plunged by 55% the first day, but rebounded on Wednesday. A quick search of StreetEasy for apartments to rent in New York City reveals more than 16,500 listings, which would equate to about $49,500 in fees per day.
Liebman strongly expressed her displeasure with the fee to The Real Deal, saying the new platform bites the "hand that feeds them." Still, Corcoran is allowing agents to sign up on their own, and will still provide sales listings to the Zillow sites.
Other prominent real estate brokers for the New York City area are biting the bullet and paying the fee.
Douglas Elliman, the city's largest residential firm, said it will cover the fee costs for its agents through their advertising budgets, The Real Deal first reported, which could cost the firm approximately $1.6 million annually.
Real estate firms such as MSN are also willing to pay up for listings on Zillow, as the Real Deal reported, while others, like Mdrn, are willing to temporarily cover the costs. Some firms, such as Brown Harris Stevens and Town Residental, told The Real Deal that agents would have to pay the fee out-of-pocket for those that chose to list on StreetEasy.
"For agents, the advertising fee represents a single-digit share of the potential rental commissions earned and is nominal for the service and advertising value that StreetEasy provides for agents and their listings, reaching the largest audience of renters in NYC," StreetEasy General Manager Susan Daimler said via email.
Analysts at KeyBanc think Zillow "should be a long-term winner in the digital disruption of residential real estate," and expect 20% to 50% rental growth over the next couple of years.
"We believe real estate agents will allocate more commission dollars toward marketing as they recognize their role in the transaction becoming more marginalized," analyst Brad Erickson wrote in a July research note.
The firm initiated coverage of Zillow on July 17 with a Sector Weight rating.
Zillow shares were holding relatively flat at around $44.48 at 1:30 p.m. EDT during the trading session on Friday.
This story has been updated to show that Corcoran hasn't stopped sending its listings to Zillow.
More of What's Trending on TheStreet:
- Chipotle CEO Should Be Canned for Not Apologizing to Sickened Customers in Virginia, Analyst Says
- O.J. Simpson's 4 Biggest Business Achievements
- Best Buy's Geek Squad Is a Mess, According to Customer Reviews, Opening the Door for Amazon's Entry
- Sears' Kenmore Products on Amazon Are Hurting Home Depot, Jim Cramer Explains
- Former Apple Exec: 'It's Sad to See Apple Slipping to the Position of Follower'
- 5 Celebrities Who Have Lost Big in Real Estate Like Golden State Warriors Star Steph Curry