Zillow recently announced that it was moving exclusively to its success fee Flex model in two major markets, Denver and Raleigh.

Why It Matters: Zillow Flex is "Next Gen Lead Gen," featuring a 35 percent commission share and lead qualification by Zillow employees. It's the future of real estate portal lead gen -- and gets Zillow much closer to the transaction.

• In the past, Zillow has operated Flex alongside its traditional pay per lead model; this changes that.
  
  

• By going all in in two major markets, Zillow is signaling its intent to control more of the transaction in order to satisfy its goals of doubling its Premier Agent business by 2025.

Zillow's new strategy (Zillow 3.0: Back to Basics) has the company going back to its roots, doubling down on agent lead gen, and extracting more revenue from real estate commissions.

• This trend started in 2018 with Opcity, lead conversion, and the journey down the funnel.
  

• Targeting real estate commissions as a source of revenue isn't unique to Zillow; many big tech players are coming after agent commissions in a big way

Winners and losers: Next gen lead gen works for the agent partners that decide to participate in the program; those agents and brokers receive millions of leads.

• But those agents may become even more reliant on the portal as a critical business partner, giving the portal more market power.
  

• Over the long term, agents not participating in these invite-only programs will receive fewer online leads, and may be at a significant competitive disadvantage in the race to acquire customers.

What to watch: How Zillow integrates mortgage (Zillow Home Loans) and ShowingTime into its renewed Flex program.

Next Gen Lead Gen is a major trend discussed in my Real Estate Portal Strategy Handbook. Check out a free preview of the report, or this article on the topic!