Compare Zillow and Aalto
For Buyers
Answer: Zillow is a Multiple Listing Services (MLS) aggregator while Aalto is a listing real estate agent that offers savings to home sellers
Buying and Selling with Zillow
Zillow is an MLS Aggregator that allows buyers and sellers to list homes and find out what local homes are available for sale. Zillow aggregates home listing data from thousands of private MLS databases across the United States.
By making this otherwise unavailable information to consumers, Zillow creates a positive value-added experience with local results for the majority of available listings.
Zillow generates revenue with ads using Zillow Group’s Premier Agent and Premier Broker programs.
Zillow Pricing
Zillow does not offer paid services to consumers directly, instead, the portal generates revenue with ads and referral fees from real estate brokers.
Listing Services
- This Service Does Not Represent Sellers
Buyer's Agent Services
- This Service Does Not Represent Buyers
Zillow Editor's Review:
This review is focused on Zillow as an MLS aggregator, separate from the referral fee network (Zillow Premier Broker) and (Zillow Instant Offers). Two separate reviews are assigned to Zillow Premier Broker and Zillow Instant Offers programs. As an MLS aggregator, Zillow benefits real estate consumers with highly accurate MLS data and home value estimates.
Today, most consumers ready to buy or sell real estate begin their search on the Internet. This is a logical first step that can help identify similar properties, pricing budget to help make the correct decision about buying or selling real estate. Zillow is one of the main and most well-known sources of such information. Zillow analyzes property values, aggregates data and displays results that make sense to seasoned real estate professionals as well as newbie home buyers and sellers.
Undeniably, Zillow, has a great wealth of aggregate MLS property information, an easy-to-use interface, valuable neighborhood information, excellent user reviews and a wide array of real estate-related services, articles, and forums. Zillow is one of the top real estate platforms in the United States and will likely remain there with acquisitions of Trulia.com, Streeteasy.com, and RealEstate.com “mirror” platforms. The chances are that a consumer either buying or selling a home uses Zillow platform or one of its affiliates as part of their real estate transaction experience.
Zillow is technically free, but Zillow is funded with advertising and referral fees. Zillow advertising costs vary by ZIP code, cost per impression and Premier Broker referral fees are currently hidden from consumers. Agents that sign-up for their Premier Agent program "get in front of buyers and sellers in the largest online real estate network."
This fact ultimately means that real estate agent recommendations provided to real estate consumers by Zillow are biased. Those agents that pay Zillow for Premier Agent accounts consistently show up first in their search results without a clear indication of Premier status. Thus, an agency at the top may or may not be the best choice, yet Zillow implies to its users that it is.
As of 2019, Zillow has further turned to “broker mentality” against consumers with an introduction of Zillow Premier Broker and Zillow Instant Offers programs. Both of these programs effectively take Zillow into a middle-man real estate broker category, and away from an independent portal. Zillow had designed these programs to “trade consumers as leads” and push buyers and sellers onto a select group of real estate agents in exchange for hidden referral fees.
Unlike the Premier Agent program, where agents simply pay for ads, Premier Broker is a pay-for-play lead generator pipeline that qualifies consumers as a service.
This literally means that Zillow qualifies consumers into a commodity where agents buy that commodity; Zillow calls this a “flexible” payment option. Zillow CEO states that “it simplifies selling process because it de-risks the purchase decision for advertisers.” There is no upfront fee to brokers when they receive consumers info as validated leads, so there is no risk to the broker if they quote a consumer a "standard" commission – if the broker doesn’t get the business, they move on to the next validated lead with their overpriced commission offerings.
Like any other limited agent referral network of agents who are willing to pay “industry standard performance advertising expense” the only job for Zillow here is to push a few agents onto consumers en masse. With even a small percent success rate, each time Zillow converts consumers into leads, it receives thousands or tens of thousands in referral fees, typically set at 25%-40% of the commission. This business model is called reverse competition, where Zillow still refuses to acknowledge the exact amount in referral fees it receives from this new program.
The only way real estate agents are able to pay 25%-40% of their commission to Zillow is to either reduce service or jack up the price. Consumers should be careful not to provide their complete information to Zillow including name, email and a phone number in order to avoid being "sold as leads" to random real estate brokers.
Where does Zillow operate?
Selling with Aalto
Aalto is a California savings tech-enabled broker (California DRE 02062727) that offers consumers listing savings for select areas around San Francisco Bay Area. Aalto claims that it does not list homes on the MLS (and, subsequently, these homes are not shown on MLS aggregators, such as Zillow, Trulia, etc. or on the competing brokers’ websites such as Redfin.) During our research, however, we found that at least several listings are listed by Aalto agents on the MLS, making it unclear why the brokerage lists some homes on MLS and not others, or how the brokerage complies with local MLS rules.
Listing homes off-MLS has potential disadvantages to home sellers. Buyers are systematically searching open MLS listings for new homes, which is the whole reason why MLS exists. Selling a home off-MLS (also known as pocket listings) is a conflicting practice because, naturally, it excludes a large number of potential buyers from looking at sellers’ homes.
If a property is not listed on the MLS, the listing agent or brokerage is more likely to represent the buyer, a situation that is often defined by state law as “dual agency” representation. Dual agency must typically be disclosed, and it’s up to buyers and sellers whether they want to engage in a dual agency transaction. Some sellers don’t mind getting less money if they can sell a home privately, but statistically speaking, there are little to no advantages to listing homes off-MLS.
Aalto Pricing
Aalto offers savings to sellers (1% listing fee). Aalto does not advertise buyer’s refunds and does not offer consumers buyer representation services. Instead, Aalto claims to connect potential home buyers to “partner agents,” likely receiving 25% to 35% as a kickback from the Buyer Agent Commissions (BAC.) Aalto likely keeps the entire Buyer’s Agent Commission when it represents home buyers, but sellers can determine what buy-side commission they offer (normally 2.5%). In the event Aalto acts as a dual agent, the total fee it likely receives is 3.5% (1% listing fee plus 2.5% BAC)
Listing Services
- Off-MLS Listing
- Pocket Listing
- Accept and Deliver All Offers and Counteroffers
- Hold Open Houses
- Professional Photography
- Yard Signage Installation
- Spare Key Lock-box Installation
- Schedule Inspection Services
- Schedule Private Showings
- Closing Duties
Buyer's Agent Services
- This Service Does Not Represent Buyers
Aalto Editor's Review:
Aalto is a tech-enabled listing real estate agent that represents consumers in select areas of Northern California and offers sizeable savings (1% listing rate against 3% listing commission, excluding BAC) to sellers. Aalto's service includes posting home on their website as an off-MLS listing, professional photos, and 3D images in addition to some typical services offered by a traditional real estate agent. It is unclear if and how many open houses Aalto agents typically hold.
Overall, Aalto offers a questionable off-MLS proposition to sellers, and the company does not openly advertise any savings and tangible services to buyers (other than a blanket buyer agent referral.)
Aalto argues that pocket listings are perfectly legal and serve the needs of many sellers in today's residential markets, against opponents who raise open market, fiduciary duty, and fair housing concerns.
Pocket listings (also known as "quiet" or "off-market" listings) involve the practice of withholding residential listing data from multiple listing service (MLS) systems. Instead, the property is marketed by Aalto brokerage using its website, to existing clients, and new prospects that happen to look there. The practice typically proliferates when market conditions include low inventories, low mortgage rates, and rising home prices. In hot market conditions, home sellers may receive enough buyer offers to outweigh the effects of the limited exposure of their homes on the open market.
Opponents of the practice argue that sellers may be disserved by pocket listings since MLS systems provide the widest possible market exposure and thus produce the highest possible selling prices. They also assert that pocket listings harm the effectiveness of the MLS cooperative brokerage system, skew MLS listings-based data that support accurate property valuations, and beg the question of whether agents may be utilizing narrowed marketing methods to collect the full available brokerage commission instead of soliciting purchase offers through cooperating brokers.
Proponents of the practice say that there are many reasons why sellers may not want to engage in the traditional practice of listing their properties on an MLS. For example, pocket listings are sometimes used to market high-end luxury homes whose owners have no interest in allowing showings to the general public and want the property marketed to those who have realistic means of purchasing it.
Other sellers may have privacy or security concerns about listing properties on widely broadcast MLSs or publishing interior photos of the property. Pocket listing proponents also argue that the MLS, which publishes the number of days a property has been on the market, can disadvantage owners who experience failed transactions due to complications that have nothing to do with the fair market price of the property.
Both supporters and critics generally agree that pocket listings are not illegal, per se. Real estate licensing laws, which vary among jurisdictions, may dictate the specific form of written listing agreement that must be used by licensees, the point at which it must be executed and/or require that certain brokerage relationships and other types of disclosures be included in the agreement. But the manner in which the property is to be marketed, and for what amount and form of brokerage commission, are matters that are generally left to be negotiated by the listing licensee and the seller.
A pocket listing policy subjects Aalto to accusations that they put their own interest in collecting a commission for both "sides" of a transaction ahead of the seller's interests in obtaining the highest possible sale price. Aalto keeps the entire Buyer’s Agent Commission when it acts as a dual agent, but sellers are able to determine what buy-side commission they offer (normally 2.5%). In effect, whenever a buyer is unrepresented, Aalto's total commission is likely 3.5% and not 1% as advertised. According to Aalto, "You are advised that a dual agency relationship may arise if an Aalto Advisor represents both you and a buyer of a property. If a dual agency relationship arises, the terms of such dual representation will be subject to a separate written agreement between you and your Aalto Advisor."
Other critics question whether sellers are being provided with disclosures that fully explain the potential disadvantages of narrowed marketing efforts. Regardless of those issues, it is fairly clear that real estate brokerage relationships, disclosures, advertising, conflicts of interest, and other licensing law strictures may raise serious issues with off-MLS practices.
Aalto further claims to operate a "marketplace" for homeowners. "Aalto's homeowner marketplace connects sellers to qualified buyers, saving you time, stress, and money." Aalto is not a marketplace, but a listing real estate agent with a website. Unlike MLS aggregators, Aalto does not display listings from other brokerages, and, therefore, lacks the networks effects required to deliver a full marketplace experience. Aalto is one of the millions of real estate agents in the United States.
Aalto's proposition is different from a typical listing agent by the mere fact that the listing addresses are hidden. "It is free to get started on Aalto" further makes for a very odd proposition, where it is free to get a listing started with any real estate broker.
"Prior to opening a home for showings through Aalto, sharing your property’s address through Aalto, or receiving the contact information of interested Buyers, a Seller must enter into a written agreement for real estate brokerage services between such Seller and Aalto," in another word, listing a home on Aalto is not free. Real estate brokers never work for free, and sellers' information will be shown only after they sign a listing agreement.
"Sellers start with Aalto earlier than traditional real estate, widening the time frame for homes to be on the market. That means more homes, sooner" is another odd proposition without any basis to substantiate the claim. Buyers browsing homes on Aalto have highly limited information about these properties, numbered at a fraction, of a fraction, of a fraction, of all homes available on the MLS.
"The Partner Agent Program is covered by the Partner Agent Terms of Service. Aalto is not responsible for the work performed or the services provided by any individual in connection with the Partner Agent Program." As a consumer, you will always overpay for broker commissions subject to hidden kickbacks and pay-to-play steering promoted in Aalto referral scheme to an unknown number of buyer agents. United States federal antitrust laws prohibit consumer allocation and blanket referral agreements between real estate companies. Homebuyers should avoid their information being "sold as a lead" between brokers in exchange for hidden commission kickbacks paid from the future home purchase administered by the Aalto Partner Agent Program.
We find no solid evidence that Aalto offers home sellers any advantages to sell homes for higher amounts, in fact, the opposite is much more likely. By withholding listings from the MLS, home sellers are likely missing out on the vast majority of tangible offers from the bulk of the home buyers and their respective buyer agents.
At the same time, some home sellers may decide for themselves that the off-MLS approach is worth the added risk and limited exposure for individual reasons. Aalto does save home sellers equity by offering a 1% listing rate against a 3% listing rate (this rate does not include 2.5% BAC typically offered at 2.5% to the buyer agent.)
Homebuyers should avoid Aalto Partner Agent Program due to hidden kickbacks and consumer allocation between licensed brokers. A homebuyer can easily negotiate a buyer refund on the open market with a licensed real estate broker in California - a fact that Aalto brokerage is silent on. Buyer refunds can save homebuyers tens of thousands in tax-free cash because the refund comes from the estimated 2.5% BAC proceeds received by the buyer agent.
Geodoma editorial staff remains overall neutral on the subject with a 3 out of 5-star rating for Aalto: we can neither recommend Aalto nor suggest that sellers refrain from using the brokerage to list their homes off-MLS.
As always, we encourage our users to post helpful and independent reviews about this business with any sentiment. With a controversial proposition such as Aalto, consumer feedback becomes incredibly valuable information to other consumers. Geodoma encourages users to post helpful, relevant, and reliable consumer reviews, but users are ultimately responsible for the quality of the content.