Zillow shares fell out of bed Wednesday as the real estate portal offered lowered guidance for sales revenue. Zillow generates the bulk of its revenue from agents who are foolish enough to buy leads for their own listings. As many agents are finally realizing, Zillow is perfectly happy to compete directly with those agents as a de facto real estate broker while it pretends that’s not what it is doing. Zillow wants an increasingly larger piece of the real estate pie. It needs growth to keep investors happy.

Zillow continues to expand into new markets buying and selling homes directly to consumers, and that has proved to be a little more risky than they probably imagined. Zillow announced this week that the company will be buying and selling homes in the Houston market. Zillow is not alone in the space of trying to lure home sellers with enticements of a quick close. As educated sellers often find out, there are usually some strings attached with “seamless experience” being advertised.

Zillow has also branched out into the rental business. In addition to the $232 million the company generated from Premier Agent advertising revenue in the third quarter of 2018, Zillow also posted $37 million in revenue for its rentals division. In August Zillow announced the purchase of an online mortgage broker. Zillow is looking more and more like a real estate broker every day, competing against the very same agents who supply it with data and its bread and butter advertising revenue.

Interestingly enough, the North Texas Real Estate Information System (NTREIS) board of directors is slated to vote later this month on a modification to its current agreement with Zillow. The NTREIS board is reportedly considering the inclusion of sold data in the already existing listing feed. The email I received from our association notes that while the proposal would allow Zillow to receive sold data, the company would still only be allowed to display a range for a sale price. The board’s reasoning seems to be that many listings are already displaying a sales price which has been provided to Zillow by an agent or a homeowner involved in the transaction. Apparently Zillow would be prohibited from acting as a broker under the existing or proposed agreement. Good luck with that.

Zillow stock closed down over 26 percent today. Shares are down 41 percent during just the last 3 months.