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Zillow is once again finding itself in the news after a Denver-based Multiple Listing Service notified members that they plan to pull the plug on a listing feed arrangement with Diverse Solutions.

You may recall that Zillow gobbled up Diverse Solutions last year, paying $7.8 million for the Irvine, California-based real estate services company. But that’s apparently not sitting well with Metrolist.

The Denver-based Multiple Listing Service notified members this week that it is scrapping a 4-year-old relationship with Diverse Solutions for an Internet Data Exchange or IDX, the manner by which real estate companies post listings on Web sites.

The reason? Zillow.

“We are disappointed that Metrolist has decided to discontinue the Diverse Solutions IDX feed, effective in April,” according to a statement sent to GeekWire from Diverse Solutions. “This was not our decision and we have asked them to reconsider as it’s not the best interest of real estate agents or consumers. We’ll continue work with current Metrolist customers and offer them all of the support we can.”

Inman News first reported on the decision, noting that it occurred because of Zillow’s acquisition of Diverse Solutions. The message sent to Metrolist members read in part:

As you may be aware, your IDX vendor, Diverse Solutions, was recently purchased by Zillow and no longer holds a valid Agreement for Internet Data eXchange (IDX) with Metrolist.  This means that they will no longer be allowed to provide you with Metrolist IDX on your website.

Diverse Solutions (Zillow) will be able to continue receiving IDX data from Metrolist until April 2, 2012 to allow you time to find a new IDX vendor and continue receiving Metrolist listing data for your website.

Zillow works with thousands of brokers and Multiple Listing Services across the country, and Diverse Solutions has ongoing relationships with hundreds of real estate firms. Many of the commenters on the Inman News story have expressed their disapproval of the decision by Metrolist. (We have a call into the MLS, and will update the post as we hear more).

Zillow’s growing power in the online real estate industry (the company topped 31 million unique visitors last month) has raised concerns of some recently.

Last week, Jim Abbott released a scathing video, denouncing services such as Trulia and Zillow as parasitic listing syndicators, pulling his company’s listings from the Web sites.

Zillow is no newcomer to controversy. Shortly after its launch in 2006, the company took heat from both consumers and real estate agents over the so-called Zestimates, automated home valuations that were affixed to millions of homes across the country.

That controversy continues, but more recently Zillow has been taking shots from the real estate companies and brokerages that are supposed to be its advertisers. Last October, Redfin CEO Glenn Kelman sounded an alarm over the rise of what he termed “media sites,” in essence services like Trulia and Zillow. He noted at the time:

I think we are at the crossroads where the media sites will enslave us, I know that is a colorful term, but if we outsource our brains to them, they are going to make all of the money, and we are going to do all of the work. Or, the brokerages can decide that we have gathered all of this information, we have provided all of the service and we should be the ones who offer the best online experience to our customers. And that’s really the big question.

However, none of the recent chatter appears to be hurting Zillow’s stature on Wall Street. The company’s stock is climbing yet again today, trading just over $32 per share.  The stock is up 39 percent in the past month, along trading well above the $20 IPO price from July.

FOLLOW-UPColorado real estate group explains why they booted Zillow’s Diverse Solutions

 

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