Message to Consumers: The truth about HomeLight and other lead systems

By
Real Estate Agent TX #0540728

You might not know it but every time I receive a lead from HomeLight I have to agree to pay 25% of my commission to them. They don’t want you the consumer to know that because it is greedy and disproportionate to the value received. I’m not saying that is unfair because it is a lead I did not have and a possibly a convenience to you. Signing up directly through these lead generation systems creates an obligation to a middleman for getting your business. For you the consumer, this might not be a great deal.

Yes, I fully understand that the public perception of agents is they don’t do a lot of work for what they earn. That’s a different discussion for a different time. I do believe in free enterprise for agents, HomeLight, and anyone else. Let me explain what this means to you from the standpoint of being your agent and provider of services and what you can do about it.

HomeLight does not have a magical formula to help you pick the best agent. They simply track historical sales information to rank agents by volume and having done business in your area. Of those, they present you with agents that have signed up in advance for the HomeLight program and agree to pay the 25% commission for future leads. Not necessarily the best agent overall, but the best of those that sign up in advance and agree to pay the price. This limits the set of whom you can choose from to those that sign up and agree to pay them a commission. That’s a good thing because they should be presenting experienced agents to you. In essence, that’s the value of their business model to the consumer.

This is not good for you the consumer. Unfortunately, 25% is a big chunk of commission making you a less valuable client and you are paying 25% to an unnecessary middleman. This is a seasonal business and agents are very busy in the spring and summer servicing their clients. When push comes to shove, the most profitable clients are going to get the most attention and you might not be one of them. As licensed professionals, we have a duty to treat you fairly and put your needs ahead of ours. What that does not say is we are not obligated to serve your needs with the same level of enthusiasm and speed. In any business, the most profitable clients get the most attention. That should be enough said.

There is a very simple way to get around this. Buy directly and get rid of the middle man. Let HomeLight present you with their list, the same for Zillow, realtor.com, or any website with home sales and agent information. Don’t sign up directly through those systems creating an obligation to a middleman from the agent for your business. Do your own research, google names and firms and contact them directly to help them control their marketing costs. I am very grateful to my clients that find me through referrals and reviews and engage with me directly. By taking an extra step you can end up with a greater chance of success.

Here are some more practical steps you can use to hire and evaluate an agent.

  • Find out how experienced an agent is. Go to https://www.realtor.com/realestateagents and input your city, state, or Zip. Here you will see a full list of active agents. It shows years of experience, number of active and sold listings, recommendations, and direct phone number. It is a no obligation, no cost phone call to talk to an agent.
  • Check for the agents license and disciplinary actions at https://www.trec.texas.gov/ . This is the State entity that licenses all agents in Texas and governs activities. Here you can see education history, sponsoring broker, how to file a complaint, frequently asked questions, and other valuable information.
  • Ask to speak to past clients. You want to know how responsive they are and gauge their knowledge of the market, contracts, lender behavior, pricing strategy, appraisal standards, marketing, buyer behavior, and technical knowledge.
  • Make sure your agent has the right tools for the job. They should offer you an automated showing service (CSS), electronic signature (DocuSign), email, text, and direct phone access, automated contracts and forms (Zipform), automated email notification, automated agent feedback (CSS). Make sure your agent can explain the listing and buying process, market trends overall and seasonal, what a market analysis tells us, about the mechanics of representation and presentation of offers, contract execution, explain contract terms, obligations, timings, and cost to you, how we handle other agents, how agents, buyers, and sellers think and view the process and market.
  • Then, pick the one that meets your needs and has a track record to deliver.

Digital lead generation is the marketing of products and services mainly on the Internet. It began its development in the late 1990’s and has had a profound impact on traditional business models. The most common is direct digital marketing such as that of Amazon.com. Amazon has an end to end brand, design, and competitive delivery mechanism with obvious convenience and value. Lead generation platforms like HomeLight, Zillow, Apartments.com, Yelp, Angies list, HomeAdvisor, Hotels.com, and many others are less competitive, hide the cost, and successful delivery is not guaranteed, nor end to end. They are disruptors of traditional business models and have not expanded markets like that of Uber, Lyft, and Airbnb.

These disrupt by dominating the web with digital and off web advertising to dominate a channel to capture and resale leads to the providers in their market segment. They simply add to the expense of these providers, selling them leads at an exorbitant price, and do not contribute to the quality of those products and services. Thank of HomeLight as a credit card with a 25% bank fee. Not the 1% slice you might be familiar with and willing to pay for the convenience and automation. When making big purchases, you know cash value is prefered by vendors and gets you preferential treatment. Worst of all, by supporting these lead systems, you pay for it in the long run.

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