Uneducated Brokers and Agents Cost Fellow Agents Time and Money.
I’ve learned something surprising in my climb up the real estate ladder: most agents know very little about how the online lead generation system works.
Since online lead generation is typically one of the top three lead generation sources of any top professional real estate team, that disconnect is critical. It is essential that brokerages understand and teach their agents how that source of business works and why -- not only to help the agents and the brokerage, but also so their agents can maximize their service for their customers and stop costing their colleagues time and money.
Agents can maximize their service for their customers and stop costing their colleagues time and money.
As a highly trained agent buying leads, how many times have you had another agent call in on a property through Zillow or Realtor.com thinking that you’re the listing agent?
Yes, many agents believe that’s how the system works. It isn’t. So, you have to explain that to them, direct them back to their local Multiple Listing Service to find the listing agent, and then ask them for the 50 bucks it just cost you for their call! It’s literally mind-boggling how many well-meaning agents just don’t know the basics of the system they use every day.
This information should be widely distributed so that all agents can stop wasting time and money. Momentum Realty’s agents are trained on this process, but for those agents who are not with a brokerage that offers education on the online lead generation system, it’s time to share. So, let’s take a look at the minimum all agents should know:
1. Online Lead Generators Make Their Money by Selling Customer Information to Agents.
The cost to the agent for that data runs $5-500 per click
Co-owned Zillow and Trulia are the #1 home search website(s), with 36 million unique visitors per month.
They make their money by selling the information they get about website customers to real estate agents. (Other search sites like Realtor.com have the same process.)
Specifically, when their website customer clicks on a property for more information, Zillow/Trulia compiles all of the information gathered from that customer (name, email, phone, and property address) and SELLS IT to an agent who is buying online leads.
The cost to the agent for that data runs $5-500 per click depending on zip code, average home price, and demand for the zip code from other agents, including the agent or agents who is purchasing a “share'“ in that zip code.
To recap: Clicking on a property through a search site does not take you to the listing agent, but to another agent who bought your information as a lead.
2. Online Clicks by Uneducated Buyer Agents Cost Fellow Agents Time and Money.
When a Buyer agent needs to reach the listing agent, clicking on Zillow/Trulia for more information does NOT typically make that happen.
Rather than reaching the listing agent, they generally get in touch with an agent who has simply bought their contact information. So, when an agent clicks on those sites, they are wasting their colleagues’ time and costing them money. This is extremely frustrating to the lead-buying agents.
At one point, 30% of Momentum Realty leads were from other agents clicking for information on properties and thinking they would get the listing agent. Each one of those 30% was uninformed about how the system worked and had to be educated by the agent whose money they just wasted.
That lack of education cost the clicking agent time and the ire of the lead-buying agent; it cost the lead-buying agent time, money, and probably a little bit of their sanity.
It’s truly shocking how many agents don’t understand. For example, Momentum recently had an outside agent with 25+ years’ experience click through because she did not understand how the system works in an industry where online leads have become a primary lead source. I don’t mean to scold her—part of the problem includes a failure of brokerages to appropriately train their agents—but an experienced agent who clicks through may find their reputation diminished.
And in real estate, your professional reputation is everything.
To recap: If you are an agent, there’s NO reason to click on Zillow/Trulia. Do Not Do It.
3. Agents Failing to Educate Their Buyers About the System Could Lose Their Own Customer… As Well As Cost Colleagues Time and Money.
Part of an agent’s initial Buyer consult should include educating the Buyer about the way these systems work, and urging them NOT to click on those search websites after entering the agent-buyer relationship.
Instead, the agent should up set their customer on the MLS search system, allowing them to examine listing data directly. It is an easy process, taking less than 5 minutes to do, and it benefits the customer because the MLS provides more data than Zillow/Trulia and is immediately available for use. Yet 30% of the leads Momentum agents receive from online websites end up being a Buyer who says they already have an agent -- creating a waste of time and money for the lead-buying agent.
Clearly, many Buyer agents are failing to do the appropriate consult and MLS set-ups.
If concern about the impact to colleagues from their Buyers clicking on search sites isn’t enough of a motivation, the potential for agents losing their own customer should be.
When that customer clicks on Zillow/Trulia listings, and fails to advise the responding agent that he is already working with an agent, the potential is there for the lead-buying agent to end up with the click-happy Buyer.
To recap: If you are a Buyer agent, failing to educate your Buyer about search sites upfront could lose you a customer as well as cost time and money to your lead-buying colleagues.
4. Huge Changes for Online Search Sites Are Coming … and Agents Need to Stay Informed.
Not to overstate the obvious, but things are drastically changing in real estate, and all agents should be on top of those changes.
Not to overstate the obvious, but things are drastically changing in real estate, and all agents should be on top of those changes.
Referral-based Zillow leads are the future. In 2018, Zillow started a referral marketplace called Zillow Flex, where instead of paying a one-time fee for leads or “share” upfront, agents would pay a blanket commission referral fee of 30-40% upon closing on the leads sent to them from Zillow. Zillow believes it will make more money off the referral platform -- if they are able to find the right partners in the right markets - than they do now by selling the contact information to their Premier Agents.
Zillow has had a challenge getting the referral program off the ground by keeping agents and teams accountable to closing the deals consistently. Although most top agents don’t want to pay those high referral fees, Zillow still views the referral platform, with the right agent partners, as part of the future.
Zillow is working toward vertical integration of real estate transactions.
That same year, 2018, to further their vertical integration into creating a seamless real estate transaction, Zillow bought Dotloop, a transaction management platform, for $108 million. And, the company is likely to add the ancillary businesses of title, mortgage, and insurance into their platform over the next few years. Recognizing that the more control they have, the better, Zillow’s end goal is to create a seamless real estate transaction. In fact, despite their denials, it is not far-fetched to imagine that, one day, they will completely remove the agent from real estate transactions entirely.
This is not to say that Zillow is bad - agents at Momentum cumulatively purchase approximately $70-75k per month of online leads. It’s a good lead source if you’re willing to live the on-demand lifestyle it requires to convert at a high level, and earn some sort of positive return on investment while building your database.
But is it sustainable?
Realtor.com is following a similar path. Realtor.com is another of the largest real estate listing search websites that also sells contact information to real estate agents, and is often following in Zillow’s footsteps with their products. In 2018, Realtor.com bought OpCity, which operates a referral company similar to Zillow’s Flex program. OpCity also collects referrals fees of 35%.
To recap: As a professional brokerage or real estate agent, it’s your duty to educate yourself on the primary mechanisms and sources of business for your industry.
Please Share. Momentum’s vision has always been to improve the way real estate is done in Florida, and that includes sharing what we have learned to the benefit of both customers and colleagues. If you find this post valuable, please share it forward!
Also, if you have questions about Realtor.com or Zillow/Trulia, feel free to contact me (momentumagents@gmail.com). The Brooks Group and Momentum have been using them for years, spending more than $500k on their platforms, and we have learned a few things about how they work.
