Referral fees between brokers - why so much ? (buyers agent, commission, listings)
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I recently came across a website called "Estately".
Went to their site and looked up a local house for sale on my street and a box appeared for me to schedule a showing if I wanted. Turns out this company does not have any agents or list any homes. They will "refer" me to a local agent and earn 30% if I buy something through them.
Kind of misleading for me as a consumer who is looking at houses - but the question I have is .. 30% referral fee? If I buy a 250k house and the buyers agent gets 3%, that's over $2k to them.
They say they have over 600 agents ready to show homes so those agents must see value somehow. Why would agents pay so much and agree to this setup?
Why would agents pay so much and agree to this setup?
A $1 commission from a lead that comes to you without you lifting a finger is better than $0 commission.
That said..... it would be better to just use that web site, find the house you want, then use a local buyers agent that "you choose" to show the house to you.
I recently came across a website called "Estately".
Went to their site and looked up a local house for sale on my street and a box appeared for me to schedule a showing if I wanted. Turns out this company does not have any agents or list any homes. They will "refer" me to a local agent and earn 30% if I buy something through them.
Kind of misleading for me as a consumer who is looking at houses - but the question I have is .. 30% referral fee? If I buy a 250k house and the buyers agent gets 3%, that's over $2k to them.
They say they have over 600 agents ready to show homes so those agents must see value somehow. Why would agents pay so much and agree to this setup?
Most third party real estate sales lead generation sites are no more than flesh-peddlers.
They collect your information and sell it to the highest bidder, without qualifying the agent's scruples or skills in any other manner. Some sites are a bit more polished than others, but the selling of your information is the end game.
Agents pay for that information via referral fees, or monthly fees, or a combination of both, and consider it as just another advertising expense.
You could also have found the same property on your local MLS retail side, or on a local agent's IDX (Internet Data Exchange) search page. There would be no referral fee, and you could directly contact that agent to represent you as a buyers' agent, if you so desired.
Yes, it is horrible. One of our local competitor offices acknowledges that over 30% of their listings come from referral companies. As the principal broker of my firm, I can tell you that we see only 1% to 2% of all of our business from referral biz. We would gladly do more, but no where near 30% of our business.
It is so much because they are too many agents out there and for many agents paying someone 30% to hand them business is easier than trying to market themselves.
It is so much because they are too many agents out there and for many agents paying someone 30% to hand them business is easier than trying to market themselves.
Absolutely FACT!!!!
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