Real Estate

‘Success Fees’ Are Coming To Real Estate Portals. Are You Ready?

Real estate portals around the world are making huge bets on next-generation lead generation tools that target buyers and sellers and include lead qualification standards and commission sharing, otherwise known as success fees.

This post has been republished with permission from Mike DelPrete.

Next-generation lead generation is the most significant business model shift for real estate portals since their birth. It is the evolution toward delivering fully qualified leads with a commission share model, and it accounts for an increasing percentage of portal lead gen revenues — while bringing them closer to the transaction.

An emerging global trend

The evolution is occurring globally and targets both buyer and seller leads. The key themes include lead qualification and a commission share model (aka success fee).

Leading real estate portals around the world have made significant investments into next-gen lead gen, including several large acquisitions.

The U.S. portals focus on monetizing buyer leads, while international portals like ImmoScout24 and MeilleursAgents focus on seller leads. The most effective way to reach prospective sellers is with property valuations: “What is my home worth?”

A key element of this model is that leads are qualified before being handed off to a partner agent. Leads are called directly by the portal, typically within minutes of submitting a form.

The second key element of next-gen lead gen is the use of a commission share, or success fee, model. If a lead transacts, the agent pays a percentage of their commission back to the portal.

The commission share varies by market, but is generally around a third of an agent’s commission. And this source of revenue accounts for an increasing share of portal revenue; realtor.com generates about a third of its lead gen revenue from the commission share model, as does ImmoScout24.

A win for consumers, portals and (some) agents

Next-gen lead gen lays the groundwork for a triple win: the promise of a better consumer experience, less wasted time for agents and a more valuable product for portals.

The potential downside of next-gen lead gen programs lie in their exclusive nature. It’s not for everyone; agent networks consist of a small and exclusive group of the total agent pool.

Over the long term, the agents not participating in these programs will receive fewer online leads and may be at a significant competitive disadvantage in the race to acquire customers. Next-gen lead gen is revolutionizing the portal lead gen business model, but it only works for the agents who jump on board.

Mike DelPrete is a strategic adviser and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.

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