Hey, want to run a scam on your fellow agents? Guaranteed to make you money. All the cool kids are doing it. (Nestready, Opcity, Agentpronto, Homelight, Referralexchange, Upnest Findarealtor and seemingly hundreds more)
It starts with an audience so eager for success and hopeful the next card dealt is the winner, you could almost sell them anything. Throw in several doses of fear and failure and you can statistically guarantee a certain percentage of this audience will throw money at you. Welcome to the world of being a dream maker!
Introducing: Your Name Here, Agent Referral Company. Insert city name’s, most prestigious firm statistically matching only the area finest and most dedicated agents with today’s demanding and ready buyers.
Get a pretty website. Fill it with cool sounding corporate psycho-babble. Realize instant prestige. Make promises. Tout your expertise in leading edge technology. Get newly anointed elite agents to sign up on your website for free.
Get a phone book. (whitepages.com) Start handing out random phone numbers to your newly proclaimed elite agents with a 30% referral fee. Call these phone numbers; leads from your highly specialized matching system. While these leads are not real, they are real people, and who knows, maybe someday they may turn into leads. After all, no one ever said “when” these leads would “mature”. Is it a lie? You bet. Is it hurtful? Only when successful. It isn’t until after an agent loses 30% of their commission do they realize any “hurt”. Otherwise it’s just dream selling. And, people do so want to believe in dreams!
The business model of these types of companies is very simple. Cheese in on 30% of an agent’s commission for next to nothing. How? By playing to agent fears of financial insecurity along with wildly upselling the hopes of “easy sales” ahead. They are the traveling elixir salesmen of their time. Selling remedies for whatever ails you. And, they’re growing like weeds.
For years we had realtor.com, Trulia and Zillow being the main sellers of referral programs. Call them old-school. Today, new venture-back referral companies are popping up weekly. The differentiation of these second tier “hanger-on” companies is negligible. They pretty much all say the same thing. And, despite what many claim, there is nothing new or anything remotely transformative about them. Why do investors keep investing in re-heating the past? Because statistically they will make money! Your money!
As much as these second tier players are leeches on our industry, they won’t go away. Like Herpes, they’ll be with us forever. And sadly, it’s a fact, at some point everyone with a real estate license will sign up for one of these companies. Like a rite of passage. It’s depressing. Yet, agents will continue to do it because, “it’s better than nothing”.
Much like scratch-off Lotto tickets to a retirement strategy, cold leads from referral companies are extreme long shots. Miracle leads. Think of them as the, “broken clock” of leads, not actually working, yet still valid for 2 minutes of everyday.
If history is any indicator, it takes agents only 3 or 4 closings of losing 30% of their commission for leads they could have found on their own, to lose interest in these programs. Money spent on referral companies comes at the expense of the agent long term. The money spent on referral companies could have been used to solicit and create one’s own leads. Referral leads don’t help agent brands.
As agents sign on to these companies; just beware. Proceed with caution. Go into the relationship with eyes open. And, never, EVER, believe a word the referral company salesman is telling you.