To anyone who watches television, it’s hard NOT to see a HomeLight ad. They are burning through an ad budget as if they were in the auto insurance industry. Ads are everywhere. One proclaims, “Our agent got it sold in 2 days for $40K over asking”! Wow, no overselling there. But you can be certain, in very tiny print, with screen time being less than a fraction of a second, a disclaimer stating something to the effect of what they are saying in the ad, doesn’t actually happen.
Yes, there will always be land-challenged areas of the Country, where “conveniently” located properties attracting high income earners, will experience unpredictability, but it is NOT the norm. And yes, it may be the personal real estate experience of the venture folks who bankrolled HomeLight, but it is not the experience of 95% of Homelight’s potential customer base.
When agents see a HomeLight ad, they see yet another referral company making promises in return for a cut of their commission. When sellers see a HomeLight ad, they want the ad. They want their agent to do the impossible as well. Is HomeLight selling the idea that somehow their agents know the secret that can instantly create home equity?
The HomeLight pitch not only sets customer expectation recklessly, it’s pretty silly. Outside of where the top 2% shop, getting $40K “over asking”, means the agent did a terrible job in pricing the property in the first place. Maybe that is what’s in the tiny disclaimer print? “Our HomeLight agent got us $40K over asking because ... they had no idea how to price a house.
In probably the funniest of HomeLight ads, a couple, in total bewilderment, are lamenting the fact they don’t know how to find a real estate agent. This also appears to be the core messaging behind HomeLight. But, think about who this ad is targeted toward? And remember, it’s not 2004.
Statistics, facts, plus thousands of articles and studies indicate today’s average buyers and sellers are actually very conversant in the ways of the Internet. So unless HomeLight’s target market is your Nana, finding an agent isn’t as problematic as they portray.
Still, with so much money being spent, there must something different about HomeLight? Their website boasts a hi-tech algorithm for searching and matching appropriate agents with consumer need. Turns out their search/matching system is total bullshit. It’s a con. They use their address in “hi-tech land” to give the impression of what they are selling is somehow different. It’s not.
To test our theory, we assumed the identity of a homeowner within a large downtown Atlanta hi-rise. You would expect the much heralded “searching algorithm” to kick out agents who have had, at the very least, a history within the building or that address. It didn’t. Not even any agents with a history nearby. So we wondered, do street addresses have any baring at all to the HomeLight algorithm searching for the “best”? Turns out, no.
We assumed the identity of a seller within one of Atlanta’s historic black neighborhoods. According to HomeLight, a guy from Lawrenceville was the top rated agent of the 5 we were recommended. Logistically, that’s kind of funny. But it should also be noted, none of the recommended HomeLight agent candidates were black. And yes, Race should never be a factor. But, if the physical address is important to picking the “best” agent, meaning an agent who would have neighborhood knowledge, then it’s incredible strange, based on historical sales, the HomeLight algorithm didn’t by chance kick out at least one black candidate.
So the HomeLight promise of some fancy hi-tech “matching” wizardry is just that, a promise. It’s an idea that looked great on a white board, featured easily digestible sound bites, and tested well in focus groups.
So is HomeLight a bad guy? No, not at all. They simply play a very expensive game in volume. They produce ads with outrageous claims solving problems that don’t really exist, but sound like they may. Then run those ads annoyingly enough where, statistically, people will visit their website. Enough people hitting their site, will draw agents. But, at what cost? The amount of money needed to keep the national ad meter running has to be daunting.
HomeLight’s 25% fee never changes. But, local fees do change. Here in Atlanta, agents are moving away from the dated 6% standard of yesteryear. What the future holds is really unknown. But, like almost everything else in life, it’s probably a safe bet the pie in the future gets sliced a little thinner. At some point, HomeLight will simply get sliced out.
HomeLight must know their costs will always be on the rise. Conversely, they must also know their revenue, per transaction, will always be on the decline. At some point, math will win. So, there must be some other, yet to be identified, strategy that makes their massive investment viable?
The only thing we really do know is: a lot of marketing professionals are having a blast spending this kind of budget.