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Many companies have explored avenues of connecting sellers with the right agent, but one real estate leader believes there is a reason for caution.
Last year, REA Group, through realestate.com.au, moved into the seller lead industry and launched Agent Match.
REA is not the only provider of this type of platform, but it is the largest company in Australia with the service.
The way it works is it connects sellers with agents in their area to begin the home selling process. However, Starr Partners CEO Douglas Driscoll told Real Estate Business the service is misleading and potentially damaging for the industry.
“Although it’s not said directly... it is implied that they almost suggest they will do most of the heavy lifting for the consumer, when the truth is, that just doesn’t happen. The reality is they will just pass these leads to someone who is willing to pay for them,” Mr Driscoll said.
Some of the country’s top real estate agencies will refuse to pay for these leads, which means the consumer will never be put in contact with them, he said.
“And the ones who will pay are sometimes the worse agents in those respective suburbs,” he said.
“One of the things the public don’t realise is it is also a paid service. Yes, they’re not paying for it as a consumer, but obviously, the agent in the background is.”
If an agent decides not to take on a listing because of the fee, the vendor is only told the agent declined the opportunity to appraise their property, but not because of the cost involved, he said.
Mr Driscoll believes that if there was more transparency so the consumer knew how limited the process is and how it is monetised, they will shy away from the service and instead do their own homework.
The challenge is, in the case of Agent Match, realestate.com.au is a highly respected and trusted brand for consumers, and it has become a one-stop shop for sellers and buyers, he said.
“If we become too reliant on seller leads, in the same way we have with buyer leads, it really could come back and bite us, and hurt us severely,” Mr Driscoll said.
To understand how this could impact the real estate industry, Mr Driscoll wants agents and industry leaders to understand what the future ramifications could mean for the industry.
“There was a time these portals didn’t exist, and in the space of 15 years or so, they have completely dominated or monopolised the buyer lead space,” he said.
Since these seller-lead companies first came into existence nearly five years ago, they have grown exponentially, and Mr Driscoll believes the industry must understand the path it is following.
“We are in an industry where our margins are eroding, and it will erode further,” he said. “We could easily become the architects of our own demise or downfall if we aren’t careful.”
When it comes to the economics, the cost to agents could hurt their profit.
While the price might seem reasonable initially, it will inevitably increase, like the costs to advertise a property on the major portals have grown over the years, Mr Driscoll said.
“Our margins are ever-eroding; I can’t stress that enough. If we are giving up 15 [per cent] to 20 per cent of our commission to some of these companies, the margins on a sale are probably only that anyway, so what’s the point of doing it if you aren’t going to make any money off it? It defies business logic, in my opinion,” he said.
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