RealEstate.com today announced a phase-out of its subscription-based lead-generation business for agents.
While the company will continue to offer services to existing clients, it will not add new subscribers, said Bret Violette, RealEstate.com president. The decision does not impact the broker-based lead-referral service offered by RealEstate.com’s parent company, LendingTree.
There are now about 3,400-3,500 agents participating in the company’s subscription-based lead-generation business, he said. About 50 employees have serviced the subscription-based leads business, and roughly half of those employees may face layoffs while the other half may be able to find other positions within the InterActiveCorp family of companies, such as LendingTree, he said.
While the slowing housing market may have contributed to the decision, Violette said it was more a matter of overall economics with the program.
“Economically we weren’t able to scale the business to become profitable,” he said. “It’s really a very difficult model, economically, to get real estate agents to commit on a subscription basis with a three-month, six-month or 12-month term to get leads … because they’re paying up front.”
Also, he said, the company was paying “a substantial amount of money to get a new subscriber. We’ve made the decision to shut down the business.”
LendingTree’s broker-based lead service, which is available to RealEstate.com’s company-owned brokerage operations and to other real estate brokerage companies, “is alive and well,” Violette said, and generates hundreds of thousands of leads per year. There are about 400 real estate brokerages who participate in that lead network, representing about 10,000 real estate agents.
That broker referral network, which collects a percentage of a participating brokerage company’s real estate commission based on closed transactions stemming from LendingTree leads, is actually growing, he said. Likewise, real estate marketing and lead-generation company HomeGain reported that its referral-fee based business for leads that close has risen, as some agents prefer this model to upfront fees for leads.
RealEstate.com has company-owned real estate brokerage operations in nine states, with plans to launch in new markets as early as the fourth quarter of this year.
While individual agents who are not affiliated with RealEstate.com’s company-owned brokerages or its broker network are not able to sign up for the referral fee-based lead program at this time, Violette said the company is still exploring its options in this area.
Last month, LendingTree parent company InterActiveCorp reported that LendingTree had a $1.3 million loss in the second quarter, down from a profit of $9.8 million in second-quarter 2006. Second-quarter revenue declined 9 percent to $98.6 million. The company blamed the revenue declines on fewer home equity loans sold into the secondary market and closed at the exchange.
In May, LendingTree announced the layoff of about 440 workers in response to falling revenue and loan production. IAC operates about 60 brands, including online and offline companies, with non-real-estate-related brands including Ticketmaster, Home Shopping Network and Match.com