Some brokers who rely on realtor.com’s lead generation service are reeling after learning from the company that the service will no longer be offered in their area but instead replaced with one from Opcity, a startup that was acquired by News Corp., the parent company of realtor.com’s operator Move Inc., last year for $210 million.

Some brokers who rely on realtor.com’s lead generation service are reeling after learning from the company that the service will no longer be offered in their area but instead replaced with one from Opcity, a startup that was acquired by News Corp., the parent company of realtor.com’s operator Move Inc., last year for $210 million.

Michael Bernier

“I think the reality is, there’s a lot of people that are going to be severely impacted or out of business because of this,” Michael Bernier, the president and managing broker of Realty Group LLC told Inman. “There’s a lot of people that are going to drop their business by half or more. There’s a lot of panic about it.”

News Corp., the parent company of Move Inc., which is the operator of realtor.com, acquired Opcity last August. At the time of the acquisition, Move Inc., said it would offer both realtor.com’s traditional lead generation model where agents vet and convert leads themselves, as well as Opcity’s model where the company first verifies the lead and directly connects the agent with the lead for a referral fee.

“The planned acquisition of Opcity, based in Austin, Texas, will broaden realtor.com’s lead generation product portfolio, allowing real estate professionals to choose between traditional lead products that offer professionals the opportunity to work leads themselves or a concierge-based model that provides highly vetted, transaction-ready leads, which is the expertise Opcity brings to realtor.com,” said a statement from News Corp. at the time of the acquisition.

Through the traditional model, when consumers opt to contact an agent on a listing, that contact is sent to one of the agents who has paid for lead generation service in that ZIP code. It’s a way for agents to generate buyer leads.

When News Corp. acquired Opcity, it opened up the opportunity for realtor.com to integrate the concierge service into the platform. So now, when that same consumer attempts to contact an agent, they will instead be vetted by Opcity before being directly connected with that agent.

“Following our acquisition last October of Opcity, the leading real estate technology platform that quickly and effectively matches qualified homebuyers and sellers with real estate professionals, we’ve focused on gaining hands-on experience with the platform and testing its business model in several small to mid-size markets,” a spokesperson for Move Inc., told Inman in a statement.

Move Inc., told Inman that the early results were positive and a reflection of an on-demand consumer culture, “in which real-time response and immediate gratification are driving forces.”

“Our research shows that when it comes to buying and selling homes, people want not only information (at which realtor.com has always excelled), but connections to a professional who can help them every step of the way,” the spokesperson said.

The spokesperson told Inman that, in light of the initial test results, the company is expanding it to more than a dozen markets in the coming weeks. The test will impact a small percentage of the country and consumer base, according to the spokesperson. In other markets, realtor.com will still offer its lead generation products.

Inman asked Move Inc., to clarify in which markets will the company will be testing its lead referral service and if the ultimate goal is to roll it out nationwide and eliminate realtor.com’s traditional lead generation platform. Move Inc., had not responded at press time.

Inman first learned of the move from a number of brokers who were shocked at the sudden change.

Suneet Agarwal

“I’ve over here with my team of 28 agents that primarily work realtor.com leads, and they’re freaking out,” Suneet Agarwal, the franchise owner of Big Block Realty North in Sacramento and a team owner, told Inman.

Agarwal said about 75 percent of his team’s business comes from realtor.com lead generation. And he’s been a big advocate for the company in the past. He still hasn’t heard directly from realtor.com — and it’s not clear if his market will be immediately impacted — but he has lost count of the “overwhelming” amount of people who have told him about the impending changes.

“I’ve gone around the state speaking on [realtor.com’s] behalf, I do all these podcasts and webinars about how great they are and really built a lot of trust there thinking they were really about the agents,” Agarwal said. “We are their consumer, and this whole time everyone is worried about Zillow, and realtor.com is considered an agent partner — now they pull this crap.”

This year, Agarwal said he was counting on closing about 240 transactions. He’s been panicking for days thinking about what to do.

Agarwal said that realtor.com should be giving agents like himself with huge spends options, instead of just Opcity.

Thomas Brown the co-founder of The Agency Texas, told Inman his Texas indie brokerage spends more than a million dollars a year on lead generation through realtor.com. He said he has a call scheduled this week with realtor.com to discuss the specific changes, but he’s been told his company will have six months to transition.

“Other agents and real estate professionals that have used Opcity have seen a horrendous conversion rate so I’m not overly excited about it and I probably will not continue my relationship,” Brown told Inman.

Bernier told Inman that there are teams in his suburban Minneapolis market place that have full-time inside sales agents (ISA) and half of their business comes from realtor.com. He heard the news directly from a sales executive at realtor.com that the change was coming to his market.

“If you’re so dependent on realtor.com that half or more of your business is coming from them and now you have an ISA too — half of your business goes away,” Bernier said. “Your ISA goes away, and you don’t have an alternative, that’s a game-ender for most teams.”

Bernier’s brokerage has approximately 400 agents, and he leads a team of 12. The brokerage closed about 200 realtor.com-generated transaction sides in 2018 but were positioned to reach 300 in 2019 with a much higher ad spend.

Bernier said he’s pivoting to a higher spend on Facebook ads, pay-per-click marketing and event marketing to make up for the changes.

Through Opcity, agents pay no upfront costs for leads, but rather a referral fee of 35 percent of the commission once a sale is closed. Bernier said that will greatly impact agents who are part of a team that have to pay a percentage to their broker and to the agent, as well as Opcity if they opt to use the lead generation service.

Zillow made a similar business decision in April of last year, eliminating unverified leads and just offering a service where it would directly connect buyers to a vetted lead over the phone. However, Zillow walked back the decision and decided to offer both options to its Premier Agent customers after greater-than-expected advertiser churn.

UPDATE: Updated with additional comment from Thomas Brown, co-founder of The Agency Texas. 

Email Patrick Kearns

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×