Paul Hurst, the vice president of venture investments at First American, advises that companies are more likely to get consumers to use affiliated services if they use W-2 agents.

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Getting a higher attach rate on affiliated services like mortgage, title and escrow, has long been heralded as a path to more profitability for real estate brokerage and iBuyer startups.

The key to success is in the type of agents you employ and your business model, said Paul Hurst, the vice president of venture investments at First American, during an Inman Connect in New York panel.

HomeServices of America has had an integrated model for more than 20 years, but only about 20 percent of brokerage service consumers are also using HomeServices of America for an affiliated service, said Clelia Peters, the president at Warburg Realty and Inman editor-at-large.

That low attach rate is a result of the agent as an independent contractor business model, according to Hurst. His company finds the 1099 model, which most brokerages are, has about a 20-23 percent attach rate.

“And frankly, you have to offer a panel of best-in-class providers,” Hurst said.

With the W-2 model — like Redfin, for example — you can start to direct the transaction a little bit more, Hurst explained.

Tune into the full video above, or check out the article.

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