Thanks to the readers who sent in the news about Amazon and Realogy teaming up to provide a basket of goodies to customers who get their agent through their TurnKey system:
Real-estate brokerage giant Realogy Holdings Corp. launched a new partnership with Amazon.com Inc. on Tuesday, a fresh attempt at jump-starting the property firm’s flagging business and tumbling share price.
Under the new program, known as TurnKey, home buyers searching for an agent on Amazon.com will be directed to a Realogy agent in their market. These buyers get up to $5,000 of smart home devices and free home services from Amazon, from unpacking and cleaning to furniture assembly and smart home setup.
Realogy is hoping the power of the Amazon brand can energize its own amid a prolonged slide in its stock price. The company declined to comment on the agreement’s specific financial terms but said it is footing the bill for the home services from commissions earned from deals that the venture with Amazon is anticipated to generate.
There are many places that offer to provide a realtor for you:
Who pays for the service?
The agents do, and it can be a hefty referral fee – usually 25% to 40% of the commission.
However, you don’t get directed to the best agent in the area, oh no. You get directed to the best agent in the area who is willing to pay their fee.
We call this, “Buying The Business” and it’s what agents do who can’t earn the business otherwise. Either agents can demonstrate their skill-level and abilities to consumers to earn their business, or for the agents who can’t, gimmicks or discounted commissions are used to ‘buy’ their business instead.
It’s just one more thing about the real-estate-selling business that isn’t disclosed to the public.
This gimmick is a way for Realogy to provide leads and keep more of their agent’s commission:
Will the public ever catch on to how the game is played?
The agents who are willing to pay for the leads either don’t have the skills, or can’t demonstrate them.
Going through Zillow isn’t much better. The big realtor teams get the best leads there, and pass them off to their new agents and then take a large chunk of their commission.
Bottom Line: Agents all look the same, and the industry does nothing to help you differentiate. You must do your own investigation to find out if your agent has the skills and ability to provide the help you need.
Let’s say that the Amazon customers who prefer to just click a button for their every need in life plunges ahead without much care about the realtor they get – they just want their goodies.
What do they get?
The dedicated Amazon customer already owns a few of the goodies – most of the equipment listed above is into their 2nd or 3rd generation by now. Only the Ring Doorbell Pro and the Camelot Deadbolt are attached to the house. So if a buyer already owns the other gear, they can take it with them – and receiving duplicates of the Echo Spots, Shows, etc. isn’t much of a prize.
For the casual Amazon customers, do they even want/need the high-tech gear?
Because they aren’t handing you a check for $5,000 – instead, you get some household goodies that can all be bought separately for $100 to $400 each.
Or will click-a-button real estate be enough of a thrill/reward?
“For Amazon this is a free way to experiment with attracting customers,” Craig-Hallum analyst Brad Berning wrote in a recent research note. “For Realogy, we believe this is desperation to improve their broker platform which has structural headwinds and a levered balance sheet.”
Realogy has much to gain from teaming up with Amazon, and the e-commerce giant has little to lose, regardless of whether TurnKey takes off: it’s Realogy, not Amazon, that foots the bill for customers’ benefits bundles.
“Amazon likes to experiment, and this to us seems like a “throwing spaghetti at the wall” kind of thing,” Berning said. “Our skepticism is whether they can really scale an interest in finding an agent through their website.”
TurnKey will launch with 3,000 participating real estate agents in Washington, San Francisco, Chicago, Dallas/Fort Worth, Atlanta, Denver, Tampa, Orlando, Minneapolis/St. Paul, Charlotte, North Carolina, Los Angeles and Sacramento.
Rob figures the additional fee that the agents will have to pay will be between 25% and 48.5% of the commission:
From the Compass VP:
I’ve heard a number of questions across the country about the Amazon lead generation partnership that was announced today, and just wanted to share my three biggest takeaways on this:
1. Most importantly, this highlights something that we’ve been saying for a while: it is inevitable that the big technology companies are going to move into real estate – it’s the largest segment of the global economy and it’s simply too big for them to ignore it. It’s no secret that the biggest technology companies tend to not think of real estate agents as the primary customer in this industry, which reinforces the importance and the urgency of our flywheel strategy to build a future that places the real estate agent at the center of the industry.
2. The universe of internet lead companies is very crowded: we’ve identified about 60 different substantial internet buyer lead generation companies. With this partnership, there are now 61. I truly don’t anticipate this impacting the client relationships that our agents have. What it will do is take market share from other internet lead companies, and make the expensive and competitive field of generating online buyer leads more expensive and more competitive.
3. Finally, I genuinely applaud any company in our space building partnerships like this. At Compass we embrace any effort to create value for agents – whether it’s at Compass or not. I hope that our legacy is that we spur everyone to improve and innovate for real estate agents at the pace that we are. But our fundamental belief is that you don’t build the future through 3rd party partnerships, you have to go out and build it yourself – you can’t rely on another company to make your company great.
Will the public ever catch on to how the game is played?
Eventually but that doesn’t reimburse the victims.
When I was but a wee lad my dad clued me in on the secret.
There are three kinds of people.
•Don’t know there is a game.
•Play the game.
•Make (and change) the rules.
Best to be the rule setters.