On Tuesday, Amazon said that it was working with Realogy, the nation’s largest residential real estate brokerage company and owner of Century 21, Coldwell Banker and other brands, to create TurnKey, a service that will help prospective home buyers find real estate agents. To entice customers, Amazon will give buyers up to $5,000 in home services and smart-home gear when they close. (That’s on a $700k+ house by the way..not everyone gets the $5k in perks)
Keep in mind that companies like Costco have offered similar incentives for more than a decade and still do. CostcoFinance.com saves members lender fees and even offers VA loans. Home Depot, Lowes, Avis car rentals, many other companies offer discounts and incentives… just saying, this isn’t a new idea.
At first glance, this seems like a pretty straightforward purchase of leads from Amazon by Realogy:
- Amazon sends leads to Realogy;
- Realogy sends those leads to brokers and agents who participate in the program, charging a hefty referral fee.
- Some Realogy agent helps the buyer purchase the house;
- Amazon gives the buyer all manner of goodies and services, depending on the price range, from $1000 to $5000 worth of stuff.
- Realogy cuts Amazon a check.
Given Amazon’s massive traffic/audience, this seems like a pretty good deal for Realogy. However, based solely on what we’ve seen so far, this not going to be disruptive to the market in a significant way.
And email from a Coldwell Banker agent who has asked to remain anonymous demonstrates this point brilliantly:
My office manager yesterday announced at our Tuesday meeting that Amazon had partnered with Realogy to offer this program. Most agents immediately started clapping with excitement. I, on the other hand, had some reservations, so I decided to speak up, I asked her how this would impact us the agents? How the leads would get to us? She nonchalantly said that the leads would go through our Relocation Department and only agents who are USAA Relocation Specialist would get the lead, (Keep in mind only about 3% of the agents in the office are USAA agents and its not because they are the best of the best agents in the office, no, its because they have been with Coldwell Banker the longest and the brokerage feel they are “Loyal”, I sell more homes then majority of these agents). but wait it gets better, she said even if you’re not on the Relocation team, if you have a client who wants the “Amazon” special, the client can request you as their agent through Amazon, but you will have to pay a 30% referral fee and your split will be the same as an agent on the Relocation team which is 60/40… So yes, this is the MATH,
Sales Price: $350,000 X 3% = $10,500 (Standard Commission in my Market)
Relocation: $10,500 X 30% (Relocation Fee) = $3,150 (to Realogy) Bal: $7,350 before relocation split
Relocation Split: $7,350 X 60%= $4,410 Gross to Agent minus all the monthly fees you have to pay.
Keep in mind Amazon is only offering $1,000 Package for homes priced $150K-400K!!!
So, in other words, you want me to give up $6,090 of my $10,500 Commission to get an Amazon Lead.
Now, this is where she got a little upset: I said why do agents need to agree to this, why should I not just create my own “Amazon program” just like we had to create our own iBuyer programs to compete with Open door and Zillow. This way I don’t have to give the Relocation department 70% of my commission, she got all red and said lets not talk about this now! It was pretty funny actually, I had a few agents come up to me after the meeting to express there concerns. So even though Realogy’s stock soared after the announcement, I think a lot of agents within the company don’t feel the same!
I am just holding my tongue and waiting for my 2yr commitment to end! Yes, I was one of those agents that agreed to $$$ to move my business here 16 months ago. The grass isn’t always greener!
I’ve been seeing a lot of activity with EXP, like where they are heading!
Thanks again for your Podcast. Please do not hesitate to call me if you have any questions.
Since most homes in America are under $400K, we’re looking at the $1,000 package of 1 Echo Dot, 1 Echo Show, and 1 Ring Doorbell. Is this really such a huge perk? This is actually about $300 to $400 worth of stuff.
Let’s say you did NOT pay all the fees, kept your normal commission and just gave those 3 things as a closing gift? Wouldn’t you be a lot better off?
Be of service to your clients. Get to them first and know what’s going on with these programs. You don’t need to give up 60% of your commission!