Real estate portals worldwide are betting big on next-gen lead gen tools to target buyers and sellers to generate commission sharing or “success fees” for portals.
Lead Generation Tools Adapting & Expanding
According to Mike DelPrete, a strategic advisor and global expert in real estate tech, “Next-generation lead generation is the most significant business model shift for real estate portals since their birth.”
This evolution of next-generation lead generation targets both buyer (US portals) and seller (international portals) leads and includes both a lead qualification and a commission share model. The commission share model is also know as a “success fee.” Likewise, the success fee or commission share model accounts for an increasing percentage of the real estate portals’ lead generation revenues.
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Next-Gen Lead Gen Tools May Result in “Success Fees” for Portals
Real estate portals worldwide are betting big on next-gen lead gen tools to target buyers and sellers to generate commission sharing or “success fees” for portals.
Lead Generation Tools Continue to Evolve
According to Mike DelPrete, a strategic advisor and global expert in real estate tech, “Next-generation lead generation is the most significant business model shift for real estate portals since their birth.”
This evolution of next-generation lead generation targets both buyer (US portals) and seller (international portals) leads and includes both a lead qualification and a commission share model. The commission share model is also know as a “success fee.” Likewise, the success fee or commission share model accounts for an increasing percentage of the real estate portals’ lead generation revenues.
Key Elements of Model
There are two main elements involved with this next-gen lead gen model.
First, leads are qualified by the respective portal itself before the lead is essentially “handed off” to one of the portal’s partner agents. The portal itself contacts the lead directly within minutes of the lead submitting a form online.
Second, this model uses a commission share or success fee if/when the handed off portal-qualified lead actually transacts. If/when the lead transacts, the partner agent then pays a percentage of their commission back to the portal.
Commission Share is Approximately 33% of Agent’s Commission
Generally, according to DelPrete, the commission share amounts to about one-third of an agent’s commission. Such an additional revenue source of portals is quite substantial.
Take a look at how this commission share or success fee is impacting various portals’ bottom lines:
- Realtor.com, via its acquisition of OPCITY in 2018, generates about 1/3 of its lead gen revenue via the success fee/commission share model with its 190K agents
- Zillow’s Flex Program has approximately 10,000 of its agents participating in this commission share model and the model generates about 0.5% of its total revenue
- ImmoScout24 (via its acquisition of immoverkauf24 in 2020) and its 600 agents generate approximately 1/3 of its lead gen revenue with this success fee model
- Alex Springer (via its acquisition of meilleursagents in 2019) has approximately 12,000 agents participating in this model and the model generates some 7% of its total revenues
As you can see, next-gen lead gen “success fees” are focused on feeding the success of the portals’ bottom lines, not the success of the partner agents’ bottom lines.
(By the way, partner agents who do not participate in these programs will receive fewer online leads which, in all likelihood, will put them at a severe disadvantage in the quest to acquire leads.)
Thanks to Mike DelPrete and Inman.
Key Elements of Model
There are two main elements involved with this next-gen lead gen model.
First, leads are qualified by the respective portal itself before the lead is essentially “handed off” to one of the portal’s partner agents. The portal itself contacts the lead directly within minutes of the lead submitting a form.
Second, this model uses a commission share or success fee if/when the handed off portal-qualified lead actually transacts. If/when the lead transacts, the partner agent then pays a percentage of their commission back to the portal.
Commission Share is Approximately 33% of Agent’s Commission
Generally, according to DelPrete, the commission share amounts to about one-third of an agent’s commission. Such an additional revenue source of portals is quite substantial.
Take a look at how this commission share or success fee is impacting various portals’ bottom lines:
- com, via its acquisition of OPCITY in 2018, generates about 1/3 of its lead gen revenue via the success fee/commission share model with its 190K agents
- Zillow’s Flex Program has approximately 10,000 of its agents participating in this commission share model and the model generates about 0.5% of its total revenue
- ImmoScout24 (via its acquisition of immoverkauf24 in 2020) and its 600 agents generate approximately 1/3 of its lead gen revenue with this success fee model
- Alex Springer (via its acquisition of meilleursagents in 2019) has approximately 12,000 agents participating in this model and the model generates some 7% of its total revenues
(By the way, partner agents who do not participate in these programs will receive fewer online leads which, in all likelihood, will put them at a severe disadvantage in the quest to acquire leads.)
Thanks to Inman.
