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Ken R Fisher & Associates, Inc.

KenFisherRealtors.com

Real Estate: The Business

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Lead Generators

Lead Generating companies prey on home buyers and home sellers and then prey on the new and the unsuccessful real estate agents as well as on the new and unsuccessful mortgage representatives for fun and profit – easy profit.  And, they are moving into the home improvement business, the insurance business, the moving business and related sales/lead oriented businesses.  It is anticipated that they will soon move into providing referrals to doctors, lawyers, dentists, and other such providers.

These companies offer ‘benefits’ to naive or just plain stupid  buyers and sellers which, when one considers the competitive nature of the actual real estate business in general, become very questionable. 

They offer ‘benefits’ to buyer agents and seller agents and mortgage representative with potential new business for a fee; a fee that is far more costly than if the agents and representatives sought out potential business on their own.  They seek out lazy agents and failures for their profit model.

People who are uninformed about the real estate and mortgage business in general are most culpable to the lead generating company’s shtick.  The new and the unsuccessful real estate agents as well as the new and the unsuccessful mortgage representatives pay fees to these companies for leads because they are unable (usually too lazy) to generate leads on their own due to many factors, a major factor being the inability or refusal to actually perform the necessary functions of prospecting in the business (a/k/a  lack of direction and ... lazy).  Some experience agents use leads of this type to provide business activity to their licensed and unlicensed assistants and secretarial staff.

YOU, AS A BUYER OR SELLER OR MORTGAGE SEEKER, CAN ALWAYS NEGOTIATE A BETTER DEAL BY WORKING DIRECT WITH SPECIFIC REAL ESTATE AGENTS AND MORTGAGE LENDERS.

Using Lending Tree, purely as an example, customers are generated by television, print advertising and marketing connections with companies such as Costco and AAA.  The Lending Tree real estate agent network (no longer illegally called REALTOR network) consists of agents willing to pay them a 35% referral fee (in other words they are willing to pay 35% of their commission fee to Lending Tree for the successful lead).   They do control the numbers of agents they use in any particular area.  They will return a part of that referral fee as a rebate to the buyer or seller keeping the rest as an EXORBITANT service fee for doing nothing more than collecting and then referring your name.   For example, based upon a recent Lending Tree brochure from Costco, if you sell your home for $450,000, your agent will pay approximately $5,500 to Lending Tree for the referral of your name and Lending Tree will rebate to you approximately $3,400 ... Lending Tree will keep approximately $2,100 as a service fee.  The referral fee is just over 1% of the commission.  Do you think you could convince the agent to reduce his fee by 1.0% thus increasing your 'rebate' from $3,400 to $5,500?  It's only your money!  Also, keep in mind that your agent will work LESS for you than for a client or customer who is paying the full commission fee!   Believe it or don't!   Pigs fly!

Costco uses Lending Tree as a member benefit. 

AAA will give you an up to $1,200 vacation in lieu of the potential fee or rebate.

For Home Equity and Credit Lines, Lending Tree advertises the following benefits:

You can receive up to 4 offers – you could get them yourself by just dialing your phone.

No closing costs – (often offset by an interest rate increase) - most reputable local sources don’t have closing costs

Get Lines of credit at Prime – (The Bank sets the Prime)  - you can get that on your own also

For New Mortgages and Refinance, Lending Tree offers the following benefits:

You can receive up to 4 offers – you can get them yourself by just dialing your phone

Save an average of $1,000 on closing cost – compared to what?

No 1% origination fee – reputable companies don’t charge an origination fee anyway

Other Lead Generating Companies typically advertise through the Internet with ads placed on web sites including MSN.com, Yahoo.com, Netcape.com, etc. and with SPAM to your e-mail Inbox.

With a very simple ad ‘Do You Want To Know What Your House Is Worth’, they get your e-mail address and then broadcast your address to every potential services provider on their lists.  More and more and more Spam!

HomeGain.com – charges up to a 27% referral fee to the agent to provide your name.  As is typical with most Lead Generating Companies, once you have submitted your name and someone has responded and you have accepted their proposal, they are legally bound to pay the Lead Generating Company the indicated fee or they will be prosecuted and you will probably have to go to court also.

MonsterMoving.com – 30% referral fee for accepted leads

1HomeRebate.com – promises cash back to the buyer or seller (charges Realtor 35% for the lead)

ServiceMaster.com – (owned by the company that owns Lending Tree) sells all leads to Realtors, mortgage people, movers, home improvement companies, etc. for advance fees

RealtyNow.com – sells all leads for advance fees

EstimateMyHomeValue.com – sells all leads by zip code for annual advance fees

House.com – sells all leads by zip code territories for advance fees whether the lead is valid or not

e-Real-Estate.com – sells memberships for $39.95 lifetime

PriceAHomeOnline.com - sells leads by territory

HouseValues.com - sells leads by territory

CompleteHome.com and  RealEstate.com – have referral deals with real estate agents and brokers and mortgage bankers and representatives for money and profit.

There are probably as many lead generating companies either starting up business, in business or going out of business as there are channels on Direct TV.

This is A REALLY BIG BUSINESS!  The consumer complains about the high cost of selling a home and the high costs of securing a mortgage and then takes steps to further INCREASE the cost.  You should ‘let your fingers do the walking’, and then 'you do the talking' to see if you can secure your own list of companies that will give you the best deal out there!