Major real estate portals have recognized the revenue opportunity in lead qualification. Take two notable examples:
- News Corp (owner of Realtor.com) acquired the lead qualification service Opcity to move deeper into the transaction funnel.
- Zillow expanded beyond lead gen into comprehensive lead qualification services.
Both companies now qualify leads and hand them off to agents only when appointments have been booked – commanding a significantly larger cut of the commission in return.
Opcity's model, for instance, charges referral fees of 30 - 35% of a buyer's agent commission. Meanwhile, Zillow follows a similar approach with premium pricing for qualified leads.
The economics make sense – by removing much of the qualifying legwork agents typically handle themselves, these platforms justify taking a larger share of the transaction.
This model isn’t new
A study by RealTrends found that agent teams typically have 35/65 splits – that is, the team gets 65% and the agent 35%. Brokerages split on the other hand, averaged around 85/15 splits with their agents. The difference between the two: teams provided the leads, brokerages did not.
So why don't brokerages take advantage of such a dynamic?
Instead of letting their agents give companies like Zillow and Opcity a bigger cut of the commission, why don't brokerages invest in such systems and take that bigger chunk?
The money that the agents are paying companies like Zillow and Opcity can be funneled back into the brokerage, and reinvested in such systems.
I know – easier said than done. But with today’s tech, brokerages can generate and qualify leads at scale, then monetize them.
The revenue opportunity
In a viral blog post, Mike DelPrete, a strategic advisor in real estate tech, gives us a closer look at the revenue opportunity:
“Back in FY16, when Zillow last reported the figure, it generated around 17 million leads during the year. If we assume Opcity’s 4% lead conversion rate (between 3x - 5x the industry norm of 1%) and a 30% referral fee, those 17 million leads are worth $1.4 billion in revenue to Zillow (about 50% higher than the ~$930 million in current premier agent revenues today).”
What are the takeaways?
- The ROI of the concierge-referral model is high. Leads are better monetized if they are qualified and then referred to agents.
- Agents will pay a higher premium for a higher quality lead. The more value you give to agents, the more revenue you can expect.
- Technology is helping companies create such a winning formula.
If lead qualification can deliver a better experience for agents and consumers, can be done at scale with advancements in technology (such as AI agents), and can be monetized to provide a higher return on investment, why aren't brokerages jumping on such an opportunity?
The truth is, some already are.
