The Real Deal New York

LG Fairmont pulls out of Premier Agent

Lead-gen firm was an early -- and enthusiastic -- user of Zillow's ad program
By E.B. Solomont | October 09, 2018 03:35PM

Spencer Rascoff and Aaron Graf (Credit: Getty Images, Columbia University, StreetEasy, and iStock)

LG Fairmont, one of Premier Agent’s biggest cheerleaders in New York, is shutting its checkbook. At least as far as Zillow is concerned.

The residential brokerage, which once spent $125,000 a month to receive buyer leads from the company, will no longer advertise with Zillow or StreetEasy, it said Tuesday.

In a statement, the company said the decision was tied to Zillow’s new practice of vetting leads before connecting buyers with Premier Agents by phone. “Based on lead price trends, showing rates, offer data, predicted conversion rate and several other variables,” LG Fairmont said, “We don’t believe Zillow is currently sustainable in New York.”

To that end, the company said, it didn’t think it was prudent to allocate marketing dollars toward an initiative “with a slimmer chance of financial return, especially in a slowing market.”

A Zillow spokesperson declined to comment on the firm’s decision in particular but said the “live connections” strategy is delivering higher quality leads to agents. “Buyers are much more likely to want to work with an agent they can talk to right now,” the spokesperson said in a statement. Zillow said buyers that it qualifies are four times more likely to work with a Premier Agent than they would otherwise.

Still, LG Fairmont’s change-of-heart is notable because the eight-year-old brokerage is among a wave of startups that aggregate leads and hand them off to agents. Instead of paying high commission splits, companies like LG Fairmont, Triplemint and Elegran Real Estate each say they’ve created technology to sift through leads en masse and convert them into deals.

Although critics of “lead gen” firms say they empower inexperienced agents, the firms got a boost in New York City after StreetEasy introduced Premier Agent in 2017. Last year, LG Fairmont said it closed $221 million in sales, compared to $151 million in 2016.

After initially lambasting Premier Agent, many of the city’s top residential brokers have opted into the program. Thanks to auction-based pricing, sources said in certain neighborhoods the price of leads has skyrocketed from $65 to $400 over the past two years.