In the fight against StreetEasy’s Premier Agent, four of the city’s most prominent residential firms have taken the “If you can’t beat ’em, join ’em” approach. But a number of their rivals are still holding out, and aren’t mincing words when denouncing the program and the deal their competitors struck.
On Wednesday, The Real Deal reported that Corcoran Group, Douglas Elliman, Nest Seekers International and BOND New York are participating in “Premier Broker,” a version of Premier Agent that lets firms purchase bundles of buyer leads from StreetEasy. In response to the news, heads of two competitors, Brown Harris Stevens and Town Residential, say the move would damage the industry and backfire on the firms who’ve chosen to play ball.
“We are shocked that any credible brokerage firm in NYC would — at the corporate level — support such an unethical, misrepresentational program,” said Bess Freedman, Brown Harris Stevens’ managing director of sales. StreetEasy has “turned [its] back” on buyers, sellers and agents in its quest for additional income, she added.
Andrew Heiberger, CEO of Town Residential, said Premier Broker is riddled with conflicts.
“It creates a quandary for the company,” he said. “If they’re going to pay for lead generation, when the lead comes in, which broker are they going to feed it to?” he said. “There are a lot of mouths to feed at those companies.”
For example, if a firm gets a buyer lead on a property that was listed with one of its own agents, who gets the lead? If the firm assigns the lead to a buyer broker — and not the listing agent — it’s essentially driving up the cost of the transaction for the firm’s seller, Heiberger argued.
“Instead of your seller paying a 4 or 5 percent commission on a direct deal, they’re paying 6 percent because there are two brokers involved,” he said.
Susan Daimler, general manager at StreetEasy, didn’t directly address the concerns brought up by these executives. But in a statement, she said “Premier Broker is a program for firms who want to actively support their buyer’s agents as well as consumers who want buyer representation.” She noted that over 20,000 brokerages and teams across the country use Premier Broker, which has been a longstanding and lucrative feature for StreetEasy’s parent company Zillow.
Among the firms opting into “Premier Broker,” some said their agents are already participating in the program on an individual basis. StreetEasy has also tweaked how agents’ contact information appears online so that buyers can distinguish between the listing agent and a buyer’s broker.
Heiberger said he has “dozens” of agents who are participating in Premier Agent, and he stands by their individual decisions. “For some of them it’s been working and for others, they’ve been indifferent,” he said. He predicted that Corcoran and Elliman’s Participation Would Drive up prices, at least in the short term.
Other brokerage chiefs expressed skepticism about Premier Broker’s return on investment and said it wasn’t a good fit for all agents. “Buying leads seems like something you do when you’re new in the business and trying to launch a career. That’s not the profile of my brokers,” said Frederick Peters, CEO of Warburg Realty. “My agents are mostly experienced. They’ve built networks and from those networks, you just get much more reliable business.”
Firms that have built their businesses around buying leads weren’t thrilled with having to compete with the likes of Corcoran and Elliman on this front.
“Although we are happy to see a validation of our business model, we feel this sudden change of heart is simply a knee jerk reaction to a rapidly changing landscape,” said Aaron Graf, CEO of LG Fairmont. “There is a very specific approach to running a company based upon lead generation and modern methods. A traditional brokerage that decides to buy leads to quiet industry rumblings will not succeed in the long run.”
Katherine Clarke contributed reporting.