“This is a Band-aid”: Brokers fear StreetEasy’s sales fee could mean fewer Premier Agent leads
The high cost of Agent Spotlight could be a silver lining
With another StreetEasy fee comes another wave of criticism. This time, the listing portal’s new program has struck a chord among Premier Agents — who drive the bulk of Zillow Group’s revenue.
In unveiling a paid program for sales listings, StreetEasy gave brokers a route to bypass Premier Agents who may otherwise be displayed alongside those listings. If the initiative, dubbed Agent Spotlight, gets enough buy-in from brokers with exclusives, Premier Agents said it threatens to dilute the value of the lead-generation program. Agents said they may be forced to reconsider their spending on the product.
“They’re solving a problem by creating another avenue of income for themselves,” said Beth Gittleman, head of sales and development at Bohemia Realty Group. “This is a Band-aid.”
When it launches in February, Agent Spotlight will cost agents $333 per sales listing per month. Brokers can participate only if they manually enter listing data. To facilitate that, StreetEasy also rolled out a new back-end listing platform called “Listing Tools.” After Zillow announced the change on Tuesday, several residential brokerages called it a form of “blackmail.”
It’s also been a cause for concern among some Premier Agents. By creating a way to cut Premier Agents out of the equation, it could reduce the amount of leads they receive. At Bohemia, Gittleman said agents can individually opt to use Premier Agent — and this change means they will have to temper their expectations for the advertising program.
“I respect them having a business and finding different ways to make money,” she said. “But it’s unfair to agents who are paying for advertising.”
As was anticipated, the Real Estate Board of New York, which has its own residential listing system, came out against StreetEasy’s latest program.
“It is clear that StreetEasy is not pro-consumer or pro-agent,” said Jamie McShane, vice president of communications. “It is a business that profits from agents by charging them for their information, thus limiting access to such information by consumers.”
He added that the industry trade group is “awaiting instructions from the Department of State as to how agents should interact with third party lead generation programs and be in compliance with the law.”
In 2017, REBNY asserted that the portal’s Premier Agent program caused “a mealstrom of consumer confusion.” StreetEasy responded by adding a representative to screen potential buyer leads by phone before passing along live leads to buy-side agents. That created a new concern: Premier Agents worried they’d receive fewer leads. The latest fee, brokers said, doesn’t address those previous problems.
Doug Perlson, founder of RealDirect, said it makes sense for StreetEasy to give listing agents the chance to appear prominently on their own listing (instead of a Premier Agent.) “I have purchased Premier Agent ads while holding my nose because I felt it was not transparent,” he said.
“Is this the right product? It’s still hard to say. Certainly, the price point is way out of line in my opinion. It’s way too high,” he said. “The idea that in weaker markets, the ability to be on your own listing will cost more is not the type of partnership that I think Zillow and StreetEasy should be doing.”
For its part, StreetEasy said Agent Spotlight is an optional branding product.
“We’re continuing to evolve the PA program on StreetEasy to best serve this market and NYC buyers,” a spokesperson said. “Agents can continue to market their sales listing on StreetEasy for free and buyers will see the default contact box, which has been redesigned to educate buyers about buyer’s agents and provide Premier Agents with more quality and better-informed leads.”
Premier Agent has raked in most of Zillow Group’s revenue. In 2017, Premier Agent generated $761.1 million of Zillow Group’s $1.1 billion revenue. And in the third quarter of last year, more than 67 percent of the company’s earnings were tied to the program, where revenue grew 18 percent to $232.7 million. But the program had a rocky quarter, with Zillow lowering Premier Agent’s revenue guidance for the fourth quarter.
Agent Spotlight may not helps matters, according to some brokers. For Mdrn. Residential’s Kobi Lahav, Premier Agent has been effective in generating leads. But after the latest news, Lahav said he’s holding off on his previous plan to increase spending on the advertising.
“Every time you get to a point where it’s going great, they change something,” he said. “It doesn’t give us a lot of confidence.”
StreetEasy is “trying to have their cake and eat it too, trying to monetize both ends,” said Ethan Leifer, an agent at Compass (which does not support Premier Agent). Leifer said he’s heavily invested in the program but will weigh his options if Agent Spotlight affects his business.
Yet there is one silver lining: the cost of Agent Spotlight may be too prohibitive to become the new normal. It may only make financial sense for those with higher-end listings.
“My sense is that there are not a lot of brokers clamoring to pay a fee to do this,” Leifer said.
LG Fairmont said the change won’t impact their business because they already swore off StreetEasy. “There are dozens of sources for buyer lead opportunities in the market, and most of our resources have been focused on developing proprietary channels,” said COO Phillip Yellen.
While it remains unclear how prevalent Agent Spotlight will become, agents took issue with StreetEasy’s approach to adding new streams of income to the platform and frequently adjusting its initiatives.
“It’s kind of a monopoly. They’re throwing these things at us and we have to adjust,” said Lahav. “I understand that Zillow is trying to fend off pushback, but this wasn’t thought through enough.”
E.B. Solomont contributed reporting.