HomeLight Hikes Lead Referral Fees - Industry Described As "Cartel"

October 26, 2022
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HomeLight has increased its agent referral fee to 33% to match the likes of Zillow and Realtor.com, in a story first published by Inman.

The Arizona-based real estate vertical matches consumers with real estate agents and helps facilitate and finance home sales. The firm's previous referral fee was 25% of the agent's gross commission, but hiked its rate for the first time in its ten-year history to align more closely with other portals.

By comparison, Zillow's referral fee is 35% and Realtor.com's ranges from 30%-40%.

HomeLight emailed agents in October to notify them of the change, with the firm saying its decision was taken after two years of "volatile periods we’ve seen, from record-setting inventory shortages, the rise of iBuyers, and intense bidding wars". The new referral fee rate went live on October 25.

Agents who wish to continue claiming referrals from HomeLight will need to sign the company’s new referral agreement, while uninterested agents can deactivate their accounts.

High referral fees have been described "cartel"-like by HomeOpenly CEO Dmitry Shkipin, who criticised the move in an email to Inman.

Shkipin characterized the referral fee as a “blanket kickback” and alleged that HomeLight has now “done what every cartel does — raise the price.”

In slides shown to the Federal Housing Finance Agency (FHFA), Shkipin described broker-to-broker referral networks, such as those operated by Zillow, Realtor.com and HomeLight as “kickback schemes” designed to bypass federal laws, such as the Real Estate Settlement Procedures Act (RESPA), which prohibits giving or accepting a fee or kickback for referrals of business related to a settlement service involving a federally related mortgage loan.

Shkipin Headshot

Dmitry Shkipin joined HomeOpenly in 2017

Shkipin's email said:

"Eventually, this 25% kickback (that will soon become a 33% kickback) is paid by consumers with overinflated commissions, or lack of full service.

"If an agent is forced to pay 33% of their commissions into the scheme, they do not have any incentive left to actually spend money to promote the listing. This is what I mean when I say that this issue is much bigger than HomeLight vs HomeOpenly dispute — this issue affects the entire real estate representation ecosystem."

 

 

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October 26, 2022
Harvey is an experienced property journalist and copywriter. He has written about the property industry since 2015, starting at The Property Franchise Group in the UK, before moving to Spain to work for Spotahome. He has blogged for the private rented sector, ghostwritten for UK property experts and written case studies for franchise owners around the UK. Harvey joined Online Marketplaces as a News Editor in 2022.

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