Douglas Driscoll, the CEO of boutique real estate agency Starr Partners has joined the LocalAgentFinder debate regarding the cost of leads, reports REB.
LocalAgentFinder compares local real estate agents within a specific area, arming a consumer with information about the agent so they can decide the best fit for them when it comes to selling their home. In addition to this, it also acts as lead generator for real estate agents.
A recent story by REB entitled Agent comparison site sees impressive jump in sign-on numbers, sparked the debate after REINSW president John Cunningham commented that these services provide “little or no” value to the consumer and that they feed off fearmongering and dubious statements.
Mr Driscoll who heads up Starr Partners, says he has “absolutely nothing” against third party lead generators such as LocalAgentFinder and Open Agent, but feels their costs are “hugely disproportionate” to the service they provide.
He has also suggested that agents who use these services should question whether they are getting enough value for the money they spend.
“According to the latest Macquarie Bank Benchmarking Report, the average real estate business in Australia operates at a 15.4 per cent profit margin,” Mr Driscoll said.
“If you were to remove the income from property management, it is not inconceivable that the average net profit from a sale could be as little as 10 per cent. This being the case, surrendering 20 per cent of your commission to a third party is commercially nonsensical.”
He added that a fee of around five to 10 per cent for this service would be more appropriate and that some of the rhetoric coming from the lead generators can be misleading.
“These companies justify their fee by arguing that it is in line with traditional referral arrangements within our industry, but these tend to be warm leads between agents, where a relationship already exists and trust has been established.