The Agency co-founder Mauricio Umansky had an interesting discussion with Eric Eckardt, CEO at Purplebricks USA in New York this Tuesday at an Inman real estate conference.
“If you want to hire a plumber for the most important transaction of your life, go for it,” Umansky said.
I find this analogy interesting because the actual “plumbing” in US real estate process is something else entirely. A referral fee network Opcity systematically calls its lead generation process a “Referral Pipeline”
Opcity operates as a licensed real estate brokerage in Texas under TREC License # 9005100, but it does not produce any services that are typically offered by real estate agents and does not represent consumers when buying or selling real estate in any State. When consumers submit information to Opcity via Realtor.com, this information is simply sold to real estate agents who are willing to pay for it with a lion’s share of their commission. Opcity pipeline process suffers from pay-to-play bias because the network never matches consumers with agents unwilling to pay a set percentage (estimated at 25%-40%) of their commission to Opcity.
Opcity audits all transactions and requires agents to update the status of each transaction on the continued basis because it needs to find out how much money real estate agents receive in commissions and when these fees will be due, inevitably collecting private details of consumer’s agreement for home purchase or sale.
Opcity further calls it a “dispatch process that matches agents to available leads based on lead’s proximity, lead’s price points.” The main qualification for real estate agents who participate with Opcity is their willingness to pay a referral fee. Opcity is a subsidiary brokerage for Realtor.com — what used to be more or less an independent MLS Aggregator, now acts as a plain middle-man broker.
Realtor.com had acquired Opcity in 2018, making this scheme one of the most scaled and damaging referral fee networks in the United States. Today, Realtor.com Opcity scheme is the low point of a transparent real estate process. From Opcity’s own description of the service, the nature of the process could not be clearer: “We send a lead alert via text or mobile push notification to the agent 1st in the queue. That agent has approximately 5 seconds to click-to-claim the lead alert before the 2nd agent receives a lead alert and can also click-to-claim the lead. 5 seconds later, another agent is alerted, and so on.” In this process Opcity “qualifies” and “dispatches” consumers, where consumers are no longer in the driver’s seat, but instead, are traded as a commodity.
It has been estimated that referral fees are 32x more expensive than typical ads, but Opcity plays these hidden fees down, claiming there are “no upfront costs.” Opcity does not publicly disclose the exact amount of referral fees it charges each agent, but it rigidly locks every participating real estate agent into a referral fee attached to the back-end of every contract. As a licensed real estate agent that doesn’t perform any real estate services or takes any responsibility for the transaction, it is not entirely clear how this process works under the Business and Professions Code and RESPA. Clearly, real estate agents only sign-up into Opcity “pipeline” because the heavy price of a referral fee can be easily incorporated into their client’s agreement in a form of excessive commissions.
The question now stands: who are the real “plumbers” in the real estate process? What exactly do consumers pay for with referral fee networks?