Is HomeLight Match Legitimate?

Is HomeLight Match Legitimate?

HomeLight referral fees cost consumers Billions and subject all matches to pay-to-play bias.

The Internet is one user at a time. If something works for one person very well, it will likely work for the entire Internet community. If an online product is severely broken for one person, it is likely broken for everyone just the same. I firmly believe that this seemingly all-or-nothing logic separates the next Google from today's Yahoo. The Internet is here to improve our lives in scale, not tax our user experience.

HomeLight must work for everyone, but at the very least, it doesn’t work for me. I know that it doesn’t work for you either, and here is why. The fact is, HomeLight only works for brokers because it is paid from the broker's commission and it is a licensed real estate broker itself.

HomeLight is not a technology company, it is best described as a Proptech (Property Technology) company. The difference is that a technology company must improve user experience over the Internet, but a Proptech company doesn’t have to do that.

Imagine, if Google was to ask for a payment from you, or a cut of service providers fees to use their search, nobody would use it. As a real estate broker, HomeLight doesn’t have to improve your Internet user experience, it only has to convince you that you should let them tax your transaction.

A Proptech company will often buy exposure with technology companies such as Google, Nextdoor, and Facebook to promote products or services that may include mortgage originations, broker fees, rent-to-own programs, real estate cash offers, professional services, etc. HomeLight, as such, actively buys ads to sell you their 25% broker referral fee.

In addition to pay-per-click marketing, HomeLight also buys TV ads, a lot of TV ads. Typically, I refrain from posting private LinkedIn messages with other Internet users, but this one is special (the user’s full name is, of course, kept private.) This person saw an ad for HomeLight on TV and posted a positive comment about it - she liked it. This conversation is distinct because it happened randomly and this user has nothing to gain personally. She is the ultimate benchmark to measure the perception of the user experience.

I consider this conversation unbiased because the user is focused on her needs, and not mine, she has no connection to HomeLight, she has no connection to HomeOpenly, and there are no hidden fees or incentives exchanged between us. She is a consumer, like any other, looking for services that help her improve her experience. The answers she gives me are impartial and directly reflect upon my questions. This input is invaluable, and I selfishly feed on it to help my team to build a better real estate product, a much better product.

The following is our chat verbatim:

Francine, I saw your comment for HomeLight.
Genuinely curious for your input after reading this review. Your POV and feedback are of great value because you are an impartial party.
Is HomeLight a legitimate match or a pay-to-play scheme? Best, Dmitry
Hi Dmitry!
Thank you for connecting with me! is spending the big bucks to advertise on TV, not to mention the costs of production of such an ad, developing the site itself and so forth. I think it's ligit due to just that.
They've made a product for folks looking to sell their homes a little easier by contacting the best Real Estate person for them in their demographics.
>br/? Great site! Jmho
Have an awesome day!
Francine, this is an interesting perspective, thank you!
HomeLight is a licensed real estate broker that recommends other brokers for 25% of their commission. If a broker does not want to share their commission with HomeLight, they won’t connect a consumer to them.
I suppose we can apply this methodology to all our transactions - if a restaurant is willing to pay a third party a portion of our lunch bill, they will happily recommend that place to us. Or does this logic only holds for real estate commissions?
HomeOpenly is an Open Marketplace, we don’t charge participants anything, but we do require that agents offer savings. So, an agent can offer you or me a 25% rebate of their commission, instead of paying it as a kickback to HomeLight.
For the time being, I hear your argument quite a bit, and it creates several questions.
What is the attraction of pay-to-play matching to consumers?
Does it bother you that HomeLight lies to you about being impartial?
Does it give you a sense of security that an agent pays HomeLight your own money to be able to work with you?
It is a social conditioning issue. Your response can shed a light on how Entrepreneurs like myself develop new products.
For example, my team picked real estate to develop our current product because we saw how brokers work and how their commissions are largely overpriced, so we took action on our end - build a better product with 0% referral fees.
Having consumers see the difference or care, that is something only consumers can take actionably change, so I am genuinely curious for justification one makes to use pay-to-play platforms for potential triggers to help them resolve this.
Your input is highly valuable, I see the Internet as a single user experience. For example, Google and Amazon work for everyone, all the same, this should also be true for homeownership. Best, Dmitry
Honestly, I probably would even use this due to all my church friends that are agents. I could see if someone wanted to attempt to get the best price for their home...but wow! 25% is super steep! I would not use this myself. Too pricey for me.
Francine, thank you for your reply and valuable feedback!
I hope you will be able to recommend HomeOpenly to your friends, we aim to bring transparency to the housing market and save consumers from overspending approximately $15 Billion in referral fees each year.
If consumers systematically begin to work with competitive agents on competitive terms without junk fees, it would greatly help lower cost of homeownership across the United States. The Internet is a great tool and HomeOpenly aims to gain organic recognition to outpace pay-to-play networks.
Please check out our directory for more information about different offerings and platforms currently trending in real estate. Best, Dmitry
Of course!

Yes, it is true, consumers have a well-defined bias toward lower transaction fees leading to lower home sale value, but there is no evidence to support it. Progressive tech-enabled real estate agents are systematically able to deliver the best service while working for competitive commissions.

There is further no third-party evidence that past MLS data has enough information distinguish between agents who deliver value and the agents who simply underprice homes for a quick sale, yet HomeLight claims to somehow be able to tell the difference.

This conversation may seem like an ongoing debate because it is one. When pressed for a reply from HomeLight on how their service only offers pay-to-play results, the company either ignores me or blocks me. In effect, HomeLight is unable to resolve this issue because it is caught up in pay-to-play.

HomeLight algorithm is self-proclaimed and, besides suffering from a heavy payment bias, it easily amounts to completely unfounded results. Because the company operates as a “black box,” there is no way to check their claims. As a consumer, HomeLight is asking you to blindly trust that they match you with a good broker.

Interestingly enough, HomeLight has a direct financial incentive to connect you with the most expensive brokers locally, because their referral fee amount goes up with a higher-priced commission.

Ask them this question: "If all brokers on HomeLight platform are required to pay a referral fee, how is this service impartial?" In the best case, their staff will attempt to tell you that referral fees are "standard" and that they need to make money from your transaction. In the worst case, they will ignore your request.

I further submit to you that HomeLight, as a licensed broker, potentially engages in an antitrust violation known as market and consumer allocation between licensed real estate brokers. Brokers must compete with one another to provide you with real estate services, not sell one another as the best match.

As far as getting the best price for your home, a seller can firmly assume that buyers will always make you their best available offer on an open market. Buyers are buying your home, not your agent. To negotiate a great listing rate with a competitive agent will allow you to take an offer from a buyer faster and keep more of your equity. A great buyer's agent may also help your potential buyer with a commission refund that directly lowers the cost of buying a home and gives the buyer an added financial leverage to make a better offer.

While competitive fees leave you with more equity, junk fees reduce your equity. Remember, banks don’t care how a home is sold, only seller’s equity is lost in transaction fees. For economists, it is a proven fact that payment kickbacks result in reverse completion, lower quality of service, and higher costs to consumers. In my humble opinion, an agent who agrees on the back-end to pay a hefty part of a commission you haven’t even agreed to yet simply doesn’t respect you as their client.

Assuming an average referral fee of around $3,500 on a $250,000 home, as of 2019, HomeLight currently claims to have made a successful match for about 390,000 people with agents. This is close to one Billion USD in referral fees paid to HomeLight for what is advertised to you as a 100% free service. Yes, this is a Billion with a “B” problem. Even to cut this estimate in half, no actionable service is provided, making almost all of it pure profit. This money, structured as junk fees, now resides in 390,000 hard-earned mortgages, collecting interest.

In 2018-2019 this trend is getting much worse. Zillow Group, for example, now aims to bring in Billions each year in referral fees from their new Premier Broker program that, too, operates on a “standard” referral fee basis. Zillow Offers runs a program that suffers from an abysmal 2% success rate, where company actively sells 98% of all failed requests to brokers – failing to deliver what is actually promised is a Billion dollar opportunity to Zillow because it yields an immense referral fee revenue.

HomeLight Simple Sale program suffers from a similar ultra-low success rate. Realtor-Opcity has also switched to referral fees as revenue in 2018 with an acquisition of a referral fee broker similar to HomeLight, called Opcity. These companies collect 25%-40% in referral fees on overpriced commissions not to improve the process, but because these fees yield Billions. Consumers do not see any benefits here, only mega-junk fees. Brokers don’t need to compete in these schemes either, they just need to agree to a referral fee.

At HomeOpenly we invite you to skip these schemes and overpaying for "standard" commissions to actively seek new ways to reduce your closing costs.

Unlike HomeLight that can easily operate on a low success rate, raking thousands from each transaction, HomeOpenly service requires much larger network effects and a much higher rate of success - we require full user engagement with us to build this service into a successful marketplace that positively helps consumers with the majority of real estate transactions in the United States. HomeOpenly doesn’t want to be your broker, we want to improve your homeownership experience.

HomeOpenly doesn’t rake in Billions from brokers, instead, we aim to help consumers efficiently manage $31 Trillion in residential real estate assets. Earning your trust is how HomeOpenly aims to generate revenue from a much larger number of real estate verticals with fairly priced, value-added and clearly labeled advertisements.

Competitive agents can help you save tens of thousands in fees, and we don’t compete with them, or charge them - we help them connect with you. Nothing prevents agents who already willing to pay 25% of their commission to HomeLight, to offer consumers these savings on our 0% referral fee platform – the result is money in the right pocket.

Truly competitive agents will never agree to pay referral fees because they want to work with transparency and pass all savings directly to you. As a savings aggregator, Open Marketplace utilizes the power of network effects from all our users with great leverage. We don’t let any of your savings get eaten up by referral fees.

We value the privilege to improve your homeownership experience as the most valuable transaction and life-cycle asset in your life – for your current as well as your next home.

What makes for a better Internet user experience? Does pay-to-play, or fair-play matter? Answers to these questions will define the way residential real estate markets operate, from top to bottom. Only the right answers, however, will help consumers better manage and to help lower overall cost of homeownership.

As an Internet user, it is up to you to make the actual switch to better user experience. The same way Google began to offer you better search results - these results only became better, once you began using their service. Suddenly, pay-to-play search results from Yahoo, Altavista, Ask, or Excite did not make any sense because they taxed you too much and delivered plain pay-to-play junk search experience. At HomeOpenly, we know that you can do it again.

Your user experience shouldn’t be sold for Billions in referral fees, it should be earned with savings. Any agent who works with HomeOpenly is a valued user to our open platform. Any home buyer or a home seller who works with HomeOpenly can claim better saving and receive better service because the entire process is competitive by design.

Savings is a unifying user experience that works for every one of us.

Related to: HomeLight, top local agents, bias, pay-to-play, real estate, referral fees

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Last updated: November 03, 2019
First published: September 11, 2019