Wednesday, May 22, 2013

Zoocasa ... doesn't that mean Animal House?

OK that was nasty. Sorry, I just couldn't resist the wordplay.

Zoocasa just announced a rebate program for people who get an agent via their service.  Herewith my take on the deal, given the currently available information.

Sorry for the lack of graphics ... I wanted to get this one out quickly.

My usual plea: yes, I'm an agent and occasionally a bit of a cynic; but I try to be objective and open-minded and I try to keep up with changes that have, do, or will influence our industry.

This Zoocasa deal strikes me as less than ready for prime time.  These guys, in my opinion, actually have a bit of a track record for getting ahead of themselves.  When they first started up, we actually signed on.  The deal was that we would get exclusive advertising space when you searched a certain geographic area.  Their job was to get all or most brokers to sign on to share their listings so that Zoocasa would become the go-to site for listing searches, with all kinds of extra features.  Didn't really happen.

So now they are becoming a licensed brokerage so they can possibly get at more of the listings.  That may work. If all brokers and reps agree to share all their listings with this type of data scraper.  There is a trend this way, but it's not there yet.

And finally, the new exciting rebate program which promises, among other things, 15% rebate on your commission fees and a slate of "hand-picked" top tier agents that you can screen for local expertise language and more.


Hand-picked.  I'm not sure how these initial bodies were selected, but I'll bet the farm that once this thing is fully launched, the first and primary criteria will be the agent's willingness to pay the Zoocasa fees for being listed in their roster.  The stated standards around experience, feedback, performance, etc will quickly default to something like "I don't see anything really awful here".  Prove me wrong, Zoocasa, but as an experienced rep I have seen many many organizations whose business is "providing leads".

One news article suggested they were starting with 200 agents with more to come.  I don't doubt there are more to come, but the site currently lists about 40 agents in total.

Their system for helping you choose screens for geography, language and type of home.  Other than a few new-construction specialists and maybe a few downtown condo specialists the "type" screen is meaningless.
Other sites, such as will allow you to sort and screen agents on these and more criteria.

I tried entering a few streets in the Beach in Toronto (just east of downtown).  Of the 7 recommended agents that popped up for my Beach street, 3 didn't appear to be based even in the actual City of Toronto (2 were in Brampton!), one included the Beach in her areas of expertise -- along with Aurora and Newmarket, and only one of these top-tier agents had I actually heard of.

Personally, I think you would be way better off getting a few names from trusted local sources and interviewing for the agent that will work best with and for you.

Now, about the rebate.  Again personally, I think you should select the right agent and pay them market value to do a great job for you.  But if you want to negotiate a 7.5% discount, have at it.  Honestly, your odds are pretty good that you can get at least your second choice for that.

I know, the articles and Zoocasa say 15%.  But that is 15% of the listing broker's end, which is typically only half of the total commission. (The other half goes to the Broker who brings in the offer and represents the buyer).  Even the 7.5% is a little exaggerated since it isn't all cash. A chunk is coupons/giftcard things.

So on a $575,000 listing, if you go through Zoocasa's limited set of agent's you can reduce a typical commission from $28,750 (yes, I know it's a lot of money, but that's a story for another day), to $26,594 in cash and giftcards.  I know that's real money, but it doesn't seem like that huge a saving unless you can be sure it is also getting you the best advice, service, marketing, negotiation, follow-up, etc.

Since these agents don't work for Zoocasa (they are agents for the Brokers you've actually heard of), you might wisely wonder how they come up with the money to give back to you.  According to one article, they take it out of the 1/3 of the listing commission that they charge the agent for handing over your name!  That is presumably in addition to fees for signing on to the service.

Yup.  We start with a normal 5% listing agreement wherein you pay the Broker $14,375 for his efforts (remember, the other half goes to the buyer's brokerage), that agent forks over nearly $5,000 of that to Zoocasa, who then give you about $1876 and some cards.

My questions: Why did you need Zoocasa to find an agent, and why did the agent need to give away a third of their commission to find you?

There is nothing evil here, just another company trying a variation on the business model of getting paid for referrals.  But like almost anything of this nature, there are questions, issues, tradeoffs, and more.  Read past the "rebate" headline and make sure you go the route that will get you the best person, service and price.

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