Sam Seller has been working with Suzy Agent for weeks to prepare his home for sale before putting it on the market. Internet-savvy, he finds his way to HomeGain where he is tempted by up to $1000 in discounts and a chance at a $15,000 drawing if he chooses to sell his home through a HomeGain agent. Sam registers anonymously to receive listing proposals from HomeGain agents. When he receives a proposal from Suzy Agent, he figures he's hit the jackpot. He can continue to use Suzy and get the HomeGain goodies, too. He doesn't tell Suzy that he was trying to better-deal her on HomeGain - anonymity has its perks. What Sam doesn't realize is that he just cost Suzy 25 percent of her commission to sell his home.

Meanwhile, Suzy Agent has no idea that Sam Seller is the same person as the anonymous inquiry she responded to through HomeGain. She has virtually no information on the anonymous seller, not even Sam's first name. HomeGain's system allows Sam to remain completely anonymous. Sam doesn't have to be truthful about his name or even where his home is really located. That makes it tough for Suzy to recognize Sam as the customer she is already working with. She doesn't hear back from the anonymous seller, so she assumes that he found another agent.

But Suzy will soon find out otherwise. Sam's closing will be counted by HomeGain as a "referral" even though Sam and Suzy had a previous relationship. One day, Suzy receives a fax from HomeGain demanding payment for the referral fee on Sam's closing. Outraged, she responds to HomeGain that this client was her own, but HomeGain has proof that Sam did indeed register to meet other agents and that Suzy sent him a proposal. The fact that they already were working together cuts no ice with HomeGain.

Says a HomeGain spokesperson, "We have time-stamps on every click that happens for both consumer and agent. The key one is the time stamp of the date the agent submitted his or her proposal to a particular consumer."

Many agents say they get leads under HomeGain's system. But how many pay referral fees to HomeGain on customers they are already working with? These agents would never send proposals to sellers or buyers they are working with. Why kiss off 25 percent when you don't have to?

Under HomeGain's blind proposal system, agents get only the most minimal information about the seller (or buyer) often a nickname, or first name and an area where the seller's home is located. This minimal information is to prevent agents from circumventing HomeGain and approaching sellers directly to list their homes and avoid paying a referral fee to HomeGain.

Agents have no way of knowing if they are sending a proposal to someone they already know. Some don't find out until long after their commission checks are spent that they owe a referral fee to HomeGain. And HomeGain doesn’t back down unless the agent can produce a signed listing agreement that predates the proposal.

That's what happened to Realtor Tamara Inzunza. She says she would never have sent a proposal to someone she was already working with. And it’s happened twice recently, she says.

”I have used the site since it first became live and have successfully closed a couple of transactions with HomeGain,” says Inzunza, who says she and her seller agreed not to list the home until it was ready for marketing. “I left a message on the rep’s voice mail that I had received the fax to pay a referral fee, and that the transaction was not a HomeGain referral. I sent an e-mail to my sellers, and they said we never did use Homegain.”

Says the HomeGain spokesperson, it isn't possible for HomeGain to track sellers unless they register.

“It is possible that this seller didn't want to admit to his agent that he filled out a profile on HomeGain because it would let the agent know he was still looking,” says the spokesperson.

Inzunza said HomeGain was able to produce proof that her seller did indeed register on HomeGain and that she had sent the seller a proposal to list the home. She paid the referral fee.

The second time it happened, Inzunza says, “I asked my seller and he said that he visited the site (HomeGain) but he didn’t do anything with it, he was just browsing and didn’t open an account. I had reviewed my notes and I had met with him in January – two to three months prior and gave him suggestions on how to improve the home and in April we signed the listing. I had a prior appointment with him written in my planner. I told HomeGain that and they responded that the listing agreement was signed after I sent a proposal to the seller.”

”If a HomeGain agent were to sign a listing agreement with a consumer prior to that consumer going to HomeGain and filling out a profile,” says the HomeGain spokesperson, “we would not have a claim to a referral fee. They would just need to provide us with a copy of the listing agreement with the date. If, however, a consumer met with an agent, but did not sign a listing agreement, and then the consumer filed a profile on HomeGain, to which that same agent responded, we would be owed a referral fee.”

Inzunza didn’t have faith that her day-planner would hold up in an arbitration dispute, so she paid the referral fee again.

“It is hard enough for me to fight for my commissions without having to also pay a referral for a transaction that was not a referral,” says Inzunza.

Part of Inzunza’s frustration would have been spared if her sellers hadn’t lied to her about registering with HomeGain. She would have known that she would have to pay a referral fee instead of being blindsided by a request for hundreds or thousands of dollars in referral fees after the closing.

Why would sellers lie about registering with HomeGain?

HomeGain user Sheila Gillette says, "Sometimes people get on these sites after you are working with them. I had someone do that because HomeGain was offering some money or some promotion, and he got on there and clicked and ‘yes.’”

Gillette says she looks at the referrals fees she pays on her own clients as a cost of doing business with HomeGain.

”I’ve been satisfied with the amount of business I”ve gotten off it, and it is business I wouldn’t get otherwise,” says Gillette. “But I don't like the way the referral fees keep going up - from 15 percent to 25 percent. So my advice is watch the profiles. If you think it might be someone you are already working with, don’t send a proposal.”

But that philosophy doesn’t often work even in Gillette’s own business.

”Part of the problem is that I have an assistant who does this, “ says Gillette. “I don’t even see the proposals; she sends them out. I wouldn’t have the chance to say, ‘Oh, that looks like the guy I’m working with,” and my assistant might not know.”

”Homegain makes it hard,” says Gillette. “What we (agents) see is not a lot of information, so it is not like you have an address so you could check it automatically.”

Both Gillette and Inzunza say that they would like to have a little more information about the seller or buyer before sending proposals.

”A full name, not a nickname, an address if it is a seller,” says Gillette, “but HomeGain is afraid we will contact them without sending a proposal.”

If HomeGain won't provide a way to let agents better discern who the anonymous sellers are, and it is clearly not in their self-interest to do so, what can HomeGain agents do to protect their commissions on referred sales to their own clients?

Inzunza says she plans to cancel HomeGain's service. Gillette says she plans to review any HomeGain proposals with her assistant before the assistant sends them to the anonymous sellers.

Published: August 1, 2002

Use of this article without permission is a violation of federal copyright laws.

Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. For more articles by Blanche, click here.