Not Very Prudent, Prudential

What happened this week at the Prudential Real Estate Conference is almost certainly the largest blunder by a real estate company this year.  In one, no two, unbelievably stupid moves, the executives at Prudential decided to dismiss two vendors, Zillow and Trulia, that had already paid to be at the conference and had in fact already set up their booths.  You can read the story at the Inman Blog or on Inman News (if it hasn't been turned off already). 

The key statement in the article is this:  "Prudential brokers familiar with the agreement said they pay a referral fee when leads generated through the agreement with Yahoo! lead to a sale."

Read that statement very carefully. 

If I was on a regulatory commission or the Department of Justice I would be reading it very carefully and then I would start to ask some serious questions, such as: 

• How can Yahoo! get paid part of the commission of a transaction if they aren't licensed? 
• If they aren't getting paid part of the commission, what kind of deal has been worked out? 
• How does that deal affect the service that is given to the consumer? 
• How does it make the agents feel when they have to give 25-35% of their money to a company that contributed absolutely no value to the transaction? 

And if I am a Prudential agent:

• Why would I work for a company that appears to be trying to limit the resources I can use to represent my clients to the best of my abilities? 
• What other resources are they hiding from me because they have affiliates that can charge us instead of getting it for free? 

And more importantly, if I am a home buyer and I use Yahoo Real Estate how will the fact that a Prudential agent will make less money representing me versus an agent at Keller Williams or Remax affect my choice in agents?

It doesn't seem that Prudential thought this through.  But then again, real estate brokerages are run by individuals that probably don't deal with consumers and only see agents as a necessary evil, so what is there to think through..."Yahoo gives us money, agents give us problems.  How can we take more commission from the agents without giving anything of real value in return?"

Related Articles: Realonomics - "Rock Solid Meltdown - Tantrum In SD", Sellsius - "Deep Throat: Prudential Kicks Trulia Out Of Real Estate Trade Show", Rain City Guide - "Trulia and Zillow Booted From Pru Convention"

Comments

[episodic magician]

Have to concur that the franchisor management team at Pru screwed the pooch on this one. They must have signed away their first born to Yahoo to be so conservative and pull a stunt like that. Maybe the Yahoo folks get free commissions from Pru agents for life as part of the deal. That would be sweet for them.

At least Yahoo is getting paid. I've heard that in all those other Trulia and Google deals that are going on with franchisors and brokers that those schleps might actually be paying for the right to publish listings.

Crazy times.

[Karim Tahawi]

This is funny because I think the Prudential move actually HELPED Zillow & Trulia get the message across while embarrassing the industry.

Is it just me or does this feel like an arm-wrestling match with your 95 year old grandfather?

[Danilo Bogdanovic]

Yes, these are some crazy times...but it's just getting started.

It's like the older, traditional boxer fighting the younger and more nimble boxer. He was the champ once upon a time, but now he throws sloppy punches that are off target. All the young and nimble boxer needs is to duck every once in a while, throw consistent jabs and have some patience.