Real estate has quickly changed into a landscape where lead-generation platforms are collecting a referral fee at closing, more companies own their own lending divisions, and the industry at large is in a protective, pro-consumer stance.
That’s according to eXp Realty CEO Leo Pareja and Holly Mabery, eXp’s senior vice president of brokerage operations. The two spoke with Inman about the firm’s Monday rollout of new and updated referral disclosure forms at the nation’s largest brokerage by sides and agent count.
EXp announced last week that its agents would begin using new forms around referrals. That announcement came eight days after a group of Realtors failed to approve an amendment to the Realtor Code of Ethics that would have expanded when agents must disclose referrals to their clients.
The proposed amendment overwhelmingly passed a vote of the full Board of Directors at the National Association of Realtors’ NXT conference in Houston just minutes before it failed a second and final vote.
“I thought it was going to pass, I truly did,” Mabery said. “When I found out it failed, it was like, ‘Oh, no.’”
Mabery suspects there was confusion about the amendment among the local leaders who make up the Delegate Body, which narrowly failed to approve the change. Regardless of the reason, eXp quickly began the process of creating new forms and updating existing ones for use by all agents, effective Dec. 1.
EXp rolled out the forms despite the failed amendment and at a time when the brokerage feels it is more responsible for its legal liability than the rule-setting NAR.
“We are, at the end of the day, responsible for our own future from a legal standpoint,” Pareja said. “At the end of the day, are we waiting for some third party body that we’re members of to have our back? As we learned, I’d rather be safe than sorry and own and offer our stuff.”
EXp was among the nearly 100 brokerages that were not covered by the landmark NAR settlement in March 2024.
“If it’s legally challenged, I feel like we’re going to be there anyway,” Pareja said. “So we might as well be authors and active participants in that process.”
Real estate evolution
EXp’s days as the No. 1 brokerage by transactions could come to an end if Compass’ bid to acquire Anywhere is finalized next year.
The blockbuster merger is just one sign of how the industry is changing as more companies acquire competitors and expand their in-house ancillary services.
“The world is different than five years ago,” Pareja said. “We witnessed the death of the pay-per-lead kind of reoccurring business model from the lead-gen side of the world.”
“We’ve seen a slow but steady migration to a success fee with all companies now taking a referral fee from most of the lead-gen products at scale.”
Zillow is facing a pair of legal challenges over allegations that agents in its Zillow Preferred Agent program (previously Zillow Flex) must meet a quota of clients referred to use Zillow Home Loans.
In a separate lawsuit, attorneys alleged that Zillow inflated costs to homebuyers through the Zillow Flex referral program, which imposes up to a 40 percent “success fee” to agents who successfully close a transaction via a lead generated through the platform.
“We’re now in a world where three of the five largest search portals are owned by lenders or own a lender,” Pareja said. “That is a pretty big shift from if we were to rewind the industry five, 10 years ago.”
“Compass buying Anywhere is another part of the consolidation, where you see vertical integration with all services under one roof,” Pareja said. “By the way, we own a lender, so we’re not different.
“So we just want to continue to double down on the consumer being our North Star and being hyperaware. There’s absolutely no requirement on them to use any service provider.”
The updated referral forms are available for use as of Monday, which will kick off a kind of “grace period” during which the updates are rolled out to agents, Mabery said.
“When it comes to using the new listing form or buyer broker, we strongly encourage our agents to use our eXp forms,” Mabery added. “But we also recognize we are a platform that provides choice for the agent to rise to the level of success that they choose. And so, sometimes, they’re going to be using their state-provided forms.”
“We have provided a standalone referral disclosure. If they haven’t used our form, they need to use the referral disclosure,” Mabery said. “It’s that simple.”
