Compare Rocket Homes and Nobul

Nobul revenue comes from referral fees and sale of user data.

Nobul is a referral fee network in business to collect fees for matching brokers with consumers. Referral fees are highly disadvantageous for real estate consumers because they must be accounted for with excessive real estate commissions. Nobul Service Terms state that: “In consideration of Nobul's Referrals pursuant to this Agreement, the Agent shall pay to Nobul, a referral fee (a “Referral Fee”) based on a percentage of revenue equal to 0.2% of the purchase price of the property purchased or sold. The Agent shall pay the Referral Fee to Nobul within ten (10) days following the closing date of the purchase or sale of the property.”

One of the major expenses for real estate consumers, when buying or selling a home, is real estate service fees and closing costs associated with the purchase, or sale. Service fees and closing costs are, for the most part, a necessary expense. Real estate agents significantly help home buyers and sellers to navigate a complicated and competitive real estate process in exchange for a legitimate commission as a reward.

Other closing fees usually include required services such as property appraisals, inspections, title insurance, etc. – all in some way help to legitimize the sale and to manage risk. There can be much said with regards to managing closing costs by choosing a motivated competitive agent who is willing to offer a buyer’s refund or a competitive listing rate.

On the other hand, while claiming it saves money to consumers, Nobul simply adds referral fees into already a fee-ridden process – consumers experience false and fabricated savings in this model. In economics, this process is known as reverse competition, where consumers end up being "sold as leads" to Referred Agents.

The platform works with a limited pool of Referral Agents willing to pay a significant part of their commission to Nobul. This referral fee is back-loaded into Referred Agent's agreement, instead of being handed to the consumer directly. The consumer technically does not pay Nobul, but she ends up with a higher cost of commissions when working with their Referred Agent. Nobul is not a free platform, these fees are simply hidden inside the commission.

Let's say a real estate consumer, James, wants to hire a listing agent when selling a median-priced home for $250,000. A local competitive agent, Jill, offers James a 1.5% commission while helping him in this process. The estimated commission, in this case, is $3,750.

On the other hand, James also receives non-binding proposals using Nobul platform from Referred Agents with a referral fee attached to the back of every proposal. When James is faced with these types of proposals, results are quite different. Firmly assuming that the profit margins and service offerings remain the same for Jill and Referral Agents using Nobul, any possible buyer's refund offered by Referral Agents must be reduced to account for the Nobul referral fees.

The referral fee in this scenario estimated at $500 due to Nobul from a Referral Agent. With the profit margin fixed, the estimated commission Referral Agent may offer to James is now up by $500 set at $4,250. James just effectively paid Nobul $500 for a "service" that is supposed to be "free."

These fees significantly increase with the price of a home and damage quality of service the agent is willing to provide. One reason the amount of savings may ever be matched by Referred Agents versus Jill's competitive savings is due to broker-to-broker pricing collusion - if Referral Agent is willing to reduce their fee beyond market rates to compensate Nobul out of their own pocket, which is highly unlikely and unreasonable to assume. Because referral fees are pre-set between Nobul and Referral Agents in advance, the cost of the referral is easily incorporated with the excessive commission.

The reason we give Nobul a low score is due to exigent fees and the way these fees are structured. Nobul operates a Referral Network that commoditizes consumers as leads. With Nobul agents are forced to quote higher commissions due to added fees. The vast majority of competitive agents refuse to play this game and Nobul simply steers consumers toward a very limited pool of agents in its pay-to-play network.

As a licensed real estate agent that doesn't perform any real estate services, or takes any responsibility for the transaction, it's not entirely clear how this process works under the Business and Professions Code.

Should real estate agents distribute "bids" of other agents for a fee? If one to say that the referral fee is indeed necessary, why not structure it as an actual service fee that is properly charged, instead of having to be back-loaded into Referral Agent's agreement?

The answer is simple – if Nobul was to charge Agents for its service directly, no Agent would ever sign-up. Agents only sign-up with Nobul because the price of the referral fee can be easily incorporated into their client's agreement.

Nobul further violates the privacy of consumers because it requires Referred Agents to disclose major details about the actual home purchase or sale. Nobul states that: "The Agent shall maintain adequate records of all fees and commissions received from the Client and shall make such records available to Nobul at its request. Such records shall include copies of the applicable real estate association’s Listing Agreement, Agreement of Purchase and Sale, a statement of commission earnings and the Trade Record Sheet, as applicable."

Despite collecting the referral fee, Nobul takes absolutely no responsibility for the transaction and consumers to acknowledge and agree "that no employment, joint venture, partnership, or agency relationship exists between you and Nobul as a result of this Agreement or your use of our Services. We are solely independent contractors."

Nobul clearly doesn't provide any tangible value to the real estate consumers as a licensed real estate agent. Nobul further audits all transactions because it needs to find out how much money real estate agents receive in commissions, inevitably collecting private details of consumer’s agreement for home purchase or sale.

This effect is known as a “blind” match. Truly competitive agents who offer great savings to consumers can never use Nobul. For example, a highly competitive flat fee listing service has a set competitive price – they would never be able to pay an excessive fee amount to a third-party.

Nobul referral fee only works is with services who are silent on their commission – if a client comes directly to an agent, one price is given, if a client uses Nobul, another price is in play. We strongly believe that real estate consumers looking to buy or sell a home should always use 0% referral fee platforms in order to avoid paying a higher cost in commissions.

By using Nobul, consumers further encourage pay-to-play bias in a broken real estate industry.