Why do agents pay lead companies referral fees if all they are providing is a lead?

Someone explain to me why companies like HomeGain are permitted to remain in business with the support of agents.

Homegain pits agents against themselves and then charges a referral fee to boot. Does not compute. Referrals should be based on competence and not who will pay you a fee. Do away with referral fees and the industry will be much better off in the long run.

I have tried several of the pay for lead services during my career and have found that most (if not all) of them are totally useless. The best leads are referrals from satisfied customers.

I'm trying to decern between a "lead" and a "referral" and the cost thereof. Seems to me that a lead is maybe worth $10 and a good referral worth 25%. Homegain calls leads - referrals - and agents play along and fork over 25-35%. why?

There are some very good lead systems but you are right - satisfied customers are the best.

Broker, you are on a roll today, posting insightful topics worthy of discussion. I have not been a fan of Homegain although I know people who swear by them. Which ones do you recommend? Either way, I concur with you on this one.