Auctions are once again dominating the Auckland market

by Alistair Helm in ,


Earlier this year there were signs that auctions had lost their lustre, but examining the past 7 days of new listings coming onto the market in Auckland shows that close to half of all new listings are being marketed as auctions!

Here are the facts - between September 22nd and today (the 29th), 808 properties have been listed across the Auckland region from data on Realestate.co.nz. Of this total 400 are being marketed as an Auction. Over the month of September a total 1,113 properties on the market today are marketed as auctions which represents 43% of the total of properties listed in the month. Of course properties listed in the first week of September with a 3 week campaign will now most likely be sold, thereby explaining the difference between the c. 50% in the past 7 days and 43% for the past month.

Clearly auctions are the hot topics and the most favoured method of sale.

But as ever the question should be asked as to the success of auctions. However when it comes to the success of auctions, this is where interpretation of figures becomes something of an art form!

Last week there were a couple of media articles which showcased auction performance.

The NZ Herald on Saturday examined the Barfoot & Thompson auction in the city office and stated that they sat through 27 auctions of which 11 sold under the hammer with 10 passing in below reserve and 6 with no bids - a 41% success rate. The article went on to quote Peter Thompson reporting a 55% success rate - this number being the total of 11 sales plus a further 9 properties which had sold prior to auction. Now you can see why reporting on auction success is an art form!

The article quoted Harcourts saying that at a Christchurch auction in the week there were 23 sold from 25 presented at the Harcourts Grenadier offices in the city. Across the city another Harcourts office (Gold) reported selling 10 from 15 under the hammer.

Now none of these figures will surprise as circumstances at every auction event will be very different and so will be the outcome. However in my mind the key matter in reporting auction success is simply this. Success is defined as how many properties of those offered at ann auction event are sold under the hammer or at least within the next working day as is now the defined period under the Fair Trading Act. It is not relevant or appropriate to add to this list properties sold before the event (even if they were sold at an auction) nor properties that sold outside of this defined new time period.

I applaud Barfoot & Thompson who have embraced this new law change in their publicity of auction performance as they now simply detail (i) sold under the hammer (ii) sold prior (iii) sold by 5pm next working day to arrive at total auctions. However they have ceased to detail total passed in as they used to do.

I have been keeping a record of these monthly reports from Barfoot & Thompson for the past 18 months and as you can see they provide a vital snapshot of the Auckland market (accepting for some months of no data).

t the peak of the property cycle back in first half of 2013 Barfoot &Thompson were reporting property sold under the hammer (plus on the day) consistently exceeded 40% of all monthly sales. Through the first half of 2014 this had fallen to less than a third in March and May, although April was incredibly active and successful. The last two months though have seen a fall off. It will be interesting to see the September results.

Looking outside of Barfoot & Thompson and the Auckland market the REINZ data of auction sales is the most reliable. I would have to qualify that statement though by saying that the data of auction sale has no clear definition. I would hesitate to guess that it simply relates to the sale of properties which were listed as being an auction irrespective of how the sale  was concluded. 

The data for the past 3 full years shows this interesting trend based on the first 8 months in total for each of the past 3 years.

 

Auckland auctions rose significantly between 2012 and 2013 (27% to 37%) before easing off this year, however the focus of auctions has certainly spread outside of Auckland where now the proportion of sales represented by properties marketed as auctions has risen consistently to now represent 8.5% of the total sales outside of Auckland (equivalent to 1 in 12) in the first 8 months of this year.

It certainly appears that auctions are once again the most preferred method of sale for Auckland agents and a growing number outside of Auckland.


The real estate industry's transition to digital marketing

by Alistair Helm in , ,


Walk past any real estate office and you will likely see a couple of wire framed baskets chocked full of the latest copies of the local property magazine - in Auckland these tend to be for Property Press, The Herald Homes and then there are some other local options and usually these days a Chinese language real estate magazine.

I don't need to procrastinate on the visual pollution these create on the high street or the lack of value they represent, nor the fact they never seem to diminish in number of copies until the next week's edition rolls in. The fact is the world over real estate marketing is going digital - it's only a matter of time until we see less of these publications cluttering up our footpaths.

The scale and pace of this transition is something I am often asked about when providing advice and consulting to businesses. I hold a fairly detailed and what I think is accurate picture of this for New Zealand. So it was with great interest whilst reading the Prospectus for the IPO for Zoopla Property Group the operators of the UK property portal Zoppla that I found data for the UK market on just this subject.

Quoting from the report:

According to Ender’s Analysis, total UK classified property advertising spend was £389 million in 2012,
comprised of a 45 per cent and 55 per cent split between digital and print advertising, respectively
— Zoopla Property Group prospectus (page 48) - June 2014

It is anticipated that during the current year in the UK year the total spent on digital marketing by the real estate industry will for the first time exceed that spent on print advertising. In total the UK real estate industry will spend  £427 million on advertising this year. The future trend estimates for the next 3 years clearly show an accelerated divergence between print and digital with digital set to grow by 50%.

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In New Zealand the make up of the spend by the real estate industry is somewhat different. Print media has done a laudable job of defending its position and through its relationship with the major franchise groups has constrained the digital media spend to less than 20% at this time, although it is, like the UK forecast in my estimation to grow significantly in the coming years. It is though not expected to exceed the print media spend in the next 3 years.

Clearly the drive for the cannibalisation of the print media across the globe holds the prospect of a significant pot of gold for the challenging companies in each country which more and more these days are publicly listed companies of significant value; be that Rightmove and Zoopla in the UK, Trulia and Zillow in the US or REA Group and Domain in Australia. Each is fighting for an ever greater share of the cake of advertising dollars of its customers - the real estate agents of each respective country. In New Zealand we have the challengers of Realestate.co.nz and Trade Me Property - a duelling pair, however the pot of gold for which Trade Me aspires may not be the same reward sought by Realestate.co.nz as an industry owned portal.

Comparing such data of advertising dollars between countries is hard to undertake unless some benchmark can be established. For this analysis I have chosen to index the NZ and UK real estate digital marketing spend by an index to the number of property transactions in NZ$ terms. Presented below is this analysis showing the extent of advertising spend per country over the past 7 years per property sale. In the UK total property sales over this time peaked at 1.23 million in 2007 before falling to 616,000 in 2009. In NZ over the same period sales peaked at 92,000 in 2007 before falling to a low of 56,000 in both 2008 and 2010.

Interesting to see the NZ real estate industry spends more per sale than their UK counterparts. The relative difference in the digital spend is staggering - a two and a half times factor. It makes the whole discussion around the relative cost / value of a charge of $159 per listing from Trade Me seem a bit moot!

The other point to note in this index comparison is the fact that the total of NZ$1,065 spent per property sale by the UK real estate industry comes straight out of their commission margin where average commissions on sale are around 1.5% whereas NZ agents who charge around 3% commission on sale price secure around an average of $200 per sale of vendor marketing contribution to offset their average spend of NZ$1,244.


"Where is my property?" - Lost in Canada

by Alistair Helm in


We all know, or I would hope we all know that digital marketing is the primary focus for real estate; more people, spend more and more time online on mobile apps and websites searching for property to buy or rent. This is the mantra that I was extolling to the real estate industry back in 2006 and yet I still sense that the message has not got through to all of the community.

I am a fan of technology and love to explore new apps and gadgets but still rely on the ones that do the job and do it simply. The Realestate.co.nz app is a great example - it delivers a simple solution defined as "discovering property around me". I fire up the app and it shows me all the properties that are for sale or rent within a kilometre or so of where I am standing. Perfect for buyers, perfect for agents and their clients as it showcases the current properties on the market, especially good as it highlights open homes.

Or so you would think, until you discover that unless you were standing on the corner of Lloyd Avenue and Braidwood Avenue in Peterborough, Ontario in Canada.  If you were not at that exact point you would have no idea that the house being marketed at 1 Lloyds Close in Rolleston in Canterbury was actually open for viewing this weekend.

Confused? - well the issue is that the property listing in question, a nice single level 4 bedroom brick house has an address of 1 Lloyds Close, Rolleston, Selwyn, Canterbury has, through the computational programme at Realestate.co.nz placed the property listing on the world map in Canada not in Canterbury. The Realestate.co.nz system uses Google maps to locate this address with a pin on the Google maps on the website and on the mobile app. However as we all know technology can perform strange acts at times and in this case the Google maps programme decided that 1 Lloyds Close, Rolleston, Selwyn, Canterbury was actually 1 Llloyd Ave, Peterborough in the state of Ontario, Canada!

 

This is somewhat amusing, but actually there is a serious issue here as the agent in their role of providing services to the client is potentially failing that client as the property they are marketing is invisible to anyone standing in Rolleston using the app or in fact a person anywhere using the mapping function of the app - especially when you consider the app has been downloaded over 200,000 times and is being used actively everyday by buyers.

There is a very simple solution to this problem and that is provided by Realestate.co.nz who can go into the their database and overwrite the geo-locational address to place the location pin in the right place and hopefully for the benefit of the owner of this property it will be completed within minutes of reading this article. However the fundamental issue is one of agents 'owing' the online marketing and checking that all of their clients listing's content is accurate online - a very important process often overlooked.

In case you were wondering I found a total of 24 NZ properties on the app today that are in other countries - 1 in Tasmania, 1 in Illinois, 2 in Kentucky, 2 in New York, 3 in Ohio another one in Canada and 13 in the UK!

As a note the Google map on the Ray White website of the property is correct and places the property in Rolleston, but it further reinforces the need for agents to check content on all medium - mobile and web.


Trade Me Property adds School zones

by Alistair Helm in ,


Whilst Trade Me Property may still be grappling with issues of agent loyalty and patronage, the technical team appear to be focused on what is important - adding richer and more relevant information to the site. 

School zones are a much quoted detail in many property listings as agents recognise the importance (and value) of the 'in-zone' location of properties. Whilst no objective data is available on the added value of an 'in-zone' location for NZ property or any consumer research, I did find some insight from overseas. In the UK a recent report entitled "The Good School Guide" produced in association with the Estate Agency Savills has found that parents are prepared to pay a premium of almost 22% to buy a home close to some of the best state secondary schools in the country.

In the US a recent homebuyer survey from the National Association of Realtors. The survey examined factors influencing neighbourhood choice amongst the various generations. For those aged 34 to 48 years the quality of the school district was the third most important criteria after overall quality of the neighbourhood and the convenience to work.

So with this endorsement of the value of such information it is therefore surprising that it has taken over 5 years for either of the leading real estate websites to incorporate school zone data into the mix. Credit should be given at this time to Barfoot & Thompson who incorporated School Zones into their excellent iPad app last year.

The Ministry of Education has provided an open data platform of school zones for years and provides an interactive map to help the public identify the zones of all schools (those that define a catchment area).

Trade Me has just this week released an upgrade to their website that delivers an excellent integration of not only the the school zone data but all data on schools within the geographical area of the property for sale.

The functionality is within the map section of the site and delivers not just the details of which schools are in zone but also key facts about those schools - size and decile ranking as well as distance from the property. The selection of schools covers Primary, Intermediate and Secondary both state and private schools.

Whilst I think this is a valuable enhancement of functionality to go alongside the other recent enhancement of boundary view I think the user experience could have been better enhanced along these lines.

  • The School information could have been incorporated into the primary facts about the property rather then making them a opt-in option of the map - simply listing the 'in-zone' schools would be a real pus and putting that up front.
  • The schools by type could be ranked by distance from the property in descending order. Also using a colour scheme to differentiate between state schools (showing in/out of zone) separate from private schools.
  • The addition of this valuable data to their iOS apps - especially given the level of usage of the mobile app environment when searching for property and the map-centric aspect of search.
  • Probably the greatest missing component given the data integration is "search by school zone" within the search function so instead of searching for 5 bedroom homes under $800k in Onehunga and then having to look at each one to see which are in-zone for Royal Oak Intermediate you could add this requirement into the search options.

Overall though a great step forward and so good to see a step up in technology innovation from Trade Me Property.

 


Choosing the right Property app for the iPad - a review of the NZ options

by Alistair Helm in , ,


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It’s just 4 years since the iPad first entered our lives and despite the view of some commentators, that sales might only top a couple of million, the product has become a legend and total sales to date far exceed 100 million and are likely to continue to accelerate in the coming years.

The device fulfils a role that is far removed from the functionality of the smartphone device or the classic desk-bound computing device. The device is tactile and is as likely to be found on the couch or kitchen bench, as on an office desk. For this reason, the iPad (and the other Android based tablet devices) is in many ways the battle ground for property apps, as property searching is largely a ‘lean-back’ experience undertaken in times of rest when you want to immerse yourself into a world of escapism with dreams of a new home.

For these reasons I would contend that the best property iPad app almost bears no relation to the iPhone or smartphone app. They provide platforms for very different use cases. The smartphone is all about proximity based discovery and routing to viewings as well as alerts to new listing - functional activities requiring key information, easily and quickly accessible. The iPad is all about browsing in a mode that the traditional laptop or desktop could never deliver to the needs of the buyer or renter. The experience needs to be more of a magazine experience - rich in imagery and immersive in context. The iPad is an intimate device that is held close and in effect caressed and so the experience of an app needs to bear that in mind.

For New Zealanders however I have to sound a note of cautions for the options here are limited and to be honest none of the 3 I have reviewed really deliver to the experience of some of the best in the world and for me some of the best are found in the highly competitive US market with the app from Redfin being a great example.

So let me share my thoughts on the 3 options for New Zealanders, from Trade Me Property, Realestate.co.nz and uniquely a real estate company app from Barfoot & Thompson. I propose to deliver this review in the similar manner as a car review, scoring points based on key categories. These categories are ease of use, content, search and overall user experience.

Just for clarity this review is based on these versions of the various apps:

Trade Me V2.0.13 March 27, 2014

Realestate.co.nz V2.0.2 April 1, 2014

Barfoot & Thompson V1.5 April 2, 2014


Ease of Use

In overall terms, all of these apps are easy to use and fairly intuitive. However to start with extra marks go to B&T for the new overlay intro tutorial which in a couple of screens gives you a great overview of the functions so nothing is left to chance. 

Both B&T & Realestate.co.nz choose to begin the user experience with a map defaulted to your location devoid of any filters. In my view this is the best landing screen for a property app on the iPad. Realestate.co.nz does things slightly better in having a right hand column of listings from the area ranked by latest listed date - a missed opportunity would be the contextual reference numbering which could show the location of these properties on the map.

Trade Me on the other hand defaults to a list view of properties ranked by latest listing but based on the whole database of NZ making the initial experience woefully irrelevant as context is everything! To get to the same experience of a local map as the other two apps takes 3 more taps - a tap too far!

When selecting a listing from the map to view details, B&T chooses to take you to the listing and ignore the location context of the map, whereas the other two provide a hybrid screen of map and listing details. Here there is a vast difference between Trade Me Property & Realestate.co.nz in terms of the amount of screen space given to the listing vs the map. Way too much focus on the map by Realestate.co.nz diminishes the viewing of a listing.

When in this mode it takes just a single tap on a listing pin on the Trade Me Property app to shuffle to another listing - very intuitive. Realestate.co.nz makes you work hard with a required 2 taps to get to a new listings.

None of the apps provide what I judge to be a logical interactive functionality - that being a map with a list of properties whereby the selection of a property on the list highlights (by changing the colour of the map marker) where it is on the map and visa versa - here's this in action on the Redfin app - not a perfect execution but valuable functionality.

The B&T app provides one form of functionality that the other two don't and I love it. It is a flipboard style image viewer which lends itself to the casual, elegant flipping through properties in a magazine style - great execution and a powerful point of difference.



Content - Listings

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Listings are what powers these apps and each have the same core data regarding their portfolio of listings. Clearly in richness of content the B&T app can only showcase their own listings thereby pushing them down the rankings however because they originate the content of the listings they show they are able (or have chosen to develop) functionality that is richer; I speak specifically of videos and floor plans.

Trade Me has the most comprehensive portfolio of listing, especially considering the dominance in rental listings the site enjoys as a function of the private landlord market. Talking of rentals, a point of note is the fact that the B&T app does not feature rentals, only property for sale.

The most important component of all listings are the photos, this is key whether you are viewing on a handheld device or a laptop, but to fulfil the desire of a lean-back browsing based couch device the iPad has to have stunning images. The raw data of image files for each app is identical (although B&T has the advantage of the original raw image files) but sadly Realestate.co.nz lets itself down by what looks like the use of compressed image files designed to be viewed on an iPhone. The sequence of images and 'blow-ups" below graphically illustrates this.

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Content - Complementary data

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I added this category to make a point. That point is School Zones which is the differentiator between the B&T app and the others. Neither Trade Me Property nor Realestate.co.nz offers any complementary data other than listings. But that is what we want! - I hear you cry!

Well there in theory could be so much data that could be of value:

  • Crime stats
  • Flood zones
  • Postcode
  • Sun angles
  • Walk score
  • Transport routes
  • Parking zones
  • High Speed Fibre coverage
  • Flight path routes
  • Rateable value
  • Property valuation estimate
  • Council Zoning

Many of these sets of data are simply not available in NZ or only at prohibitive cost. However the point is valid and I think important. School zones are public data and easily incorporated into an app and yet the two leading players choose to ignore the details. Good on Barfoot's for showing the way.

However B&T don't stop there they also have a tab in the listing view that includes the StreetView from Google - beautifully integrated into the full screen view - beautifully executed!


Search

The Realestate.co.nz app is the only one of the 3 to use aggregation of listing 'pins' which on the zoom out function reverts to a number to show the total of listings in an area. Trade Me uses red pins which cluster on zoom out until they disappear with a notice instructing you to zoom in - not a very friendly experience. B&T adopt a kind of mid solution - red pins which don't cluster but when you click on them on zoom out show a number of listings for the local area.

Only Realestateco.nz uses differentiation in the pin design to highlight 'New' listings, in my view a valuable feature it is the only app allowing you to also filter the search by 'days-on-the-market'. Both B&T and Realestate.co.nz do display 'Open Home' flags on listings with B&T offering an ability to filter the parameter of open homes by 'any time / this week / today / open in next hour' which I find really useful.

In terms of search filter the Realestate.co.nz and Trade Me apps rely on the iOS format scroll wheel for price and tick boxes for other criteria. As noted in the review of the Realestate.co.nz iPhone app the somewhat restricted search ranges especially on price and on bedrooms as compared to the website is surprising. B&T adopt sliders for price, bedrooms and bathrooms, something I find difficult from a user functionality perspective as the finger tends to obscure the slider and there are no visual cues to the gradations on the slider.

A key part of search on any device is the context of location presented by maps - real estate is always conditional on location and therefore despite the fact that the use of the iPad app may be on the couch the map view is important. Here the 3 apps differ, with in my view Realestate.co.nz taking top honours by using the Google map application layer whereas both B&T and Trade Me Property have defaulted to the Apple Maps layer. This is so evident as a drawback when viewing in Satellite mode - the resolution on the Apple Maps layer is so inferior to the Google Maps layer. These images below show the highest zoom in you can achieve in each app before losing resolution - a vast and significant difference.


Overall User Experience

Getting to use these apps begins to show their respective strengths and weaknesses. In reference to my earlier comments, in my view Realestate.co.nz is the weakest, as simply this iPad app is the iPhone app adjusted to fit the format of the iPad, and sadly as noted earlier the issues with screen resolution makes it the least likely app for 'lean-back' browsing. Too often the majority of the screen is taken up with the map view which does not interact with the property or list view in an intuitive manner. It does have the value of the higher resolution satellite imagery but this is not enough to make for the shortfalls.

Trade Me Property delivers a better solution, however given the resources and capability from a company of their size and knowing how critical the property sector is to the overall performance and long term value of this publicly listed company, I would have to say the app delivers at the lower end of expectations. Too much focus remains driven on the user experience of the web and too little time seems to have been spent on experiencing other property apps and other magazine apps in general as a benchmarking exercise.

The winner by a wide margin in my view is the Barfoot & Thompson app. A well executed iPad app that has been thought through and tested to deliver an experience that I would enjoy using - a credit to the marketing and tech team there.

The saddest conclusion though is that the best app is at best a great platform which will be so seldom used as fundamentally who will ever use it? - it showcases just Barfoot & Thompson listings - sure that is close on 4 out of every 10 listings in Auckland, but what use is that?

Given the clear advantage that the app delivers if I was in the role at Barfoot & Thompson I would make a smart decision. I would as a 22.22% shareholder in Realestate.co.nz* license the app to Realestate.co.nz and thereby benefit doubly - prove the credibility of the technical and marketing prowess of the team and at the same time earn a license fee whilst at the same time deliver to Realestate.co.nz as a championing industry owned website to challenge Trade Me a superior app to the current one - food for though!

Note * Realestate.co.nz is a joint venture between The Real Estate Institute of NZ (REINZ) (50%) and Property Page (NZ) Ltd (50%). Property Page (NZ) Ltd is owned by Harcourts Group Ltd (22.22%), Ray White (Real Estate) Ltd (22.22%), LJ Hooker New Zealand Ltd (22.22%), Barfoot & Thompson Ltd (22.22%) and Bayley Corporation Ltd (11.11%)

 

 


Dress for success - presenting a property ready to sell (Updated)

by Alistair Helm in


Update: I have been asked by many people the question - "so how much more did this house sell for after being cleaned up?" - well the facts are: It was sold in January 2013 for $435k which represents how it looked in the Before pics and then it was on the market again within 5 months and sold in July 2013 for $550k.

 

I have over the years seen many examples demonstrating the value of do-ups where for the sake of a bit of tidying up and a lick of paint a property can be re-marketed after only a short period of time and through the process attract a wider audience and as a result attain a higher price. It is the subject of TV makeover shows in this country and overseas.

I was therefore delighted when some eagle-eyed person contacted me a while back to share just such a real life makeover. They brought this property to my attention as it was close to where they had bought their first home some months earlier.  Given the property details they provided, I was able to collect together the images of the property in a before and after state. This gave me the opportunity to undertake a interesting and hopefully helpful evaluation of the process to examine the enhancements.

Exterior of the property

The property was the subject of a general clear-up with lawns cut and levelled, The somewhat sad looking tree was removed opening up the front of the property to emphasise the clear tidy lines of lawn and path. When it comes to photography removing extraneous objects in this case the car and defining the property better by using a filter to create a clear blue sky effectively lifts the property creating a sense of presence and makes the property far more appealing. The exterior photo of a property for sale is so important as it should be the No.1 photo - the one that appears on the primary search results page. This photo has to be good enough to get people to click through to the fuller details. I think you would agree the After photo is far more likely to attract attention and engender click through. 

 

The Kitchen

More and more attention is these days paid to the kitchen as the hub of a property and for this reason it deserves close attention to optimise its appeal.

The key to the presentation of the kitchen is de-cluttering to create a sense of space. The removal of the items on top of the kitchen cupboards effectively lifts the room to seem more open and lighter. More internal lighting is used to add warmth, this is accentuated by the addition of a rug that softens the hard vinyl floor coverings. Kitchens are functional areas of a house but when it comes to presentation, less is more and extraneous items like the microwave can be removed to create this sense of space. Notice also the professional photographer captures external images through the window to balance the internal artificial light - so much better than the glare in the before photo.

 

The Living Room

This is a striking "before & after" photo set that highlights the content and the photo. This area has received the benefit of the new floor coverings which together with a clean white lick of paint has brightened up this area, additionally helped by the removal of the heavy old curtains. The modern chunky style of furniture on the vibrant new rug creates a focal point for the room with the bold touch of red in the chair cushions creating visual impact.

As for photography, the angle of shot is important as is the lighting; hiding the ceiling detail so evident in the before shot. Excess exterior light so dramatically darkens the room thereby diminishing the opportunity to showcase the rooms. Again a wider angle lens on the camera creates a sense of space and allows the property buyers to see more context of the whole room.

 

The Bedroom

In the bedroom the old curtains set to the height of the window effectively lowers the height of the room. The new carpet adds warms and in this case adding more furniture adds a sense of richness with the red rug adding a feature. The headboard also creates a sense of height and the bedside cabinets appear to create a bigger room. The lack of curtains is a functional loss but an aesthetic gain. In terms of photography the critical issue here is lighting using extensive internal lighting as well the wall lights provide warmth also in so doing it allows to create definition through the window to the trees outside by shooting later in the day without bright sunlight.

 

The Bathroom

The key improvement here in the bathroom is the fitting of  shower attachment, providing for a much needed requirement of any bathroom. The room has been painted and as ever decluttered. This is a clear demonstration of the benefits of a wide angle lens which captures the room from door to towel rail with full view of the window and vanity. Again the light balance is so key ensuring that the window does not become the distraction as it clearly is in the 'Before' photo.

 

The point about this exercise is that this property was not the subject of a very expensive makeover - I would judge that the total costs of the work, materials and finally staging and photography cost around $7,500. The eagle eyed neighbours told me the closer inspection at an open home showed some less than perfect painting, but the overall impression was appealing. When it comes to selling a property success is all about maximising impact. This before and after photo comparison in my opinion certainly testifies to the enhanced impact that can be created by a make-over and a great photo shoot. Naturally as you would expect the property sold for a great price with significant interest far better than the initial sale - not surprising when you view the before and after shots.


Agents boycott of Trade Me hurting vendors

by Alistair Helm in ,


We say no to Trade Me.png

This week has seen significant media interest in the boycott of Trade Me Property by agents particularly in the Hawkes Bay and Hamilton City. Articles written have proffered opinions that "The real estate industry has a lot more to lose than Trade Me" and gone as far to look to whether the Commerce Commission will investigate the potential breach of the Commerce Act or whether the governing body of the Real Estate Agents Authority will clarify if the action of these agents is against the best interests of the vendor as the agents clients.

I shared my opinions with Bernard Hickey as in my judgement this is a matter that should not result in vendors' property listings being used as pawns in this standoff.

The fact is that there are vendors in these two regions of the country who are missing out on valuable marketing on Trade Me and as ever with the web, the data is there to back up the story.

Firstly look at listings. Generally Trade Me and Realestate.co.nz enjoy the support of all licensed real estate agents across the country (up until this time), Trade Me holds a larger stock of listings nationally as they feature private sale listings which are usually around 15% to 18% of the total of property for sale.

Looking at the Hawkes Bay data on the respective websites today based on comparable listings of residential and lifestyle property shows that there is most definitively a boycott. Compared to a similar sized area such as Tauranga the Trade Me listings are down 55% as compared to Realestate.co.nz in the Hawkes Bay whereas the listings ratio should be similar to Tauranga with around 15% to 20% more - this means that around 1,000 properties in the Hawkes Bay are not being featured on Trade Me Property. These are listings from offices of Property Brokers, Tremains, Sotheby's and others. Importantly these offices have withdrawn all the listing - recent listings as well as older listings.

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These c. 1,000 listings are not attracting potential buyer interest from the more than 120,000 property buyers per day using Trade Me Property.

As a buyer accustomed to using Trade Me when searching for property there is no recognisable experience that will tell a person that there has been a boycott. The functionality of the web allows for tailored searches by location, price and type and at no point do you get a sense of the number of listings in relative terms. That is why the level of viewing of individual properties in the Hawkes Bay has not changed since the boycott began. This can be proved by this simply analysis.

Taking two properties that are advertised by Ray White (who have made no mention of their intention to join any boycott) that were both listed on the 5th February. The level of viewing on these properties comparing Realestate.co.nz and Trade Me continues to show the general trend of a 10+ fold higher viewing on Trade Me Property.

Hawkes Bay 1.png

 

Now look at a couple of examples of the c. 1,000 listing not shown on Trade Me Property, they are not getting more viewing on Realestate.co.nz because they are not on Trade Me - here are comparable stats. It clearly shows that there is no greater viewing on Realestate.co.nz because these properties are not on Trade Me Property.

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The vendors of these properties are not receiving the exposure they should. The scale of the loss is substantial - every day these c. 1,000 properties are missing potential buyers which has the potential of lessening the sale impact and competitive pressure in the market. The fact is the medium of choice when searching for property by over 90% of home buyers is the web. There are only two websites for real estate in NZ and Trade Me dominates to such an extent that not being on the site is marketing madness.

What perplexes me is that the real estate industry continue to think of online advertising as a cost, in the same way as they think of the photocopier as a cost or the phone system. They do not think this way about their preferred medium of choice - the newspaper or property magazine, that they think of as a re-charged advertising medium.

A single property advertised on Trade Me Property cost them $159 + GST. That advert works everyday to market that property until sold and would costs private seller upwards of $400. So why don't they front up to their clients and say " Our recommendation is that we market your property on Trade Me Property at a cost of $200 and Realestate.co.nz for $100 - that way your property will reach 90% of buyers" (that cost includes a small margin for admin - which they need to disclose under the REAA). If they are not confident to ask for the money upfront they could suggest adding it to the commission upon the successful sale.

This boycott is hurting the clients of these real estate agents, vendors will very soon be up in arms and potentially pulling their listings and moving across to agents who don't treat their property as a pawn in the internal squabble between Trade Me Property and the agents. These agents would be wise to reflect that to the average kiwi Trade Me is far more loved than a real estate agent!

 

For reference here are the links to these listings highlighted above:

Ray White Listing #1 "When location counts" on Trade Me

Ray White Listing #1 "When location counts" on Realestate.co.nz

Ray White Listing #2 "Seriously Special" on Trade Me

Ray White Listing #2 "Seriously Special" on Realestate.co.nz

Property Brokers Listing "Rural views" on Realestate.co.nz

Tremains Listing "Modern Brick Home" on Realestate.co.nz


Trade Me Property solidifies status as property marketing powerhouse

by Alistair Helm in


Trade Me Property recently published an interesting infographic detailing some key statistics on their website usage by home buyers. I thought the data worthy of highlighting and reviewing.

The figure which, whilst not central to the stats on property is always somewhat staggering is that Trade Me has over 3.2 million accounts and over 730,000 daily visitors across its site. There would be no other media save only for the gorilla-like Facebook that attracts such an audience or holds such an account base of NZ’ers. Certainly no traditional media company comes anywhere close to that which makes it all the more surprising that Fairfax, having shown the smarts to acquire the company then made the decision to divest.

Anyway back to property. Trade Me Property now attracts over 120,000 visitors a day which represents 4 times as many buyers as any other site (clearly referencing the 2nd placed site of realestate.co.nz). This level of daily visitors is staggering for the reality is that if you added together all the active property buyers and sellers in NZ to the total of all the agents, to all of those looking to rent property with all investors and then add commercial property agents and their clients, in total you might get somewhere close to a third of that number. That means that right or wrong the appeal of viewing property is a national pastime. However whilst we often label ourselves as a nation of property fanatics I can tell you that with my experience of similar property portals around the world we are not that different. In fact in Australia the ratio of visitors to population on the leading site realestate.com.au is higher than Trade Me Property attains and in the UK RIghtmove the leader there is the 6th most visited website in the UK across all categories.

Not only does Trade Me achieve this enormous visitor traffic on a daily basis they also manage to engage those visitors for longer than any other property site. This results in the staggering fact that 8 out of 10 of all time spent by people on property website s in NZ is spent viewing property on Trade Me.

Added to these hard statistics sourced from market analysts Nielsen, are some new data from a recent survey the company undertook from a survey of over 600 qualified buyers. The research shows that more than half of all buyers found the property they bought on Trade Me with 63% of buyers rating Trade Me as their #1 place to find property. 

Clearly Trade Me has the lions share of eyeballs and they are leveraging this to seek to deliver every growing financial returns which are so required of a publicly listed company. The question and challenge for the company is more by how much can Trade Me can grow its Property division. That is the challenge for the new leader of that business when they are appointed. 


The global industry of property portals

by Alistair Helm in


I have spent the past week running a global conference in the beautiful Spanish city of Barcelona. The conference, part of a regular series of conferences hosted around the world by Property Portal Watch, for which I am CEO; brings together a wide variety of executives of property portals from numerous countries for a 3 day conference to discuss the trends and developments in this fast growing industry.

With over 230 attendees from more than 40 countries the conference provided a unique experience for like-minded executives to network and share insight and experiences around the development and operational performance of property portals. Represented within the attendee list were executives from leading portal operates in developed countries such as Italy, Germany, Spain, France and Ireland as well as those representing more emerging markets from Eastern Europe with attendees from Estonia, Lithuania, Poland, Russia and Romania. As well as European attendees we had attendees from Australasia, India as well as Latin America and Africa.

I thought it would be interesting to share some of the headlines from the conference to provide a sense of this now well established global industry.

Whilst no accurate figures exist ( a task Property Portal Watch is currently undertaking ) there are probably over 2,500 property portals across the world employing well over 20,000 and conservatively with a market cap in excess of $25 billion. The top 3 global leaders (all of which are listed companies - REA Group (which operates the Australian portal Realestate.com.auRightMove in the UK and Zillow in the US are collectively valued at over $14 billion. This is by no means a start-up industry, this is a significant and well established industry attracting significant investment funding and delivering significant return on investment. Rightmove in the UK delivers a EBIDTA margin of over 70% - that is to say for every dollar of sales revenue they deliver 70 cents of profit (before depreciation and amortisation).

The leading players in these developed markets of Europe and Australia especially are continuing to see growth in sale revenue through greater marketing services of premium advertising that they deliver to their agent customers who more and more ignore the print media and focus exclusively online to deliver marketing profile and buyer leads, something that seems to be a challenge for NZ agents to accept. In many European countries print media for property advertising is virtually non existent, Talking to the leading operator in Poland (far from a developed market) who stated that close to 90% of real estate marketing spend of properties for sale went online.

Whereas the revenue growth of leading operators is slowing as markets reach a degree of saturation from listings fees, those in more emerging markets continue to experience continued doubling of revenues as they spearhead the adoption of online marketing by agents. The focus of these emerging markets seems to be focussed less in Asia these days and more around Africa, the Middle East and Latin America. Africa particularly seems to be a very hot market with new entrants operating in Nigeria, Kenya, Morocco as well as Uganda and Rwanda.

A significant topic of the conference was the role of horizontal vs vertical portals in the property space, this has particular relevance to NZ as a horizontal operator is best defined by Trade Me, having as it does under the one site the categories of general classifieds, motors, jobs as well as property. This contrast with realestate.co.nz which is a specialist vertical. It focuses on just property. Many other countries experience a similar challenging environment whereby these horizontal operators attracts a significant aggregated audience across the various sectors thereby creating massive audience numbers often far ahead of the vertical property operator. There was extensive discussion around the emergence of more of these horizontal players and the consolidation of these operators by companies acquiring such operations through Europe, interestingly despite the global dominance in online classifieds E-Bay does not present itself in any market as a significant player in property marketing.

The global property portal industry is diverse not only in scale and market development but also in ownership for there are many industry owned property portals around the world some like Funda in Holland and Hemnet in Sweden completely dominate their market. The challenge for them and something I can relate to is the political issues of balancing the needs of the industry organisation to service the desire of the industry to ‘protect’ this vital marketing media matched to the desire to continually offer enhanced and innovative user services and tools to ensure continued engagement and loyalty. It seems a shame that so little of that seems to come from realestate.co.nz these days.

Overall the conference was a great success and this being the 9th such conference over the past 5 years has demonstrated the value that can be created by a facilitated collaboration and sharing of idea and experiences by industry professionals prepared to open up and get together.

The next conference our 10th for PPW will be held in New York on the 13th / 14th January - very likely to be a well attended and comprehensive insight into this fast growing industry.


Auctions are getting out of control in Auckland

by Alistair Helm in


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The latest data from the May property market as reported by REINZ states that of all sales in Auckland; 38% “went under the hammer” – up from 28% a year ago, outside of Auckland auctions are also on the rise albeit off a smaller base up from 7% of all sales a year ago to 9% in May.

The comments within the real estate industry as expressed by Harcourts Northern regional manager support these rises saying “Sellers are wising up on the benefits of auctions – higher prices with less fuss”! She went on to say “sales by auctions had shorter and more thorough marketing campaigns that limited ‘stress periods’ for vendors

Sounds perfect – less stress, less fuss, higher prices!

The fact is, not only are auctions becoming more the norm, they are also being compressed into a shorter marketing period, which in my view is dumb and somewhat illogical.

Take the data for today (13th June) – in Auckland 185 new properties came onto the market. A pretty normal day, although Thursday’s tend to be busier (a hangover from the days when this is when the property magazines used to publish the weekly selection). Of these 185 properties; 98 (53%) were auctions, with 28% being marketed with a price and the balance for sale ‘By Negotiation’.

More than half of all new listings today are being marketed by the auction method of sale.

However when analysing the auction date for all of the 98 auctions, what I found even more alarming is that nearly two thirds of those new auction listings have an auction date of 3 week or less from today. A staggering 1 in 12 have an auction date before the end of June, with one providing only 9 working days between listing and auction.

 

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Making the process of selling your house a rushed and truncated process is sure to do one thing – spook buyers.

Buyers who are already pulling their hair out trying to bid on houses with so little time to do undertake due diligence. As to the claim made by Harcourts Northern regional manager of ‘higher prices’. This is a claim that can never be truly substantiated, there is never a ‘control’ benchmark for houses; they are all unique in form, location and circumstances; measuring against CV is misleading as that is proven to be a poor benchmark.

So real estate agents who are paid a commission by sellers and who have the sole interests of sellers at heart, are constantly pushing auctions. Nowadays as the supply constraints grow larger these agents are choosing to recommend shortening the selling period. In my view this can only drive more potential bidders / buyers from the market, rather than as they hope, bring more buyers together to bid up the price.

Just imagine this scenario played out by an Auckland couple who are in the market ready to buy.

This young couple have been looking at buying a house for over 6 months, they constantly hear tales of super-heated property market and having already lost out on an auction or two already, stress levels are high! They get an email alert today for a property which meets their criteria. They review and decide to view at the weekend, they can’t do Saturday as they are away, so they attend on Sunday. They like the property a lot, but the auction is on the 3rd July, just 13 working days away. Now normally they would go back to view again the property on the second weekend before deciding if they are keen, but they realize the urgency. So they talk to their bank next Tuesday who show support for the price they think they can bid to, however the bank tells they will need a registered valuation.
The couple pause – they don’t want to spend another $600 for a valuation – after all they have only seen the property for 12 minutes so far!
They decide to wait until a second viewing at the weekend which goes well; so on Monday 24th June they decide to get a valuation. The valuer though says he cannot fit them in until Friday the 28th (just 3 working days from the auction). The next question is should they do a building inspection? – left with just 6 working days they decide to forgoe this, although they do request a LIM through their lawyer.
Days go by and the weekend of the 29th / 30th lets them see the property a third time, but with no real idea of the condition or what the valuer says he will value it at. By Monday pulling their hair out and loosing sleep, the valuer delivers the valuation placing the property at a value just below the level they had hoped based on their loan to value ratio. However all is not lost. One of the parents has said that if they needed they would lend them $30,000 to help if they needed it. They call up on Monday night to literally plead for help, however the access to the money is not available due to the money being on a term deposit. Whilst they could have bid at the auction and as they find out later with that $30,000 they would have been able to buy the property; they just gave up - totally frustrated on Wednesday night, instead of celebrating their new home, they drown their sorrows, vowing to give up on buying a house - they have a guts full!
(Note this is a scenario of a couple who are renting and don’t have a place to sell, just imagine the compounding issues if they had that property to sell, scraping together the cash deposit and then the panic about selling their own house).

So another prospective buyer fails to present themselves to the seller, unbeknownst to the agent. How many buyers are being squeezed out of the market by such circumstances? Equally how many buyers are buying without due diligence? This could be a dangerous long-term issue especially if there tuen out to be structural issues with the house.

Agents may well like short notice auctions. They may well get a sale and thereby service the vendor in a shorter period (this is clearly their idea of reducing 'stress') it certainly meets their needs as they get paid sooner with less work. Let's not forget that an auction requires less work by the selling agent around the process of facilitation and negotiation, the auctioneer actually does the negotiation at the auction.

Finally what about that claim about auctions provide 'more thorough marketing campaigns'? Auction marketing is no different to any other form of property marketing, except for the date of sale and the word ‘auction’ in the marketing material and of course the cost of the auctioneer. Properties all get loaded onto Trade Me and Realestate.co.nz in the same way and promoted online the same way regardless of the chosen form of sale. Arguably and perversely the shorter auction period is further reducing the relevancy of print advertising, as lead-times for print are measured in days rather than the seconds it takes to get a property online.

Auctions are undoubtedly the favoured method of sale by agents, this they detail to vendors citing the data of 38% of all Auckland sales being by auction, but beware of these number as sometimes what is reported as an auction was not a true auction sale. However the vendors should be more wary; they actually end up undertaking a sub-optimal marketing of their property by going for an auction or worse a short notice auction. They may actually end up eliminating buyers and thereby reduce demand for their house.

The underlying problem is that this situation in today's market not become transparent as due tot he current demand as long as they get just 2 bidders at the auction the property may well sell; but the question has to be asked, was money left on the table?

In my view marketing a property needs to be focused process undertaken with consideration. It should be undertaken with an appropriate period of time. Sufficient enough to allow prospective buyers to satisfy themselves of the property, undertake due diligence and approach the sale in a clear-headed manner. That period is probably between 3 and 4 weeks. I think a fixed date of sale is appropriate in fact I think there should almost be a sell-by-date. I favour tenders as a method of sale - it achieves the same outcome as an auction without all the hype, razzmatazz and undue very public pressure!  

Whilst on this topic it is relevant to reference the analysis undertaken by highly regarded ecomomists and authors of Freakonomics Stephen Dubner and Steven Levitt who, when analysing the sales of agents homes in the US (as the video below shows) and found that agents marketed their homes for longer; 10 days longer than their clients' homes, and they ended up getting a better price. Makes you think!

 


The 6 steps to selling your house

by Alistair Helm in


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It almost seems too logical to write an insight into the process of selling your house, but sometimes it is valuable to spell out the steps in detail, after all real estate transaction is a process and in my view there are 6 main parts to this process.

 

1. Preparation

Selling a home is a major undertaking, doing it yourself or through an agent you need to think it through carefully. Is this the right time to move? It will take a fair amount of your time and focus for what could be a month or two or more. Selling for most people is alos at the same time associated with buying, as you are generally looking to move to a new home from your current home. Buying takes time too. So don’t underestimate the total time commitment.

Preparation is also about getting to understand the property market. Spend some time preparing yourself by visiting open homes in the area that are similar. Look to see how your house compares. Find out what these houses sell for, go to the auction or speak to a local agent. Be better informed.

Make sure you have discussed your financial situation with your bank or financial advisor so you are clear as to how much you can borrow based on your anticipated selling price.

 

2. Presentation

Selling a home is a task that requires you to present your property in the most appealing way to appeal to the widest audience. Make sure the house is clean, clear and everything works. Make it look its best.

When it is looking at its best get a professional photographer in to create an extensive portfolio of photos – get a wide selection from which to choose around a final set of 20 photos. A professionally photographed house is one of the most important things to do tin selling your house. It is in my estimation one of the most overlooked or "handed-off" tasks. It is madness not to invest in quality professional photography. It may cost you $500 but that amount will pale into insignificance in the context of how much the house is worth or how much you might spend on an agent, legal fees or marketing costs.

 

3. Marketing

The marketing of property today has become a whole lot simpler than it was a decade ago. Simply put the decisions about property marketing start online and then moves to decisions of additional media only after the main online campaign is set up and running.

Trade Me has to be the #1 focus. Choose the best 20 photos and select them in an order that tells a story and leads a prospective buyer virtually from the outside of the front of the house, through the house, finishing in the garden. It is so important for the first photo to be of the outside front of the house. The term “kerb appeal” is so relevant to the physchology of how prospective buyers see a house and creating that impression online is so important. The first photo appears in all search results and email alerts and marketing communication it is the image that will either attract or turn-off prospective buyers. If it fails to capture the interest in a search result everything else you do is lost as the buyers will never see the other 19 photos and inherent appeal of the house.

The fact is the online listing of a property for sale is all about images, as recent research has shown the key is the photos, the description is of lesser importance.

In terms of written information the best advice is to keep it short and highlight the benefits of the property rather than reiterate the features which are potentially self-evident or else already detailed on the listing. By this I mean don’t talk about '3 bedrooms, 2 of which with ensuites', describe the benefit of the ‘master bedroom with ensuite and dressing room is set apart from the other bedrooms providing privacy’. Talk about the convenience of local shops and public transport which is only 3 minutes walk, rather than blandly say “set in this beautiful suburb".

Having set up the listing, the next stage is to actively promote it. Marketing is all about capturing attention and this is where money is well spent. Go for a feature listing to place it in the top section of search results and also look to splash out on a super feature to really make sure your property gets more views than others. It’s a competitive world online and you need to be seen to capture interest and these promotion campaigns generally double or more the number of views – that does not mean it doubles the number of buyers but every bit of exposure helps.

All of the above online promotion and listing should apply to Realestate.co.nz if your property is listed with an agent, these two websites and their respective apps should be your primary thought when it comes to marketing your property.

As to other media devices. Well a ‘For Sale” sign still has some merit, although in today’s world less relevance as people are less taken to drive around a neighbourhood – the web is the most efficient means of search and so much cheaper. Print advertising in newspapers and magazines might make you feel good to see your house beautifully presented in glossy colour, but you have to ask yourself “who is going to see it, and are they not as likely to see it online?” There is no doubt that property supplements in newspapers and property magazines get viewed, but given their focus on real estate companies sequentially branded pages they are not the choice of serious property hunters. My advice – spend the money online and then, decide if you want to spend almost the same amount again for a print advert!

 

4. Facilitation

This is the part of selling a house which gets to test the capability of the selling agent. Houses seldom sell themselves without the necessary follow up by an agent to those prospective buyers who have shown interest by contacting the agent or visiting the open home. This persistent follow up and seeking out of information is where the value in an agent really shows through. They do this work day in – day out and know how to look for the signs of interest and to be subtly persuasive. They know how to keep buyers interested and get them to visit again.

Most of all what they are good at is getting buyers to commit – that first critical step of making an offer. They know the contract and terms to steer that would-be buyer to make the initial offer.

 

5. Negotiation

This is the challenging part. The agent representing the vendor is seeking a favourable outcome, one where the vendors’ interests are paramount. The buyer is generally cautious and seeking their best interest. The value in the agent is to maintain the buyer commitment to the purchase of the property whilst negotiating the best terms that meet the vendors’ requirement. The agent is adept at knowing when to ease off and when to quicken the pace and move things along.

 

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6. The Close

Whilst the close is a natural consequence of the negotiation the ability to close a deal is probably the most important capability of any salesperson and when it comes to property transactions this skill is ever more important. The whole process of property buying is emotionally draining and challenging but at the end of the day the vendor wants to sell and ideally the buyer wants to buy, but you cannot simply assume that the contract will be signed. The close, as with all good selling techniques will utilise a myriad of options all seeking to get that agreement for both parties to sign.

From the signed agreement, so starts the legal process of completion and settlement, not a time to sit back and assume everything will complete satisfactorily and it is likely your agent will be diligent to see all components are taken care of right until the date of moving and the handing over of keys. 

 

If you are about to sell - good luck. My advice is get involved, even if you are using a agent take control - especially when it comes to marketing. It is likely int his day and age that you have bought and sold more household items on Trade Me than will have an agent and this actually is a skill you probably didn't realise you had, so use it.