The New Zealand Herald judged to have misled consumers in Herald Homes Advert

by Alistair Helm in


The Advertising Standards Authority (ASA) this week published its Complaints Board’s decision against NZME., publisher of the NZ Herald. The board adjudicated that the Herald Homes advert claiming that “On average properties sell for 20% more when the marketing includes the Herald Homes…” was likely to mislead consumers.

I filed the complaint with the ASA following the articles I wrote in October when the advertising campaign commenced (Can advertising generate extra sales price for property / Sale price premium cannot be claimed by advertising alone). I should highlight that at the time I was self-employed. Subsequently I have taken a role with Trade Me Property and this complaint is in no way related to Trade Me Property.

I submitted a detailed complaint to the ASA supporting my claim that the advertising was misleading and potentially deceptive. I judged it to be misleading, as the advertising made no reference to the fact that the research upon which the advert was based only examined million dollar plus homes over a selected six month period. I further stated that their claim could potentially be deceptive as the analysis of the data, whilst proving correlation between advertising and selling price, could not definitely prove causation between advertising and sale price given the multitude of factors and variables involved in selling a property.

The outcome is gratifying – the complaint has been upheld and the NZ Herald has been found to have undertaken an advertising campaign which was judged to be likely to mislead consumers. However, the process taken to reach this outcome and the remedies available to the ASA leave me feeling somewhat frustrated.

The ASA is an industry organisation which seeks to uphold industry standards but is unable to exercise any financial remedies or penalties. The options are limited to forcing advertisers to withdraw and cease to undertake such advertising, matched to a published retraction.

The NZ Herald, in their response to the complaint, stated that:

The Herald Homes advertising campaign has finished its run. It is no longer present on bus shelters, is not scheduled to run in any further print media, and has also concluded its run on all NZME digital channels such that it is no longer accessible online (eg, via www.heraldhomes.co.nz).

I consider this a poor excuse or justification. However the most surprising component of the response from the NZ Herald was their attempt to offload responsibility for the advertising to its research company (TNS Research):

TNS Research were (accordingly) asked to provide their confirmation that the claim and explanatory footnote to the advertising were: accurate; and capable of substantiation based on the research undertaken by them.

NZME received confirmation from TNS Research prior to publication of the Herald Homes advertising campaign, that the claim and explanatory footnote were accurate and statistically supported by their research.

In my opinion the NZ Herald has a responsibility beyond simply asking the research company for confirmation. The ASA Complaints Board found the NZ Herald had breached the Basic Principle #4 of the Code of Ethics. This found that the NZ Herald advertising had not been prepared with a due sense of social responsibility to consumers and society.

The advertising campaign is over and sadly the NZ Herald has achieved what it wanted to achieve – attempting to convince agents and vendors that the NZ Herald Homes advertising can deliver a 20% price premium over CV. Sadly that claim was misleading but the NZ Herald has banked any competitive advantage this has given them between October and December (the strongest listings period of the year).

My only wish now is that the NZ Herald and in fact all publications seeking to attract advertising dollars from agents and vendors take seriously their responsibility to act within the ASA guidelines and Code of Ethics and not to undertake misleading or deceptive advertising.

 

 


Price indications - agents cannot mislead

by Alistair Helm in ,


I was rather pleased to see this tweet from the Real Estate Agents Authority (REAA) today:

The statement is incredibly valid and prompted me to write as over the last couple of weeks I have heard from a number of readers about their frustration about the price search parameters on web searches on both property portals and real estate company websites.

An agent not only has to be accurate and must not lead around price expectation of sellers when discussing with buyers at open homes but also should ensure this mis-representation does not occur on web searches which are so critical given the vast majority of buyers search for property online.

To be specific the REAA on their website sets out the "Expected behaviour of Real Estate Agents"

Here are the statements that are pertinent to this issue:

Agents can’t withhold or give inaccurate information about a property

The agent is in contract with the seller and will always work on their behalf. However, they have an obligation to treat the buyer fairly, including not withholding, or giving inaccurate, information.

(I think this is important in the context around not withholding information, an accurate price expectation is information which when requested must not be withheld)

 

Agents can’t make unsubstantiated representations

Under the Fair Trading Act, it is an offence for an agent to make an unsubstantiated representation about a property. This means that an agent can’t make a representation about a property without having the evidence to back it up.

Agents must have reasonable grounds for making a statement (written or verbal) about a property - before they make it.

(I think that as each property requires a market appraisal undertaken by the agent for the vendor at the time of listing which provides an indicative sale price / price range then under the Fair Trading Act the evidence to back up any reference to price needs to reflect the evidence of this appraisal so the two should be aligned and therefore the search price online should be substantiated by this evidence)

 

Agents can’t mislead buyers and sellers about pricing expectations

The advertised price for the property must be in line with the pricing expectations the agent has agreed with the seller.  The agent should not mislead the buyer about the seller’s pricing expectations.

(I believe as I have stated that the search price range online is as valid as response to setting buyer expectation as is a verbal communication)


Sale price premium cannot be claimed by advertising alone

by Alistair Helm in


Last week I challenged the claim made by the NZ Herald that the power of Herald Homes print advertising added an extra 20% to the sale price of property featured in Herald Homes. I wrote a detailed article "Can advertising generate extra sales price for property?" challenging their assertion which I firmly believed was misleading.

I wrote to the NZ Herald to request answers to questions regarding the research, in order to enable me to better understand the research they quote in support of their claim. This was their response I received :

The research was carried out on our behalf by TNS Research, a well-respected global research provider.

TNS purchased a list of recently sold properties from CoreLogic – all properties were residential dwellings in the Auckland area (Franklin to Rodney), and had sold in the most recent 6 month period (1st August 2013 – to 31st January 2014) for over $1 million. This list contained fields for address, land area, dwelling area, number of bedrooms, CV, sale price, days on market, agency and agent.

This list was then supplied to the relevant agencies to populate with marketing data for each property. We asked for spend by media options (Herald, Property Press, TradeMe, etc.), open home visits, enquiries and numbers of auction bidders where relevant. This took a reasonable amount of time to collate but resulted in a completed list of 252 properties. Success measures were based on:
· Sale price to CV ratio
· Premium achieved (sale price minus cv)

This allowed TNS to look at similar properties (based on the data from CoreLogic) that included / didn’t include Herald Homes in their marketing mix (based on the additional agency data). Our advertising is based on the results of this analysis. We are absolutely confident in the methodology –as we have based our claims on actual sales and market data.
— NZ Herald : Brad Glading, Head of Research & Insights : NZ M & E Ltd 9 October 2014

This response is certainly illuminating. I have no problem from a research perspective as the sample size of 252 properties is sufficiently robust and the methodology and factual basis is without question. The one issue I do have is that they chose to limit the sample to only those properties that sold for over $1m. This fact is not detailed in the supportive advertising when disclosing the research. It should be disclosed as in my mind it creates a bias in the advertising campaign as people would rightly believe the claim applied to any property sold with Herald Homes advertising.

As a point of reference and context. Using Barfoot & Thompson sales data for Auckland $1m + property sales represented just 1 in 8 of all property sales in the period from August 2013 to January 2014. Therefore this selective sample set of $1m + sales is actually a small fraction of the market. 

Far more important than the bias of the sample set is the belief by Herald Homes that the premium price achieved at sale is solely due to the advertising. The data they have analysed certainly shows a correlation between premium sale price and advertising BUT their assertion is that the advertising is causing the resultant premium sale price - this is not provable.

The NZ Herald have fallen into the classic trap of believing that "Correlation implies causation" where in fact the opposite is true. The fact is that a correlation between two variables does not necessarily imply that one causes the other.

The fact is there are just too many variables at work in the factors influencing the sale of a property for any one component to be isolated to be proven to be the cause of a sale price premium. I am certain that with the same set of data Trade Me could argue with confidence that advertising on Trade Me would result in a sale price premium or that auction sale process caused a premium or that real estate agents with blue logos caused a sale price premium.

On a more serious note I believe that there is a alternative hypothesis to explain the results of the research undertaken on behalf of the NZ Herald.

Alternative Hypothesis

 A key factor in the Auckland property market over the past few years especially of property  sales value over $1m is the prevalence of inner city renovated properties. These are properties which have achieved significant premiums over their respective CV due to the substantial investment in renovation of many hundreds of thousands of dollars. I detailed this situation in an article from earlier this year "Property statistics can be misleading".

I believe that such properties which have been renovated and then come onto the market attract a higher level of marketing investment which clearly will involve the Herald Homes together with other advertising in print and online. These properties also attain a higher margin over CV because effectively they are new homes and the CV relates to the former home on the site. These type of properties are more than likely to be skewing the results of the research and creating the correlation.

To prove my assertion I undertook a detailed piece of research of my own. I took the inner city suburb of Grey Lynn and with the assistance of a friendly agent accessed the CV and sale price for a total of 62 properties sold in the suburb between August 2013 and January 2014. Of this total, 46 properties had a sale price in excess of $1m. I then went through these properties one-by-one to identify which had been sold following a renovation. There were 16 properties which had been renovated.

Here is the resultant sale price premium for renovated and non renovated property compared to CV.

Renovated properties: 16 - average sale price over CV $403,125

Un-renovated properties: 30 - average sale price over CV $335,826

The margin is 20%! 

So I could quite legitimately say that the 20% premium claimed by the NZ Herald as attributed to the power of Herald Homes advertising is as likely to be the result (in the case of Grey Lynn) to be down to properties having undergone a renovation.

I judge that the NZ Herald has leapt to a interpretation of causation from their commissioned research simply by identifying a correlation potentially the result of significant renovations and therefore the advertising claim is without foundation and therefore fundamentally misleading.


Can advertising generate extra sales price for property?

by Alistair Helm in


  • If a TV company were to say to an company - if you buy this campaign you will see a 20% increase in sales - you would not believe it?
     
  • If a radio network were to say to an restauranteur - if you buy this campaign you will see a 20% increase in sales - you would not believe it?
     
  • If a real estate agent were to say to you as a seller - if you buy this campaign you will see a 20% increase in the selling price - you would not believe it?

So why would you believe it when the NZ Herald says - if you buy a campaign in the Herald Homes you will see a 20% increase in selling price?

Well that is exactly what the NZ Herald wants people to believe with the new advertising campaign it has started

To be fair and accurate they are not, as the headline says claiming that by using Herald Homes that you will see a 20% higher selling price. Although these banner ads you can read above suck you in with this ambitious claim!

What they are saying is that if you use Herald Homes then on average the premium of the sale price over the CV of the property will be 20% higher than for a property without the Herald Homes - as ever the small print tells the real story whilst we are seduced by the headline!

Herald_Homes_-_Sell_your_property_in_Auckland_for_more.jpg

So if I am correct in this assessment, this is the scenario they are claiming based on the much promoted Grey Lynn 'dump' - its CV was $690,000 and it sold for $1,075,000 at auction on Wednesday. So Herald Homes is claiming that if this property had not been in the Herald Home (which it was, as well as TVNZ, TV3, Stuff etc etc) then it would have sold for 20% less than $385,000 margin over CV - effectively without the Herald Homes a sale price of just $998,000. So the claim in this case is that the advertising in Herald Homes boosted the sale price by $77,000! - That is some claim. Clearly if this were to be believed then the investment of c. $6,000 a page would be money well spent!

The advertising material to support this ambitious claim references to a "TNS Research 2014" as the source of the claim. I have written to the NZ Herald with questions about the research and to seek to obtain a copy.

I cannot believe this claim as the fact is there is no such thing as a 'control' environment when it comes to property and any claim to state that this method of sale, or that agent, or this advertising will achieve a higher price is unprovable.

To be able to in any way even test this hypothesis you would have to analyse a sample group of properties in a similar area of the country across a variety of price points using different selling methods - some of these properties would be advertised with say Herald Homes and Trade Me / Realestate.co.nz, some just Herald Homes and some with no Herald Homes and just online.

I can see no possible way for any seller to be happy to participate in this type of 'research' - every seller wants maximum exposure and there is absolutely no way of isolating the impact of Herald Homes from other factors such as market demand or online premium advertising or any number of other factors.

I will wait with interest to see if the NZ Herald respond to my request and also to see if they continue with this advertising. I believe that this advertising proposal breaches the code of practice of the Advertising Standards Authority in regard to misleading and potentially deceptive advertising claims. 


Real estate advertising - classic snake oil tactics

by Alistair Helm in ,


I have to declare a bias here and be upfront. I am not a fan of property schemes; training courses that perpetuate the idea that property is the answer to a financially secure future, a way to make a million or any other scheme that whilst trying to sell a money making venture that is really just trying to ‘sell’ a property. Let’s face it property developers are not interested in your retirement or mine for that matter, nor are the agents who act for them. I say that not to demean them. It is just that the marketing tactics that they employ, to my way of thinking are not much better than those of a snake oil salesperson.

Sadly we all became far too aware of such schemes in the last decade as we saw the collapse of the high profile finance companies and I would have hoped that we could have learnt from that period and tried to approach these property developments in a more transparent and professional manner this time around as our major city seeks to expand upwards and create apartment living in every corner.

So with this inherent bias I was flabbergasted by an advert in the Weekend Herald last week. Leaping out from the small advert was a picture of Albert Einstein - one of the luminaries of modern times - what could he be doing involved in selling real estate I thought to myself?

 

The details as I was about to lean were buried in the advert - when you got to read it.

And here is where we come to the complaints I have for this advert. There are 3 major complaints and they are in some ways serious enough for a formal complaint to be made to the Real Estate Agents Authority and/or the Advertising Standards Authority.

  1. It is illegal to use an likeness of Albert Einstein without permission
  2. The advert is far too focused on hypothetical promotion of a money making scheme instead of being what it is - an advert for new apartment developments
  3. The audacity of the advertiser to try and squeeze all the regulatory small print into that tiny advert.

Albert Einstein is somewhat of an iconic individual of the 20th Century receiving as he did the Nobel Prize for Physics in 1921. He is best known for his mass-energy equivalence E=mc2. What then is his likeness doing on a real estate advert?

The advert purports that Einstein had a Rule of 72 - this is not factual and irrespective of that the Rule of 72 speaks to a shorthand way of assessing the time period required to double the value of a capital sum based on a simple interest rate. If you divide 72 by the interest rate (say 10%) then in this example you get a figure of 7.2 - which is the number of years required for a capital sum to double in value if the interest rate payable is 10% based on compound interest. The reality is that the statement in the advert that “in future years the property should be worth more, much more” is neither attributable to Einstein nor to the Rule of 72.

Lastly GreenLight, is the duly appointed exclusive licensing agent for the Hebrew University of Jerusalem, who hold the rights to all likenesses in any form of Albert Einstein and it is also authorized to vigorously pursue all unauthorised uses of Albert Einstein's creations, appellations, copyrights, right of publicity, photographs, trademarks and characterisations, and to prosecute and maintain trademark and copyright registrations on behalf of The Hebrew University of Jerusalem. So I would be very cautious about using any unauthorised images of anyone on any advert.


The advert is full of speculative assertions "A city residence can now be purchased with only $1,000 down and nothing to pay for 14 months" and similarly "After finance charges, you can have other people paying it off for you". Nowhere does it say which property and where and for how much and what type of property you might get. Nor as to the risks of buying an apartment and the potential issue of arranging finance or the problems of tenancy.

No it sells the snake oil of "make a few hundred dollars a week coming in as extra income in retirement" and of course the presumption of a "long term appreciating asset"


The advert needs to be seen in context - it measures just 150mm by 90mm 


And as for small print the advert manages to compress 230 words of legally required disclaimers into a space smaller than the headline - maginfying it as I have done below shows how bad this is:

In case you are interested this is what it says:

Disclaimer: Only available when purchasing an off the plan Urba or Queens Residences apartment and only apply where the Vendor accepts a Purchaser’s request for payment of the balance of the deposit (usually 10% of the purchase price) to be deferred until settlement, and the Purchaser enters into a Deferred Deposit Deed with the Vendor (if acceptance with clause 23 of the Agreement for Sale and Purchase) within 15 working days of signing the Agreement. At settlement the balance of the deposit together with the full purchase price must be paid. If the Vendor does not accept the Purchaser’s request for payment of the balance of the deposit to be deferred until settlement or, if the Purchaser elects to pay the balance of the despot by cash, the full deposit must be paid in cash in accordance with the terms of the Agreement. Capital and (not legible) values rise and fall according to market conditions, investing in property is a long term investment, not a get rich quick scheme for spectators. The information contained herein is not financial advice and should not be relied upon as such. Prior to signing any legal documents, such as contracts, you should seek independent advice. Every Precaution has been taken to establish the accuracy of the material herein at the time of printing, however no responsibility will be taken for any errors or omissions. 


In my view this advert does nothing for the professionalism of the real estate industry nor does it add any value to the properties that are endeavouring to be marketed or the agent acting as a sellers agent. It's shoddy and if I had the time I would like to take a complaint against the advertiser for the latter of the 3 issues at least - time will tell if they receive a complaint and financial penalty against the first issue!


Premium advertising of property needs smart design thinking

by Alistair Helm in ,


The parallels of online and offline advertising of property are clear. If you want to achieve impact then you need bigger adverts and bigger adverts cost more - this applies to a print magazine as it does to a website.

With print magazines you go from the basic 1/4 page to a 1/2 page to a full page to a double page spread to a cover page - each step more than doubling the cost until you in some cases blast through $5,000 for a single insertion.

Online you go from a standard listing to a feature listing to a super feature and in the future as likely as not a platinum super feature. Costs increase accordingly, although not to top even $1,000.

However my focus of thought and reflection at this time is not on cost but on design and user experience. I think the team at Trade Me Property need to ask themselves some serious questions. For whereas the property magazines design very consumable and appealing publications with inspiring double page spreads and cover adverts that draw you in to support these premium advertising solutions, the online world of Trade Me Property is becoming a jumble which is less likely to draw anyone in as it strives for more and more premium advertising.

I make these comments as I today I have discovered a new header advertising unit on the site.

"Best on the block" takes up the header section of the site and is appearing under all types of searches despite the property in question when you click through to the "Find out more" is actually in Christchurch.

Why would I be interested in a Christchurch property when I am searching in New Plymouth? As you can see the advert provides no location context so you have to link through to see the location only to discover as over 4,000 people have already done that it holds no relevance - adding up to what in my mind is a dumb piece of advertising.

Additionally this new block of advertising pushes down the former super feature to now place the real listings so far down the page that it takes a good action of the scroll wheel of a person's mouse to find a normal listing as the screen shot below shows.

If you then open up the map search in the header things get ridiculous - it is so far down the page that you have to scroll that you might well be forgiven for thinking that Trade Me Property was not interested in basic listings at all.

In my opinion Trade Me needs a major rethink as to design layout.

It needs to decide fundamentally if it is a general classified website where property listings and their attendant premium adverts are to be squeezed in where there is some space just as car adverts and listings and job adverts are pigeoned into the same structured architecture or if it is serious about the property space and create a new design and user experience as a serious real estate website portal. It needs to look at the best run site in the region that of Realestate.com.au in Australia to see how to lay out a website for maximum user experience matched to optimal premium advertising.




Yet more innovation in the marketing of property for sale

by Alistair Helm in ,


I often vacillate between a fascination for the latest shiny bauble of technology and the fundamental mantra of KISS (keep it simple, stupid). So it is with real estate marketing. Great photos, contextual information that sells the real benefits of the property; forget the videos, augmented reality and virtual tours!

But every now and then a piece of technology appears that distracts you and I find myself resetting my perspective. So it was when the iPhone was launched. I could see the impact the locational capability would have upon the real estate industry and the experiences surrounding the process of buying a home.

Equally I have long held a dislike for virtual tours which thankfully have become less popular over the past 3 years as video seems to have surpassed this early multimedia presentation. I found one example online to remind me of how nauseating they are - that sense of vertigo they create as you seem rooted to the spot as the property spins uncontrollably around you. You can sense my dislike!

So when I first heard of 3-D virtual tours I recoiled in horror at the concept of these nauseating images - but with 3-D glasses!

How wrong I was, as it turned out, and what a surprise I got. I first came across 3-D virtual tours at the annual real estate tech start-up competition called FWD Innovation Summit organised by Realogy (The largest global franchise real estate company). Inaugurated last year this competition offers the winners US$25,000 in an attempt to stimulate innovation and ideas focused on real estate. This years winner at the event held in June was Matterport the makers of a new camera technology that creates a true walk-through experience for any space, but clearly of great value for home viewings.

The Matterport camera costs US$4,500 and is more a data analysing device than a traditional camera. You simply place the camera on a tripod in various points around the home and it ‘absorbs’ the images from all around and then ‘stitches’ them together to create a complete smooth immersive walk through of the property.

No 3-D glasses, no headsets and importantly no nauseating virtual tour this is a self managed drive through, so the term “3-D Virtual Tour” is actually incorrect, it is a self-guided remote viewing for a home (bit of a mouthful!).

As ever the proof is in the pudding or in this case the viewing, so to get a sense of the power of this technology have a look at this real example of a actual listing from the embedded player below. The size of the data file could take a few seconds to load and then just dive in to virtually walk around the property with your mouse of finger in exactly the same manner as if using Google Street View.

 

This technology is smart and has been quickly embraced by one of (if not the) most progressive real estate companies I have come across - Redfin. They are planning to utilise this technology on as many of their listings as they can as quickly as they can. This is just the type of game changing advancement that a smart real estate company should and will adopt - so who will be the first such company in NZ to adopt this and show leadership.


Selling your home - a personal perspective: 4 - The Sale!

by Alistair Helm in , ,


The critical day arrives. Probably second only to a wedding or other significant event, is the day your home finally sells. In the case of our home, that day was the day of the auction on that Wednesday afternoon. Nerves were evident, as were the usual questions:

  • Would the prospective bidders our agent had identified be there?
  • Would there be sufficient interest to generate a bidding war?
  • Would bidding exceed our reserve?
  • Would anyone turn up?

These are the common questions asked by anyone about to sell their house by auction or in fact almost any forms of sale.

But before detailing the outcome of the sale let me recap. As chronicled in prior articles I have over a series of 4 posts detailed the processes and decisions we had gone through in identifying the method of sale, choosing the agent and establishing the marketing plan for our house. Overall a carefully planned programme designed to ensure that our property was presented to potential buyers in the most appealing manner to generate interest and stimulate demand, and ultimately sell our home. 

One aspect of the whole process that most impressed me and strangely (given my experience in the industry) surprised and delighted me, was the very detailed and intimate understanding we gained through our agent as to the prospective buyers. I do not know if this degree of detail is common practice but as a seller it was vital to a sense of connection to the process.

At each meeting with Blair in de-briefing the weekly open homes as well as interim meetings and chats, he shared insights and feedback on each of the key prospects he had identified from enquiry and open home visits. He referred to these prospective buyers by name. He provided insight as to their personal situation, where they lived, what they were looking for, what their expectations of price were and what aspects of the house they most liked and disliked.

Over the 3 weeks of the campaign leading up to the auction we saw insight into a total of 5 couples. The insight was not intrusive nor in any way a breach of privacy or personal confidences,  but provided us with a great ability to manage our expectation and in so doing I believe added credibility and professionalism to the role Blair played. As I say, if this is common amongst agents then these smart agents in my view do themselves a disservice in not highlighting this value they bring to the process. In my opinion it is vital and truly valuable part of the real estate process.

Through the 3 weeks of the campaign we had what amounted to a virtual leaderboard ranking of prospective buyers with some surprising movements. Barely 7 days into the campaign we had what both Blair and ourselves though were the perfect couple as buyers. Cashed up from selling a property in the South Island and frustrated at living in rented accommodation, this couple ‘fell in love with our house’. They visited  a couple of times and Blair talked to them about making a pre-auction offer of which they were engaged around the idea. We even were able to verify their seriousness as we witnessed them bidding at an on-site auction at another very similar property in the neighbourhood. Then things went quiet with them for 5 days only to discover that in those intervening days they had not only found another very different style of property, but had actually attended and bought it at auction! It just goes to show how little you can tell of people’s real interest or intent.

We heading into the last 7 days leading up to the auction with what Blair believed were two strong potential buyers. The property ticked all the boxes for them and they had both seen the house a couple of times. They appeared to have done their due diligence. Based on this and the belief that you have to take the market for what it is, we sat down with Blair coming up to the final weekend of open homes. Our question was ‘why do we need to do these final weekend open home viewings?’ - it seemed to make no sense, who would suddenly appear out of left-field 3 days before the auction? Blair convinced us against our better judgement to go ahead, so dutifully we tidied up and prepped the house again for what we thought would be a quiet viewing.

How wrong could we have been. A new buyer appeared, or at least a relative of a prospective buyer. They loved the house and wanted their relatives to view the house when they came up to Auckland on the Tuesday (the day before the auction) - not a problem we thought, can’t do any harm. Little did we know that this prospective buyer would go on to buy the property!

A key step before the auction was the setting of the reserve with Blair. Naturally we had developed our own view of the expectation of price and what we would be prepared to accept. As a point of note I choose not to reveal the reserve or the selling price - this is not the essence of this article. This is a matter we as sellers choose to remain confidential. The reserve we agreed on was surprisingly aligned with Blair's recommendation, or maybe it is not surprising as through the 3 week campaign he had provided a clear view of the expectations of the prospective buyers, accepting as always that buyers never want to truly show their hand when it comes to price.

The reserve price was set at a level at which we would be satisfied. Like all sellers we would wish to be blown away by frenzied, manic bidding with a stunning resultant price, way above the reserve but you have to be realistic. At the end of the day the difference between our reserve and Blair’s recommendation was less than 5% - naturally we were higher!

An unusual set of circumstances arose in relation to the actual auction day and time which meant that my wife could not attend. This troubled us as to how we would cope if we could not both be there as joint owners of the house. Our immediate thought was how to facilitate the signing of the Sale and Purchase Agreement - would we have to get a power of attorney for me to sign for both of us?

Again this is where you can be surprised about how little you know of the process. In an auction you as the sellers completely sign over the sale to the auctioneer who through a right of representation acts legally on your behalf to transact the sale at a price at or above the reserve. This document was signed the day before the auction effectively leaving us both out of the process.

This is a very interesting situation and something I sought advice on from an independent and experienced agent. His advice (somewhat surprising) was that you as sellers should not attend the auction! The logic being that in this way you insulate yourself and thereby avoid the pressure coming from the auctioneer and agent trying to encourage you to compromise on the reserve if the bidding fails to reach reserve. This is a very interesting strategy and something I had never considered. If the role of the auctioneer is to sell the property at or above the reserve and this is your wish then not being present has its merits (and some degree of risk as I am sure many agents will tell you).

So the auction time duly arrived and I was alone at the auction rooms with my wife on standby via text message (she was actually doing a presentation!)

Blair had told me in a pre-meeting that he knew that there were definitely two serious buyers in the room.

I won't take you through the chapter and verse of the actual auction suffice to say that the auction lasted 5 minutes and 24 seconds - I know that because I recorded it on my iPhone - captured for posterity! There was as anticipated, two genuine bidders. Once of the bidders clearly had a threshold which he stuck to staunchly despite the best skills of the auctioneer. The property reached a final bid which was just below the reserve. So with a pause in proceedings, the auctioneer began a somewhat lengthy and protracted process of negotiation with the highest bidder with a clear instruction staunchly adhered to from me that the reserve was fixed and not up for negotiation. The end result was that the auction was recommenced and called and the property sold "under the hammer!"

In my opinion the outcomes was a satisfactory conclusion, whereby as I have often said the price expectations of us as sellers was met by the preparedness of the buyers to pay that price - I felt that the outcome was fair and open; and neither party should have any reason to feel aggrieved nor triumphant.


So after a number of weeks of tense anticipation and nervous expectation we sat back at a well deserve celebratory dinner (actually pizza and a beer at 4 in the afternoon!) and reflected over the process. We had in our hand a signed unconditional agreement for the sale of the our house, with the deposit already transferred from the buyer to the agency rust account; thereby allowing us to move on with our lives and to close a chapter on both the ownership of this house and the selling process.

When it came to reflecting on the cost / benefit analysis of the process we did not (as is universally accepted in the process) physically write a cheque for the commission fees paid to the agency company. We did not feel the ‘pain’ of that large amount of money leaving our bank account, it was seamlessly deducted from the balance of the deposit paid by the buyers. However, we have reflected often on our decisions and the process, and we do not in any way begrudge the fee we paid for the services provided by Blair. We felt that we were professionally guided through the process without undue stress. We discovered great insight from the process and were delighted with the outcome. That chapter of our lives is over and a new chapter begins.


Mobile platform - getting smarter and growing in importance

by Alistair Helm in ,


iPhone iStock_000017188325Small.jpg.png

There are more internet connected devices in people’s hands these days than the total installed base of computers and laptops. If you add on the 440 million tablet devices to the 1.6 billion smartphones it far exceeds the total of 1.53 billion desktop and laptop computers.

 Data from Mary Meekers (Kleiner Perkins Caufield & Byers) presentation at the ReCode conference on Internet Trends May 2014

Data from Mary Meekers (Kleiner Perkins Caufield & Byers) presentation at the ReCode conference on Internet Trends May 2014

We have reached this tipping point of mobile vs desktop and from here the divergence will only accelerate , especially as currently only a quarter of internet usage is on a mobile device. A few years ago we heard the phrase “mobile-first’ when describing the mindset of new tech companies, that mantra has to be a continuing theme of all business models that rely on a technical platform. When it comes to real estate advertising, there is no argument it is a technical platform that dominates real estate advertising when seen from the consumer perspective.

An interesting deeper insight into this mobile usage for home searching was highlight in data last year from the US portal of Realtor.com published in the Wall Street Journal which highlighted the profile of mobile vs desktop searching by suburb in the US. The findings showed that the higher priced suburbs saw far higher usage of mobile and that within this usage which exceeded half of all views, the Apple iOS ecosystem dominated with combined iPhone and iPad accounting for 50% of views vs. 8% for Android in these high price suburbs. 

At home in NZ we have seen a number of developments to the mobile landscape over the past year with enhancements to the Realestate.co.nz app as well as the Trade Me Property app. In addition we have had the launch of the Kiwi Bank Home Hunter app and a iPad app from Open2View.

When analysing the relative level of audience to Realestate.co.nz and Trade Me Property earlier this year I analysed the performance in terms of downloads using the tracking analytics of AppAnnie which ranks apps on a top 1,000 list per country. At the time back in Aril there was no doubt that Realestate.co.nz continued to lead the field in terms of the higher ranking in new downloads, added to which its installed base built up over nearly 4 years had given it supremacy over Trade Me Property amassing over 200,000 downloads.

Revisiting the latest stats from AppAnnie though shows a very significant difference as the two charts highlight below:




Trade Me Property’s iOS app (for iPhone and iPad) has leapt in the rankings since the beginning of July from 350th placed downloaded app in NZ to an average of around the 70th most downloaded app. Meanwhile Realestate.co.nz download ranking appears to have slipped from a high of 175th place at peak in Feb / March to 250th overall place in the past 3 months.

What could have lead to this significant lift in the rankings of Trade Me Property?

I don’t actually have the answer - I will ask Trade Me Property to share their secret if I get the chance. However if I was in their shoes the advertising tactic I would have used is the new download app placement available now from Facebook and Twitter

The sheer simplicity and contextual logic of these ad services staggers me. Both Facebook and Twitter as news and social platforms are more and more about mobile - they are also used constantly and given the profile data they have about users they can target so perfectly so as to maximise conversion and in so doing minimise advertising spam and maximise revenue per ad unit.

Look at this simple example:

Option 1 : Web advert for mobile app

Consumer experience - if on a desktop / laptop click on advert, taken to company website and the click again to app store to then sync app with mobile device. If on mobile device often face difficulty of landing page design not optimised for mobile

Cost for campaign: $4 per 1,000 impressions - company buys 1,000,000 impressions. Typical click through rate of 0.05% = 500 clicks to landing page, 70% conversion to app store and 50% conversion to download.

Result - 1,000,000 ad units, spend of $4,000 for 175 extra downloads = $23 per acquisition

 

Option 2 : In app download

Consumer experience - only on mobile as specifically targeted. Only shown if profile matches profile of property buyer

Cost for campaign : pay for performance vs. pay for adverts. $15 per download is far less than cost of traditional advert. Conversion rate of 10% - to achieve 175 downloads requires only 1,750 ad impressions and costs just $2,625.

This model is a win win for each party - the consumer is saved the extreme bombardment of endless ads, the company only pays for successful downloads, the advertising platform (Facebook & Twitter) shows far less adverts and attracts new advertising revenue.

 

This is the future of advertising and saves us from the ages old ‘shotgun’ approach to marketing. That is how I would approach the promotion of a mobile app.


Selling your home - a personal perspective: 3. The Marketing

by Alistair Helm in


Property marketing is one of my favourite topics and something I have shared my opinion on for many years both on the Unconditional blog which I started in 2007 and on this site. As regular readers will know I have in all this time been consistent about one thing. That is, that digital marketing has taken over from print media in the minds of the consumer and consigned this former stronghold of property marketing to the dark ages - never to return.

So it therefore should not come as any surprise that when it came to selling our home recently I was committed to a purely digital marketing campaign. 

So having gone through the process of choosing a real estate agent to handle the sale of our house as detailed in the second article of my four articles detailing the personal perspective of selling our home, we came to the decisions around the marketing of the property

In my view having spent the majority of my career in marketing focused roles, I judge that marketing covers a wide gamete of components and is not simply the reserve of advertising placement. It is far more about what, how, when and where. In the case of property marketing it focuses on the form of marketing as in the platform of sale, the positioning of the property, the presentation of the property, the promotion of the property and the performance of the marketing through the campaign. Let me review and share the approach of each of those 5 P’s.

 

Platform of Sale

This refers to the various options - By Negotiation/ Auction / Tender / Priced. An imperative for me in property marketing is the need to drive the process. I think it is ineffective and lacking in focus to simply announce to the world through an online listing and a sign board, that this property is for sale and then hope that someone makes an offer. Urgency is a tool that should be leveraged. The reality of selling a property is there may well be a buyer out there who will judge that your house is simply the best, and the house they have always wanted, and that they are willing to pay way over the odds for your house. The cold hard fact is that though this could well be quite likely and even possible, what is highly unlikely; is that this ideal buyer just happens to be in the position to buy your house now. So you have to be pragmatic and deal with market today - this month, and focus on the reason why you are selling - you want to move. If you don’t want to move then don’t put your house on the market, the real estate industry really doesn’t need another listing that sits on the books for a year or more.

For this reason I have a preference for Tenders. They appeal to me for the reason that they establish a deadline by which time buyers need to commit themselves. Are they in or out? Offers submitted as Tenders can be either conditional or unconditional. Tenders force buyers to put an offer price on a contract that is their ‘full and final offer’ - with no knowledge of what anyone else is offering. This compares to auctions which are public spectacles in which the winning bidder secures the property for a small (relative term) amount more than the unsuccessful bidder. Finally Tenders allow the vendor to calmly and in their own time examine and consider the submitted Tenders and accept, reject or negotiate with any of the submitters.

I have sold by Tender in the past and therefore had a preference. However I listened to my agent. Blair accepted all of these views as well as hearing (or knowing) my reluctance to the Auction method. He articulated very well the benefits of an Auction. It was a focused method which had a deadline. It ensured buyers were focused. He spoke of the recent sales experience with very similar properties in the area that he had sold by Auction. He also shared the experience that Tenders were less common and therefore could create wariness in the minds of prospective buyers. We were persuaded, not easily I should add, that an Auction would be the best method.

Another component of the platform of sale is the duration of the campaign. Given our pragmatic approach to recognising that you have to accept that the market will only deliver buyers who are ready to buy; it was our decision to go with a 3 week campaign. This would allow sufficient time for all interested parties to view and assess the property whilst keeping the whole process moving along at a good pace and keep marketing impact high.

 

Positioning of the Property

Positioning is all about identifying your buyer profile and creating the look and feel to attract them to view the property. In our area of Auckland there is a very common minimalist villa renovation-look which dominates - white surfaces, lap pools and large bi-fold sliders. Our house (as a reflection of our own taste) is what we judge to be a more sympathetic modernisation of a character villa appealing to people who want modern convenience without loosing the heart of the property. This recognised that our house may not appeal to city dwelling young families but more to older generations who crave the convenience of the city suburbs but like the character detail. Positioning is not so much about choices as to how you might position a property as few people will be re-designing or renovating prior to sale. It is more about recognising who the prospective buyers may be and how to best appeal to them.

 

Presentation of the Property

Presentation is all about creating impressions. Put it another way its about creating an experience which ideally limits criticism of the property. It may be hard to believe, but often people judge properties not on the attributes which are easy to see and tend to be presented in the listing details, but in the drawbacks and general criticism. Don’t like the curtains! the bathroom is too small! there was a strange smell! could see the neighbours messy back yard etc! 

Presentation is about literally ‘courting’ prospective buyers when they check out the property at an open home. Working hard to minimise criticism and capture the hearts of those prospective buyers.

 

Promotion of the Property

For me this was the easy part - online. That’s it!

A key part of promotion is quality materials. This starts with professional photography. Blair recommended Open2View which I have high regard for and was happy to agree on. As well as a comprehensive photo shoot I also insisted on floor plans. These in my view should be mandatory - I find them invaluable and feel that they provide a great reminder for prospective buyers are they reflective at home after a day of open home visits.

The online marketing was naturally Trade Me Property and Realestate.co.nz - again with the solus  focus online the judgement was that a plain listing was not enough so a Super Feature on Trade Me and Premium package on Realestate.co.nz were booked.

The traditional elements of a street sign and brochures were not in despite - they are a necessity.

With this comprehensive package of advertising and photo portfolio the question was still asked by Blair as to an advert in the NZ Herald. I did not criticise Blair for bringing this up. I can see the rationale for the belief that there could be a random opportunity of a buyer viewing a Weekend Herald; for them to see a house and fall in love with it. However I remained true to my principle. I would not pay for print, that did not stop Blair placing a quarter-page advert at his own cost!

Our investment in marketing totalled $1,850. This included costs for a premium featuring on Realestate.co.nz for $400, listing and premium featuring on Trade Me Property for $400, Photography and floor plan from Open2View for $650 and then signage and brochures for $400.

 

Performance of the Marketing

The ultimate performance of the marketing campaign is judged in the result of the final sale, as to how much interest was generated and how competitive was the interest from prospective buyers in wishing to bid for the property. That outcome I will share in the final article.

In assessing the performance of the marketing campaign I will let the numbers speak for themselves.

Online advertising and profiling consisted of four websites. In addition to the premium advertising on both Trade Me Property and Realestate.co.nz the property was featured on Open2View and the Bayleys website. Across the 3 weeks a total of 6,174 views were made of the property with Trade Me Property accounting for more than half of all views as detailed in the chart below showing cumulative views across the four sites for the 3 weeks of the campaign:

 

The chart reminds me so much of the typical performance curve of online listings which I analysed on Realestate.co.nz a number of years ago. The peak interest for a listing is in the first few days as the combined impact of email alerts and ‘top-of-search’ result pages drive huge awareness. That awareness and consequential views declines to a plateau very quickly. This firmly demonstrates the critical importance of ‘launching’ your home onto the market with a fanfare and grabbing the market opportunity quickly. There is an often-heard comment within the industry that the “the first offer is often the best offer” - this may have even more credibility than some may accept as early interest is high from real committed buyers who want to act.


Our agent was very effective at not only providing the stats of web views he also prepared and delivered a written weekly report (not an online dashboard - which I would have loved). This report provided the following key stats which I think are the KPI’s of the property marketing process.

A very interesting analysis of the marketing. So we 42 visits to our property over the 3 weeks. Without doubt the largest driver of visitors (19) identified their source of info as the web and the largest driver of that was Trade Me Property.  It was interesting to note that what is not detailed on this report was email enquiries. There was just 1 from Trade Me Property. To my mind this was a success! Let me explain. The listing provided all the necessary information and we held weekly open homes. The photos and floor plan gave all the necessary insight into the property - so why would you need to send an email. Email is not a key indicator of performance, if the marketing is well executed.

 

With the 3 week campaign completed, 42 visitors groups and 6,174 online views the key question was. Had we done enough to attract a buyer and was there a buyer out there who's appreciation of value in the property matched our expectation of the value of the property? That test would come on the day of sale.


Previous Chapters:

1. Method of Sale

2. Choosing an Agent

 

Future Chapters:

4. The Sale!


Selling your home - a personal perspective: 2. Choosing an Agent

by Alistair Helm in , ,


We have recently moved house and with the heartache and stress behind us, I felt that now was the time to examine and report on the process in order to provide an opportunity to, from a personal perspective, share observations and opinions on the whole process.

I have broken down the process into what I see as 4 key steps from the starting point of judging the right method of sale (private sale or with an licensed agent), through choosing the agent, the marketing and then finally the negotiated sale.

In the first article I shared the decision making process in judging the right method of sale, whether to try and sell privately, use a traditional licensed agent or try an new emerging online solution.

This next section details the process of selecting a traditional agent.


Choosing a local agent

Our choice of an agent was extensive, as is common to sellers in major cities and towns throughout the country. The major real estate brands within the industry are all well represented with offices in the local suburb. However the local office presence was of little interest. Our interest was in the individuals rather than the companies.You don’t deal with a company, in the real estate process you deal with the individual agent.

We decided that we would select 3 local agents and invite all of them to visit the property and to get them back to present their proposal as to their recommendation for the best approach to marketing and selling our home. Naturally as part of the process we would be interested to learn their assessment as to the value of the property. I think too often people treat the decision making process of choosing an agent as a mock auction with the adjudication based on the appraisal value. The agent isn’t offering to buy your house at that price, so their assessment is nothing more than conjecture - based on professional skills, I accept.

 

So which 3 agents to choose?

This is the approach we took. Firstly we would invite the agent who sold the house to us. I am sure this is an often chosen route. They were successful in selling the house last time, they are active in the market, they know the house and they would appreciate better than anyone the changes and improvements we had made. The agents concerned were Marty Hall and Heather Lanting from Ray White - Ponsonby.

 

Our second choice was an local agent that we had met at numerous open homes we had visited. We liked his approach and were avid readers of his weekly market report email which provided a great weekly insight into the new listings and sales of property in the area. This agent was Kirk Vogel from Barfoot & Thompson - Grey Lynn.

 

Our third choice was again a local agent that we had met on occasions whilst viewing open homes. What most significantly drew us to him was the fact that he had in the past few weeks sold a very similar property in the area and this we judged was an excellent opportunity to leverage this specific knowledge as well as the contacts of prospective buyers who may have missed out on that property. This agent was Blair Haddow of Bayleys - Ponsonby.

 

We ensured that prior to inviting these agents to visit the house we had prepared it to the same presentational standard that we would judge, you would expect from an open-home visit. In my opinion the presentation standard is as important for impact for the agent to experience as it is for potential buyers. There is a sense of wanting to capture the attention and commitment of the agent to want to represent us and our house, as much as us selecting them. Each agent was invited to meet us at our house as a fact finding step, for us to assess them and for them to see the property. Each was then asked to go away and provide a proposal to us as to the approach to selling the property including the recommended method of sale, marketing programme and an assessment of the likely sale price of the property.

Allowing time for them to respond, we scheduled sequential meeting times for all 3 parties to present their proposal to us on the same afternoon, thereby allowing us the opportunity to be able to easily assess them, and for us to make a decision and get the property on the market.

I can say that the decision of which agent to choose was not an easy decision. I have decided to be very open in detailing not only who was our chosen agent but also to highlight which were the agents who we shortlisted but who did not represent us. In doing so I wish to remain objective.

In terms of local presence Ray White Ponsonby and particularly Marty and Heather have a very high profile in the area having sold many houses around our location. Comparing them to Kirk at Barfoot & Thompson and Blair at Bayleys they were the more ‘visible’ option. Having said that our decision not to choose them came down to the accuracy of their appraisal for our property. They neither over-pitched nor undersold the prospective value assessment of the property. However their assessment lacked the contextual relevance that the others did. They benchmarked our property against properties that were significantly different and their range of selling prices spanned too broad a spectrum. This left us with a degree of an unclear picture as to how they came to the conclusion of a property value range which was in its self in our view too wide.

Barfoot & Thompson are a strong player right across the Auckland market and across all types of property and prices. However the fact was in considering Kirk Vogel we were selecting him and not Barfoot & Thompson. In that regard we were concerned that the types of properties that he had sold over the recent year were not in the same price range as ours and whilst he had a strong command of the local market intelligence as to what had sold where and by whom when it came down to it he had not sold a “house like ours”. This factor above all others drove our decision not to appoint Kirk to represent us in the sale of our house.

Our chosen agent was Blair Haddow of Bayleys. This decision was not made as a result of the exclusion of the other two contenders, far from it, Blair was our clear choice once we had seen all three submit and present their proposals. Blair impressed us in his professional approach to the proposal to market the house, as well as his insight into the local market. However core to our decision was his recent experience with prospective buyers who are looking for a house like ours.

It is worth highlighting that the commission fees were discussed with all three selected agents. We wanted to be fair and objective and recognise that a market base fee was appropriate. This did require us to negotiate the fees where necessary with those who were charging higher fees so as to ensure that the fee commission was not a influencing factor in the final decision, in doing so we created a level playing field where price was not the deciding factor.

With the decision to appoint Blair came the decision as to the marketing strategy of the property which I will detail in the next article. 


Previous Chapters:

1. Method of Sale

 

Future Chapters:

3. The Marketing Process

4. The Sale!


Digitally enhanced photos could provide a new marketing service

by Alistair Helm in


When you mention to someone the concept of photoshopping property photos you I am sure, will conjure up the idea of tinted blue skies and lush green grass when in fact the lawn is actually bare earth and the sky a dull grey!

There is no doubt that to take actual images and start re-touching them is at best, misleading and at worst, deceptive and potentially in breach of the principles of advertising and representation, especially when trying to pass off the image of the property as the real thing.

However just for a moment consider a very different approach for the presentation of property marketing which could give a whole new take on photoshopping images.

Have a look at the two images below which are featured in an interesting article from the US headlined "Real estate brokers take digital trickery to new levels with virtual renovations"

 Original image

Original image

 Image after photoshopping

Image after photoshopping

A striking difference I am sure you would agree. The point being that real estate agents always ask buyers to "imagine" how the property might look with their furniture or with a little less clutter. Sure there are applications which can allow anyone to creative virtual images of property with any furnishings and colour scheme all through virtual reality glasses - but who wants to?

However a real estate agent / company could provide a great service where in addition to the actual photos of a property there are also a set of photos that have been professionally photoshopped to create an alternative layout or look-and-feel. The key here is "additional" - trickery as the article states is where images are replaced with re-touched photos. Enhancement of the presentation of a property could be created as an added-value service of creating "Concept Photos" for a listing - just imagine!




Selling your home - a personal perspective: 1. Method of sale

by Alistair Helm in , , ,


 By the way - this is not our new house or our old house - just a nice pic of a house!

By the way - this is not our new house or our old house - just a nice pic of a house!

Recently we have completed a complex, emotionally charged, time consuming and potentially life-changing process - we have moved house!

Much like 80,000 other people this year, we have sold our existing house and bought a new house to call our home. However unlike the vast majority of these other buyers and sellers I have an insight and knowledge of the industry, and the property market that gives me somewhat of a unique perspective of the process. A process I am keen to share, providing some observations and insight, now that we have successfully completed the move.

I decided to wait until we had finally completed the process before writing what I intend to be 4 separate articles which break the process down into what I see as critical components (i) the decision around the method of sale - agent or private sale, then (ii) choosing an agent (iii) the marketing and finally (iv) the completed sale.

I will be completely up-front at the start and declare that the process was highly satisfactory. Not only that, but the experience has, I am pleased to report (and to the pleasure I am sure of 10,000+ real estate agents) significantly changed my views, presumptions and appreciation of real estate agents. 

In selling our house we followed a path trodden by over 90% of people selling their home. We appointed a licensed real estate agent, who marketed the home and undertook to facilitate the process with consummate professionalism and delivered for us a result which met our expectation. 

We paid a market rate commission which in the cold light of day is a large amount of money, however whichever way I look at it, the outcome is the most important thing - we sold our house without undue stress. We were therefore able to move on to our new home in a timely manner and naturally get on with our lives.

The starting point to this whole process was the decision around the Method of Sale - the 1st chapter:

 

Method of sale

Deciding to move house is not something that comes to you in the middle of the night as a bolt from the blue and drives you to call up a local agent the very next morning. Like most people we began thinking about moving around 8 months before we actually put the house on the market. I suspect that this time period, whilst a long time in absolute terms is neither uncommon, nor unrealistic. We wanted to ensure our house was in top condition before we started marketing it and we knew there was some work to be done, added to which we wanted time to check out the options for a new location and a new house.

With the house completed to our satisfaction earlier this year, we looked at the various options to the process of selling the house. In my mind, and with my experience, there were three valid options which I wanted to sit down and seriously consider with my partner.

1. We could undertake the whole process ourselves as a private sale or as the American’s love to call it a FSBO (For Sale By Owner). The attraction of FSBO is saving money. In NZ that saving of the fees of a licensed real estate agents run into the tens of thousands of dollars. This is a sum worthy of serious consideration.

2. We could experiment with a new model of real estate - using a licensed real estate for a fixed fee and a undertaking some of the work ourselves. This model lead by the innovative service of 200Square certainly appealed to me.

3. We could appoint a local licensed real estate agent. Make them accountable for the outcome of a successful sale and pay them a commission fee at a market rate.

Irrespective of which of these 3 options we chose, I knew for certain that there were two elements of the process that were not negotiable - we would use a professional photographer and we would market exclusively online.

A professional photographer would be engaged to undertake a complete photo portfolio of the property together with a set of floor plans - an absolute must in my opinion. When it comes to online marketing the listing on Trade Me Property was a must, together with premium featuring to ensure we stood out from amongst the other properties on the market. If we went with a licensed agent then coverage online would include Realestate.co.nz as a complementary platform.

So the first issue in preparing to put our house on the market was which of these three options we would choose.

Selling privately naturally has a significant attraction in financial terms, this coupled with its ability, through the use of Trade Me Property and a professional photographer to achieve exactly the same level of market impact, viewing and potential open home traffic as any licensed real estate agent, makes it a serious consideration for many. However the fact is that marketing your home and selling your home are as separate as buying the ingredients and serving a gourmet meal. There is so much more to the process required to bring people to the point of being able to make a decisions which eventuates in a sale and purchase contract  being signed is subtle, hidden and challenging for the average person. I have gained an insight into this extensive process over the years I have worked with real estate and I can see just how complex and under-appreciated is the process of hand-holding that is required to get people to make a serious move to buying a property. It takes a certain type of personality to be at the same time persistent, forceful, cajoling, pleasant, empathetic and ultimately results-driven to get a successful sale. We can all identify a real estate agent. They stand out from the crowd. It is that personality type that makes them effective at what they do and the rest of us, pretty poor at trying to do their job!

So having decided not to go for a private sale, the simple question then was, the traditional model of real estate agent or the new innovative model? Stacking up the similarities and differences only makes the decision that much harder.

Traditional agents and innovative real estate companies such as 200Square both operate under the laws of the Real Estate Agents Act. Both services would be handled end-to-end by professional agents with many years of experience and success behind them. Both would be able to market the property as well as each other. Both would work to succeed and earn a fee / commission on successful sale.

The only difference is really that 200Square does not physically meet you at your house, they do not have a high street office in your suburb (not that makes any difference), they do not manage the open homes; they judge that is something you can do just as well or better, and if you want someone to do it for you then can arrange it. What they do better than any traditional agency is an online dashboard putting you in the driving seat as to the progress with the sale of your house, not only the data of online viewings but an insight into the lead management and the negotiation process.

Most striking of all though is the fact that they do not charge a commission based on a percentage of the selling price which for most agents amounts to around 3% plus GST. 200Square charges $4,500 - a flat fee irrespective of the value of your property.

That comparison creates a tough challenge. 200Square has a good track record, they have been operating for over 3 years and have sold many more houses in that time than the local real estate agent, right across the country - can’t be bad.

However at the end of the day when we as a couple sat down and weighed up the decision it came down to one factor.

When my wife asked me - putting aside the costs, could I in all good consciousness tell her that there wasn't any risk in using 200Square? - I could not. Not that there is any risk at all, they are a licensed real estate agent. The issue comes down to trust and like it or not - local agents sell local houses and in our area; nobody has used 200Square in our area and therefore that presents a risk. A risk which when it comes to selling your home becomes far more amplified than for many other decision. 

The one thing which in my mind is bigger than anything else in the process of selling a property is reducing risk. That is it; and to be honest the cost of reducing that risk can be pretty high, but it is easy to justify it at the end of the day.

Future Chapters:

2. Choosing a local agent

3. The marketing process

4. The sale!


Trade Me Property changes its pricing model - again!

by Alistair Helm in , ,


Trade Me Property today announced a new pricing structure almost a year after the implementation of the radical switch from a subscription model to a pay-per-listing business model. That model has, so it seems, proved to be a too great a stretch for the industry to accept and likely as not, too troublesome an issue for Trade Me to continue to deal with as it approaches it annual reporting just 3 weeks away.

The new pricing structure is on the face of it, a significant win for the real estate industry as it re-establishes the subscription model, whilst at the same time offering a scaled per-listing fee and a regionalisation of pricing.

The real estate industry mobilised itself into action upon the announcement of the new pricing model last November with clear messages passed within the industry from, at the extreme a  complete boycott of Trade Me Property, to merely advising clients that the website had changed its pricing and was no longer a mandatory component of marketing of a listing.

At the same time the industry circled the wagons around the ‘industry-owned’ website of Realestate.co.nz as a means to provide the home-shopping public with an alternative to Trade Me Property.

As the standoff ensued over the next 10 months there has been a clear demonstration that the impact on Trade Me’s business was being felt in both customer loyalty as demonstrated by listing numbers and in investor confidence as evidenced by the share price (although it is not accurate to entirely correlate share price to the issues with the Property sector, however it is a critical sector).

It is my belief that this new pricing scheme will in one fell swoop patch up the issues that Trade Me Property has faced, resulting in a solid re-population of the site to full strength and full loyalty (and if not loyalty then at least patronage). It will not deliver the much hoped for absolute gain to the bottom line that the original pricing model of a pure per-listing fee would have delivered but it will get the company back on track to build its business for the future.

So what are the details of the new price structure, who will benefit, who will choose which of the options and what will be the medium term outcome, as well as an assessment of the winners and losers within this tussle?

 

Return of the subscription 

The new subscription service with unlimited listings will be open to all offices with a regional split with metro offices in Auckland / Wellington / Christchurch paying $1,399 per month, an increase from the previous monthly subscription from last year when fee was $999. For those offices outside of these 3 metro areas the monthly fee will be $999 - no change.

This subscription model based on location is a smart move in that it moves the company away from a single flat fee structure, to regional pricing. This will go down well with provincial customers who have long fought to be recognised as having a wholly different cost base than the metro real estate operators. Once established, Trade Me Property may well apply this regional structure to their premium property advertising and also potentially further segment by geography as I am sure Southlanders will likely argue that Hamilton and Tauranga should pay more than them or rather that they should pay less. Regional pricing makes sense and it will be interesting to see if Realestate.co.nz follow suit.

 

Listing fees based on rateable value price

Trade Me Property will continue with the per listing fees in what they describe as the "Flexi option" however to mirror the differential pricing that was introduced for private sellers a year or so ago, single listings will be $159 for a property with a rateable value over $450,000 and $99 for those under $450,000. This will also go down well especially with the smaller offices. On top of this they are making a very public statement that the scale of a customers business affords discounts in the form of Gold / Silver / Bronze.

The average office in NZ is actually quite small handling around 100 listings a year / 8 listings a month, with many of these offices in provincial areas of the country where the median listing is more likely $300,000 this change will be welcome news. A year ago these offices would have been paying $999 a month for unlimited listings. The per listing fees bumped this up to $1,272 whilst this new structure will cost them $800 - a win!

The retention of the listing fee based model is in Trade Me’s words a method whereby offices can seek to remove the sunk cost of Trade Me Property and appropriately pass the cost on to the consumer, in effect saving them thousands of dollars a year. Time will tell if this is how the industry see it.


So overall the industry will feel I think, vindicated in leveraging their collective muscle against Trade Me and maybe Simon Tremain of Tremain Real Estate in the Hawkes Bay and Tim Mordaunt of Property Brokers in the Manawatu and Hawkes Bay will be hailed as heroes for staunchly refusing to capitulate and effectively completely boycotting Trade Me Property for all this time across all their offices.

I think it is likely that the vast majority of offices will switch back to a subscription model, the metro offices absorbing the higher monthly fee and relinquishing the charging of the fees to vendors. Many small offices will choose the per listing fee not to pass the cost on, simply as a means of saving money.

So the question has to be asked - so who’s the winner and who’s the looser in this change?

For my money the short term winner is the real estate industry. They will be happy and as I say feel vindicated. In the medium and longer term Trade Me Property is the winner. They will once again re-affirm their dominance of the lead generation business for agents from the largest and most comprehensive portal of listings covering licensed agent listings and private sellers. They will now, once they have regained patronage (if not as yet loyalty) build a growing business in premium services sold more aggressively through a growing field-based sales team. They will naturally hike fees regularly and in time seek to move to a pure per listing fee, probably as a more bundled offerings as other leading portals do. This will deliver the bottom line that the company and the investors want.

As for Realestate.co.nz I fear that they will be the loser in the short and long term. They have emerged from this period a lot stronger in audience terms and with a greater industry appreciation, however with Trade Me Property back with a full listings complement the delivery of leads through Trade Me will return and Realestate.co.nz will be back to being judged by the industry as a championing industry site, yet hardly a comparable adversary. Compounding their problems will be a more aggressive and significantly larger resource base across the Trade Me Property sales team out in the field who will seek to develop a stronger relationship with agents and offices matched to a significant ramping up in their technology team


Disclosure: I was CEO of Realestate.co.nz from 2006 to 2012. I provide consultancy services to Trade Me Property from time to time, but I note those services do not extend to advice on pricing and offers.  All insight and opinion expressed here are without any reference to any knowledge or insight I have gained through my work at Trade Me Property. 


Private sale or agent sale?

by Alistair Helm in


I have often been asked a to whether it is better to sell your house privately or to use an agent. As ever with anything to do with property there is no single answer - certainly no right or wrong answer. It very much depends on the person, the property and the circumstances. 

I recall a number of years ago a real estate research report found that whilst around 12% of people said that they were planning to sell privately as compared to 40% who said they would definitely sell with an agent; a large proportion, close to 1 in 3 of the people surveyed said that they would probably sell through an agent but they may well try and sell privately first. 

I sensed at the time and still feel nowadays that this group - a third of all prospective sellers reflect a very commonly held view - give it a go to sell privately and if you don’t have success, fall back on the agent as they will likely sell it. It is interesting psychology really. You know that if you list with an agent you will sell your house, whilst to do it yourself has less certainty, but no real downside except for the time factor. Not an approach you would take with a legal matter or to fix your car, but far more likely reflective of home DIY work - give it a go and if you can’t do it, call in the professionals.

Certainly the cost of an agent sale is in itself a motivation to try a private sale, added to which is the full knowledge that as  agents rely on Trade Me for the bulk of their listings the site offers private sellers the same ‘level-playing-field’ on which to attract prospective buyers.

It is very interesting therefore to compare the approach private sellers take to the task of advertising a property as compared to agents on Trade Me in particular and online generally.

I recall a few years ago now noting how often private sale listings had far more photos and richer content description than those of agent listings. I believe on-the-whole this differential has almost disappeared as agents have ever more accepted the role of online as the pre-eminent form of advertising.

Just the other day however a perfect opportunity presented itself to make such an assessment - comparing the approach taken by a private seller and an agent. Unusually though this is for a property that is being marketed as a private sale after failing to be sold by an agent!

I became aware of the property when viewing the NBR site - the advert caught my eye as the image looked very much like an advert for a holiday home, but it was clearly a property for sale. An unusual placement for an advert - that is the kind of thing that caught my eye. The advert leads through to an excellent website - a wonderful presentation of the property built off a simple WordPress themed platform. The photos are excellent, mostly taken at night, they are emotionally engaging and of a very high quality.



The website is a consumate example of a professional and comprehensive presentation of the property, including 42 photos, a video, the LIM report and rateable value, details of school in the area and an insight into a recent registered valuation of the property. A building inspection is due to be added shortly. What more could a prospective buyer want in order to make an informed decision on this property before an inspection?

Doing a bit of research on this property brought insight into its marketing history - it was marketed by a real estate company with an auction date of 27th April, providing a unique opportunity to see how a private seller approaches the marketing of their property as compared to a real estate agent.

The presentation for the property in April is equally professional with 20 professionally taken photos and 2 very detailed floor plans (interestingly there is no floor plan on the new private sale site). The key difference is all the agent professional photos are taken in daylight whilst the private sale images are very moody night time photos which do add to the 'sub-tropical private paradise' sense of the property - which is a great positioning statement for the property marketing.

Aside from the comparison of the photo gallery for each presentation, I was fascinated by the difference in the way the same property was presented in the description between an agent and a private seller.

Below is the text of each starting with the private listing taken from the current listing on Trade Me:


Down a long private driveway opening up to a beautiful subtropical private paradise.The 2 steps and entrance way lead to 10mm industrial glass front doors

Bottom floor has 2 bedrooms.The master bedroom has ensuite, walk in wardrobe, extensive wardrobe & storage space, glass sliding doors leading to deck with spa, stepping down to one of the 3 outdoor living/dining spaces & pool area. 

Wooden floored hallway from entrance leads to open plan kitchen, dining area & step down carpeted lounge, with bifold glass doors on both sides leading directly to the solar heated pool. The heat pump is UNDER the flooring , with 6 vents distributing consistent warmth throughout winter, & air conditioning in summer

Just past the stairs (that lead up to 3 more bedrooms & bathroom, all with glass fronted sliding doors for wardrobe & storage) & you step into a very spacious sunny office/granny flat with bath/shower/toilet/kitchenette fully carpeted with underfloor heating in the main room. 

Sliding glass doors open out onto another patio, the other end has glass doors which bifold out making it entirely open. This office/granny flat has dual access, either through the house ( which has a 2nd door inbetween for added privacy) or through the glass doors accessed from the parking area.

The property is fully fenced so pet friendly for the smallest up to the largest of animals to roam/run freely due to the size of the land.

Garden lighting is activated by movement sensors, as does the many security lights throughout the property. House is fully alarmed with activation pads in the house and the office/granny flat.

This is a beautiful SUNNY PRIVATE OASIS right in the heart of Mt Albert.

If you love this property, it would be a pleasure show it to you. Please contact us for appointment to view. We have available upon request a Website showing a Video, Picture Gallery, LIM Report, Rateable Valuation, Registered Valuation, Schools in area, & a Building Inspection Report next week. AUCTION IS ON SITE 2PM THURSDAY 31 JULY. Many Thanks 


Here is the full text from the agents description from the agents website (Google cache) from April


Enter the private inviting driveway that leads to the rear impressive landscaped entrance, this property exceeds the WOW factor.

The glassed front entrance foyer of this impressive contemporary home beckons you to enter, giving you a glimpse of something special.

To the left a spacious light filled master bedroom with ensuite and walk in wardrobe. Flowing out onto a private enclosed spa pool area adjacent to outdoor pool and entertaining area.To the right a generous sized office.

Just past the office climb the stairs to three sunny light double bedrooms and a bathroom.

Return downstairs, down a small staircase and discover two huge areas of work from home office space, set up for business, or a granny flat complete with own bathroom and entrances.

Up to the main level, past the laundry and w.c. to the kitchen/dining which has a subtropical outlook encompassing the lush backyard with mature trees yukkas palms and plants.

Entirely private this flows onto a further entertaining area. The kitchen has integrated whiteware central granite work island and granite bench.

Adjacent is the step down lounge seamlessly opening on two sides to a fabulous swimming pool/entertainment area. The lounge has a woodfire.

The solar heated pool complex with tropical feel exemplifies indoor/outdoor living at its best.

There are so many more features in this extraordinary property we invite you to view this paradise in the heart of Mount Albert.

Open Homes Saturday & Sunday 1.30-2.30pm or view by Appointment

Auction - On site 27th April 2014 at 2.30pm


The first thing that struck me was how the agent description is effectively a commentary of a walk-through of the property - useful. However when comparing side by-by-side with the private listing the most striking difference is the use of features and benefits in the descriptions. I have highlighted what I see as contextual and relevant features and benefits in italics in each of the listings' description.

The agent's description totals 6 features and benefits, the private sale description totals 16.

I have often heard the comment made in the real estate industry that the best person to showcase a property is the owner. They know the house, they know the features and benefits and maybe this is a clear example that maybe of benefit to agents, to ask owners to write down a description of how they would communicate their own house in terms of features and benefits as part of the marketing!!


Property signboards - a vital part of real estate marketing

by Alistair Helm in


Whilst the days of newspaper advertising for property may be numbered, I believe that the traditional property signboard is here to stay and very likely to be immune to technology advances.

The signboard strategically placed on the boundary of a property which sometimes regarded as visual pollution are in my view an integral part of marketing a property. They are akin to the promotional sticker on the supermarket aisle that draws attention to the special product when doing your weekly shop. Whilst not every property on a street is for sale the ones that are, are suitably highlighted for those on-the-look-out for a property to buy.

I was drawn to this subject by an article on an Australian real estate site - Property Observer which posed the question as to whether this form of marketing has a future. One of the contributors argued that, rather in the same vein as open homes - signboards are purely for the benefit of the agent, another put forward the view that electronic signs will replace current printed sign boards.

I hold the view that neither of these predictions will come to pass. Signboards serve a valuable purpose.

They highlight to the local neighbourhood the availability of property for sale which can be vital for those serendipitous opportunities targeting people who might not feel they are ready to move house but for whom the attraction of a specific house in a particular area can prompt the call-to-action. For these people email alerts serve no purpose as they are not actively searching. This is an important aspect of the property market, as not all buyers follow a logic path of making a conscious decision to start looking which results in a purchase and a house move. Property buying is not a linear process.

The other value in house signboards is actually as a visual indicator of the property market. A lack of signboards means a quieter market, lacking demand. A lot of signboards indicates a tricky market without much activity and a nervous set of sellers looking to move. A healthy number of signboards many with the classic 'Sold' sticker signifies a dynamic market.

 Innovative digital signboard - CodyLive

Innovative digital signboard - CodyLive

As to the form and size of a signboard, as stated earlier I do not see the evolution of electronic signboards. An Australian company CodyLive produce these high end LCD signs - I sense that local authorities would judge these as a step too far and ban them as their night time display would be intrusive and potentially distracting to drivers. The purpose of the signboard is just that a sign, not a substitute to an online listing which has all the images and facts regarding the property. I can imagine some real estate agents salivating at the branding opportunity of such technology beaming out at night the smiling face of the local agent, but I can't see that eventuating!

As to size, I think in the main in NZ we have a good balance. The traditional sign is around 1.2 m2 which provides ample space for a single main image, a couple of smaller images and the contact details and open home times as well as the agent brand. A suitable mix of content. Signboards that fail to show a image are clearly nothing more than advertising for the agent and the property owner should charge the agent a rental for such space.

In Australia size of some signs appears to be getting out of hand as I found on a recent trip over the Tasman.

Property signboards that totally obscure the front of the property would seem to defeat the very principle of what they are there to do!


Video has its place in real estate marketing

by Alistair Helm in


Ripe_for_Renovation____-_Realestate_co_nz.png

I stood up at a real estate conference a couple of years ago and challenged the presenter when he expounded the view that the “Next Big Thing” in real estate marketing was videos for individual listings.

Time and technology advancement has not diminished this view, although as ever there are nuances as to the question  “Will video play an every greater role in real estate marketing”?

Here is my perspective on the matter. 

When it comes to property searching, the most critical stage is the early process of filtering. This is where buyers are building up a picture in their mind as to the type of property they want to buy and in doing so examining the various options, undertaking a filtering process. This process of 'include this / exclude this' is largely influenced by images. The brain can scan and process images at an incredible speed (apparently the brain processes images 60,000 time faster than text) and to prove my point here is a simple experiment I carried out.

I took a random listing from today’s property market - “Ripe for Renovation!!!” 65 Court Crescent, Panmure, Auckland a property being marketed by Ray White. (I used this listing simply as an example, not to make any judgement on listing agent or Ray White or the property).

The property has 12 photos a brief description and a video - all on Realestate.co.nz

  • It took me 11 seconds to view all 12 images 
  • It took me 34 seconds to read the description
  • It took me 46 seconds to view the video

The pictures told me all I wanted to know about this property - how it is laid out, what condition it is in. The description to be honest told me a lot about the neighbourhood. However I was looking to buy in the area, I would surely have done my background research or be living locally anyway. The video though was literally a complete waste of 46 seconds - it was not to be fair, a video, rather it was a photo montage set to music with no voice over featuring just 8 of the 12 images.

The fact is that this type of video is the least valuable form of video content and certainly of no value on a property portal like Realestate.co.nz.

Home buyers using property portals such as Trade Me Property and Realestate.co.nz are constantly in the state of filtering. Wading through the aggregation of listings. It could be argued that all that is really needed on such sites are the the primary data of the property location, price, number of bedrooms, bathrooms and the size and of course the images. In some ways agent contact details and time of open homes as well as method of sale are secondary. The last thing that is needed to be honest is a video.

However I do believe there is a place for video but it is selective usage rather than universal. 

However before I expound on my view as to the best use of video as a passionate technologist I would be remiss if I did not highlight a massive leap forward in the presentation of property listing images in an automated fashion - imagine the video from the last listing on steroids. That is what Redfin has done in the US. In real time when you view a single listing on their site a computer programme creates a video with voice over curated with the primary content - try it out by clicking the Play Video link on this sample listing.

The business model of Redfin is somewhat unique to the US model of an MLS system with buyers and sellers agents and this is why listings offer a rebate! - the key thing is text of the listing has been translated into computer generated voice over and on screen graphics - its smart, very smart! Try any listing on Redfin and you can see the computer programme work on any listing.

Anyway back top my hypothesis of how video can be used in real estate marketing.

Before examining the form of video I want to state that the hosting of a video for a property should be on the real estate listing company website, the agent website or a solus website - this is where interested parties should be encouraged to go once they have "added it to their favourites" from a property portal.

The value of a specialised video is its ability to create in the viewers mind an experience of being in this house. This is undertaken through a professional video shoot that is shot and edited to become a visual story with a clear sense of a beginning, middle and end. My interpretation of this structure would be an opening which creates a sense of context. Where the house is in context to the community and how it is seen from its ‘street appeal’ - the exterior presence. The middle is all about the body of the house, how it is laid out and how it creates a liveable environment, however that might relate to the type of property, recognising this will be different for an city apartment to a lifestyle property. The tail end of the video needs to be that classic ‘close’ in the sales sense of the word - reinforce the key benefits of the property and leave clear message of how to move to actually visit the property as this is the outcome that as an agent is wanted.

Having outlined this is as personal perspective of the ideal video I can tell you what I would not advocate in video production. 

  • Handheld iPhone videos with commentary by the agent are as bad as iPhone photos - best left to the office party video
  • Guided tours by agents who insist on telling you that this is a bedroom and this is a kitchen, its as bad a being guided through in actual house - we are intelligent enough to walk around
  • War and Peace length videos must be avoided, the best videos are short and succinct
  • Hollywood glamour should be avoided - this video has to be the worst, although based on YouTube views its well liked. It is a promo tool for the agent and it certainly created standout!

If you want a great example of a well produced property video have a look at this one:

 

It’s a style of video that I have not seen before and until I saw it I probably could not have anticipated how much I liked it or even described the style and how it would appeal and why. The key point of difference for this video which I was almost cringing at the beginning was the actors. Once you accept them for what they are and they don’t burst into signing agents or get silly, I think they add a vital component of context. Seeing how people live in a house in a non-intrusive manner became for me both compelling and engaging, that had me viewing the video all the way through.

So I do believe video has a place in the marketing mix of real estate. It is not in my a core part of every listing nor should it be by some default of technology regardless of how smart or fast that technology is. Where it lives and how people access it needs to reflect the place the medium has in the path-to-purchase of home buyers and in my view that means on company websites of real estate operations as well as agent websites of rich bespoke content rather than competing for attention of portals which as pure-play operations should be about efficiency rather than bogging people down.

As a closing comment and example. Here is possibly one of the most extensive (and expensive) multimedia productions I have ever seen for a single property. A US$26m property on the island of Maui. The property has its own website, naturally. It does have which must be unique a 15minute movie that barely shows the home itself (check out the Explore tab) as well as a guide video tour, a virtual reality tour and a Feng Shui appraisal - have 25 minutes to spare immerse yourself in Hale Ali'i








Spring has arrived in the US and with it a new battle of real estate websites

by Alistair Helm in ,


There is a war being fought right now in the US - a high stakes tussle between the 3 aspirants of the property portal industry. The prize is a slice of the more than US$6 billion a year spent by the real estate industry in marketing, coupled with the potential of a foothold into the influence of more than US$60 billion in transaction fees a year. By comparison the NZ comparable numbers are around $100 million in marketing and $1.4 billion in fees.

The three players in the market for the eyeballs and influence of the buying public of the US are Realtor.com, Zillow and Trulia and each have today rolled out their new season TV commercials perfectly timed for the Spring home buying season.

I have always been partial to TV advertising and in some ways I'm sad that the heyday of TV commercials is past and their relevance is diminishing - they are the ultimate creative medium, as creatives and production crews combined with massive clients' budgets all seek out that holy grail for that one special ad that transforms a company and becomes enduring and memorable - think Coke ads and Toyota ute ads.

The latest collection of adverts for these real estate portals reflect perfectly the differing personality of these three companies and their distinct point of difference and viewing them further reinforces these differences.

Realtor.com

The industry stalwart, serious, factual, professional. The site is the 'official' site of the National Association of Realtors and as such focuses on facts - more listings, more accuracy, more up-to-date. All wrapped up in a warm 'idealised' family of wholesome values from a place only existing in TV commercial land - lightly glazed with humour.

 

Zillow

Zillow is the leader in eyeballs at the moment with a staggering 77 million unique visitors per month and plays an emotional card creating beautiful vingettes of real people 'looking for a place for your life to happen' rather than a boring functional requirement to move home, or just find or buy a house. It's another tear jerker to complement the homecoming advert from last year. In some ways it is similar to Realtor.com full of purity and the idealised perfection of a perfect couple - mid market, middle America. The search functionality featured in the ad might have been more convincing if the search term was "tree house" instead of 'big tree' but that would have killed the punch line and I just did! 

 

Trulia

Trulia has the appeal of being the battler in this threeway tussle, not the scale of Zillow and not the authority of Realtor.com, however they create a unique experience, they focus on real situatons and inject subtle humour and insight that is hyper-local which is important. It is the subtly l love, the insinuation that is made of the situation - creates memorability and this ties into the campaignable idea of 'Moment of Trulia' - gets my vote. Shame though about the competition as the end frame - seems to spoil somewhat the authenticity and emotional connection.



Trade Me vs. Real Estate Agents : 5 months on, could the boycott be growing?

by Alistair Helm in , ,


Back in November last year when the news of an agent boycott over proposed fee increase by Trade Me hit the mainstream media, I was pretty sure that sanity would prevail and more importantly vendors would not be used as 'Pawns' in this issue of internal costs of marketing.

It's now 5 months later and the issue is still not resolved and as each week passes I would judge that the balance of power is tipping significantly in favour of the agents.

Back in February I reported that the then two highlighted areas of the country where the initial boycott had begun - the Hawkes Bay and Hamilton still had a situation where Trade Me listings were significantly reduced and in some cases dominated by private sale listings. Revisiting the situation today shows a continuing gulf of listing stock stock between Realestate.co.nz and Trade Me Property in these areas.

Taking the Hawkes Bay region - as at this week Trade Me Property is displaying less than half of the property listings for sale than Realestate.co.nz (based on all house types as well as lifestyle property).

The data analysis of the Hawkes Bay I have undertaken this time has broken down the listings by real estate company.

Screenshot_28_04_14_9_13_pm 2.png

As reported at the time, the regional players of Property Brokers and Tremains who between them represent close to 40% of all listings in the region continue to boycott Trade Me Property; they currently feature less than 1 in 20 of their active listings on Trade Me Property (most of which are listings added by the vendor with the agent details). This means that from amongst the 1,594 active property listings on the market at this time in Hawkes Bay, Tremains and Property Brokers between them are not displaying 583 of them on Trade Me - that is significant over 500 properties for sale from the two big players in the market not being displayed on Trade Me Property!

Given the extent of this boycott it is clear that these companies are not facing any adverse reaction from sellers - properties are being listed and sold in the Hawkes Bay without the exposure on Trade Me Property.

Widening boycott?

What is also significant from the Hawkes Bay data is the extent to which Harcourts are boycotting Trade Me Property, with less than half of their listings in the region displayed on Trade Me, that amounts to another 181, adding to the 583 from Property Brokers and Tremains not featured on Trade Me.

The extent of this boycott by Harcourts is dramatically seen when doing a search on Trade Me Property for Harcourts listings by listed date - there have only been 3 new listings across the whole of the Hawkes Bay region in April from Harcourts whereas in fact from data on Realestate.co.nz shows the total number of new properties listed by Harcourts in the region in the month was 227.

The National Picture

Applying this analysis to the national picture, Trade Me Property is displaying 8% less listings of property than Realestate.co.nz (this total includes private sale listings).

The analysis below details the extent of the support or boycott by real estate company. Clearly Barfoot & Thompson and Ray White are at this time supporting the use of Trade Me (or as an alternative conclusion these companies agreements with Trade Me have yet to reflect the new charging rate).

Whereas Harcourts are only featuring 7 out of 10 of their active listings on Trade Me Property. Harcourts are the largest real estate company in the country with over 190 offices and currently 8,315 listings of properties for sale.

Equally as significant is the analysis of listings from Bayleys and LJ Hooker who also appear to be boycotting Trade Me Property which in the case of LJ Hooker with 2,664 active listings on the market results in only 1,755 of them displayed on Trade Me Property.

 

Boycotts in Other Regions

Further investigation of the listings data shows that in addition to the Hawkes Bay, the Manawatu / Wanganui region is also witnessing a boycott of some significance.

From amongst the 3,223 active listings of properties for sale across the Manawatu / Wanganui region (using the boundary definition of Trade Me) as showcased on Realestate.co.nz, just 2,567 of them are shown on Trade Me Property (actually somewhat less as this number includes private sale listings). The breakdown by company, shows that it is only Ray White that has almost full support for Trade Me Property whilst Harcourts display less than a third of their listings on Trade Me Property. Equally other key players in the market such as Professionals and LJ Hooker display less than 70%. 

The anomaly though is Property Brokers. This region is their heartland where they hold close to a 30% share of all listings on the market, yet they are displaying over 60% of their listings on Trade Me Property - a very different situation than that in the Hawkes Bay.

So in conclusion it looks like the boycott of Trade Me remains and if anything is growing, given the extent of the Harcourts representation (or rather lack of it!) on Trade Me Property. In my view as each week passes without some action or decision or negotiation (which clearly will be going on behind closed doors) the market position of Trade Me Property weakens and the muscle flexing by agents appears to be working.

 


Can real estate really be disrupted?

by Alistair Helm in ,


A couple of weeks ago I posed the question as to "Why has real estate sidestepped the technical transformation of the digital age?" and in so doing provided a couple of key reasons why it is hard to disrupt this industry as so many other industries have been disrupted through technology. The fact is, at its heart, real estate is a deeply emotional service-based business which due to it infrequency is tough to challenge.

Over the years there have been noble challengers to this billion dollar industry, most notable was The Joneses back in 2008. Their demise in my opinion was not their core business model of a flat fee service and salaried agents. Their downfall was simply bad financial management which meant that they simply ran out of money just before they reached critical mass, which they were certainly approaching at pace. They were certainly also not assisted by a property market that went into a nose dive at that time and a fair amount adverse undermining from the established industry players. In my view the model if rekindled today with adequate funding could make a serious dent in the market. After all who cannot relate to the strap line of "Flat Fee - Not Fat Fee" - their flat fee at the time was just $7,999! - any house anywhere.

In the UK only this week we have seen a new challenger announce a new service of real estate (yet to be launched) which could be a serious disrupter in the market - welcome easyProperty. Leveraging the ubiquitous brand of easy as in easyJet / easyCar / easyHotel / easyBus / easyPizza - you get the idea! this new company is seeking to shake up the real estate industry starting with property management and then addressing sales. From sketchy information so far the principle seems to be that easyProperty will charge 0% commission on sale of property, looking to earn income from referral and ancillary services wrapped around the processes of real estate. That is certainly a possible method for the UK where agents do not undertake such an extensive service as in NZ but then they only charge on average 1.8% commission as compared to NZ commissions of 3%.

As well as the marketing strength of the easy brand which claims a 99% brand awareness in the UK, the new company has secured as Chairman Harry Hill who was the former boss of the largest real estate firm in the UK Countrywide. as well as one of the founders of the leading real estate portal Rightmove. 

I would judge this is a serious venture and has the funding to get this new venture off the ground, as to the full details of how the service will work we will just have to see in the coming months.

What relevance could this type of move have for NZ?

Well I would have to say that there are two NZ brands that in someways mirror the easy brand. The first has already entered the real estate market a couple of years ago - Mike Pero Real Estate. The Mike Pero brand is extremely well known however their business model in real estate is not radical and could hardly be called disruptive. It professes to be a champion of low fees but in reality the differential is modest at best and in all other aspects, their services are a cut and paste of every other real estate brand.

The other brand is Trade Me. They currently dominate the advertising service sector of the real estate industry gradually eating away at the c. $100 million a year industry still so tightly held by newspapers and magazines, but imagine for a minute the appeal of a full service real estate company provided by Trade Me - tapping into the $1,300 million a year commission industry - even if they were to discount this by offering a Flat Fee - not a Fat Fee. Food for thought!