Innovation does exist in the real estate industry

by Alistair Helm in

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When it comes to selling your house you may think there are only two options. Employ a licensed real estate agent or sell it yourself.

The comparison assessed purely on a financial basis for a typical NZ homes would leave you to spend upwards of $17,000 in commission payments with your local agent or to spend somewhere around $1,000 doing it yourself; to which you would have to undertake the facilitation and negotiation for the sale.

The reality though is there is another option. A licensed real estate company that does not charge based on a percentage commission but simply charges a fixed service fee for providing a full real estate service; a company that has innovated so that their full service is undertaken by fully qualified and experienced agents, all undertaken remotely.

Now you may say that you want to meet your licensed agent and shake them warmly by the hand, but pause a moment. After that initial meeting do you think the work of the agent in following up enquiries and keeping you updated will be done though numerous face-to-face meetings, or via phone and email?

The reality is that in today’s world so much of the work of real estate agents is done remotely; so why not have an agent undertake the whole process remotely in the first place and in so doing use their time so much more efficiently and charge a fixed fee of $4,500 (plus GST) regardless of whether your house is in Ashburton, Nelson or Auckland, whether it is worth $250,000 or $2.5m.

Sounds a good concept? – it is. The fact is this week that company offering this full-service professional real estate solution just sold their 100th house.

Welcome to 200Square

Over the past couple of years as they have been testing and refining their business they have saved sellers over $1m in commission fees. They have made 100 property owners very happy with a great result selling their homes, such  that those people have gone on to tell others of their experience and that referral engine is now driving considerable sales for 200Square. No need for them to stuff flyers into your letter box – they live and operate online and deliver their service remotely. Happy customers who rightly say, why do I need to pay these agents thousands of dollars when this new professional service can do it for $4,500.

As their service is online; as the seller you can see the up-to-date status of the selling process through a smart personalised dashboard which clearly shows you what the agent selling your house is doing, how many buyers are interested and what is the overall level of viewing of your property online. As the process progresses the documentation and facilitation is again all managed online - as they say in their service offering "We don't play Taxi Driver or Courier"

Adding to their innovative approach to marketing they recently worked with GrabOne to create a deal to help homeowners – a $49 deal gave home sellers a $1,000 reduction in the cost of the 200Square service and according to feedback from GrabOne the offer exceeded the expectation of both parties. The offer page on the GrabOne site says that 40 of these deals were bought which reflective of how many people are looking to sell during that period is a very strong result. The offer also provide a great opportunity for Grant Wakelin (CEO of 200Square) to answer some really interesting and relevant questions about the 200Square service. In my opinion the promotion speak more to the logical association of an innovative online real estate company and an innovative online group buying service, than the sheer savings alone.

It was one of those GrabOne voucher buyers that lead to the 100th seller for 200Square with a property sale in Karori, sold unconditionally 16 days after listing.

So whilst you may think there has been little in the way of innovation in the real estate industry over the past decade as the tidal wave of the digital revolution has transformed so many industries, there are pockets of innovation seeking to deliver great service at a fair price.

What you can learn from tracking the 'digital history' of a property listing

by Alistair Helm in

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There is much to be gained as an active property shopper online in tracking the history of a listing to get a sense of the mindset and personal situation of the vendors. To me this history of listing activity online can really help you better understand the current market dynamics and be better informed as to the situation of particular house on the market.

To help you better understand to what I am referring let me show you by example a recent properties I have tracked for sale in Auckland. I think it is best not to reveal the actual identity of the property as it is still on the market. That is part of the reason why this is relevant, as the property has been for sale for a period longer than the emerging standard these days in Auckland of 3 weeks. Part of the reason why it has not sold in my opinion is because the vendors have too high an expectation of sale price. This I think is endemic in Auckland at this time as seller’s expectations are getting ahead of the market.

The property in question came onto the market back in early January. A leading boutique real estate firm with an auction date of mid February listed it. The agents had high expectations of a selling price “well in excess of $2m” as was presented when the property was profiled in the NZ Herald property supplement.

The auction date came and went with clearly nobody prepared to meet the vendors reserve. The decision between the vendors and the agent post-auction was to change the method of sale from auction to ‘by negotiation’. Clearly though the vendors ‘showed their hand’ and their eagerness to sell, as a few weeks later the listing was changed to show a price of $2,750,000.

Time passed by and the listing remained on the market unsold. The next milestone occurred in mid April when the 90-day period of the original listing agreement expired. At this time the vendors decided to give another agent a go.

This is where things got really odd. The new listing agent from a large Auckland real estate company decided to list it with a price indication of $2,850,000. That was $100,000 more than an advertised price that generated no buyers. I have no idea what prompted this decision. I can only imagine the conversation with the vendors must have gone something like “I believe there is a strong interest in this property and clearly your previous agent failed to reach the right buyers, not only can we find those buyers but we can convince them that the property is worth $100,000 more than advertised last week!

As a point of note one consequence of listing with a new agent is the fact that the property appears online as a new listing with a new current listing date, in this case of mid April, rather than the true "placed on the market" date of mid January. This may have partially assisted in pitching a new price for the property.

Weeks went by and the property remained unsold. Then strangely just a week or so ago the listing became an auction with a date of auction set for mid May!.

This property has clearly not found a willing buyer despite two agents, two auctions and clear price expectations. The vendors clearly have signaled that they want $2.7m minimum for the property and yet nobody is prepared to pay that sum. Potentially this new auction (set for mid May) might well see the vendors set a more realistic expectation with a reserve below $2.7m, if not, I would judge the agent is wasting their time as this is clearly a case of the vendors expectations being well removed from the reality of the market.

So what can be learnt from this analysis and tracking of a listing:

  • The web allows anyone to now see very clearly the marketing of a property and as a consequence of actions what the market is saying about price expectation
  • In my judgment it shows that the choice of agent has no bearing on success. I say this because the platform for marketing properties today is entirely focused online. Every agent has access to this platform where the property sells itself; the profile, scale or expertise of the agent has no bearing on the online presence.
  • Whist the agent in my opinion has no bearing on success the quality of presentation and the extent of online promotion certainly has an impact. However in the case of this property I could not fault the standard of marketing online.

So in my opinion the failure to sell this property after over 100 days does not lie with the agents or the marketing, simply this is a case of the vendor’s expectation of price. There is always a buyer for a property – at a price. The question is always is, does that price the buyer is willing to pay, match the vendor’s expectations – in this case (so far) it does not.

Now I would concede that this property in the higher price range will not have quite the number of prospective buyers as would be found around the level of the median price of Auckland properties at $590,000; however I believe this form of digital investigation is valuable to all property hunters to assess.

As a final comment there would be those reading this who might well say that agents should be more professional in managing vendor price expectation; they should challenge the vendor and if they believe that the expectations are unrealistic they should walk-away to uphold their professional reputation and not waste their time with a property that is clearly not matched to market expectations. However it would be a brave agent who would confront this by declining a listing on the grounds of an unrealistic vendor price expectation, after all they rely solely on commissions, and for many agents having a listing (irrespective of whether they sell it, or not) is a status point of value for their current profile and reputation.

Real estate agents endorsing digital media! - the tide has turned

by Alistair Helm in

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Working in the realm of digital media as I have done for over 7 years now, I struggled long and hard to get agents to see the value of online advertising, it was a long and arduous road. Getting agent to embrace digital media and relinquish that decades old love affair with newspapers, that was the objective at and at many property portal around the world.

In many countries the pendulum has firmly swung in favour of online advertising, the US being a prime example where it is rare to see any print media advertising for real estate. In Australia the majority of spend by agents is heading online and Europe is firmly in favour of online. However in other parts of the world the print media and particularly newspapers are still seen as the advertising medium of choice.

So imagine my surprise and delighted when the following video was brought to my attention by Business2 in Australia, the media hub of real estate and technology. The video they profiled on their site was made by a real estate company!.

The video by Philip Webb pulls no punches; stating that the primary function of real estate advertising in newspapers is for the brand profile of the agent or the real estate company, not the property. Buyers go online. Sellers check out the newspaper - after all that is where the agent said they were going to spend the vendors money advertising it!

In NZ it costs less than $700 to do a significant online campaign, a campaign that is working 24hrs a day for a month around the world to an audience of hundreds of thousands. That amount of money would not even buy a single page in a property magazine. A single page that becomes recycle trash within 24hrs and reaches people who have to go to an office to pick it up and sift through thousands of properties that are not sorted in the logical needs of buyers - location and price filtering!

Here's the video from Philip Webb.

Its a brave move by Philip Webb. It's guerrilla marketing. The video is not to be found on their website, clearly they want to kick up a storm and demonstrate a competitive distinction. I would judge that they are achieving this, they are certainly getting media coverage within the industry.

Maybe other smart real estate companies might take their head out of the sand and realise that they could differentiate themselves by endorsing online-only campaigns as 200Square does in NZ.