Can an agent achieve a higher price than a private sale?

by Alistair Helm in ,


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This is an age-old question and one that will generate opposing responses based on the perspective of the responder. A few moments spent on the Trade Me forum category of real estate would have you believing that private sales were a viable option and given the projected saving of many tens of thousands of dollars in commission thereby seeing the seller better off than by using an agent; although they would be hard pushed to say that they achieved a higher selling price than an agent.

Conversely a conversation with an agent would generate a response reflective of the competitive tension that an agent can generate between competing buyers such that the agent will secure the best price which would be the highest price attainable in the market. The latter caveat being very important.

For like it or not, the fact is that there is no evidential way to prove that an agent can secure a higher price than a private seller. The fact is that the price attained for a property is governed by a unique set of circumstances that can never be replicated. There is no such thing as a ‘Control’ in real estate.

What I mean by this is that in the scientific faculty everything is evinced by a Control by which any experiment is measured. Testing of drugs, improvements in battery technology, new microchip technology all of which are assessed by a Control that allows scientists to say that this version B is x% better than version A.

In real estate this is not possible. No two houses are identical; for whilst they may be two identical apartments or two town houses or even two 3 bedroom family homes in the same street, each will be different as a function of their orientation, conditions or layout. Mix into this the very unique circumstance of the buyer pool that is so small for any property and you begin to realise that every transaction is a very unique set of circumstances that occur at a point in time and can never be replicated.

Think for a moment about the sale of a particular property. Could it achieve the same sale price a week later? In theory yes, but the probability is that it would not as the price that was achieved was a function of the buyer pool at that moment in time, a day later, a week later and one or more of those buyers might have exited the market having bought another another house and equally a new buyer or set of buyers might have appeared as they suddenly became ready to make a purchase decision.

So unlike the ability to set up an experiment to test price sensitivity for a consumer product in two supermarkets in different areas of the country to test demand the property market does not afford such controls. It is therefore impossible for anyone to say that they could achieve a higher price than anyone else. The price achieved for the sale of a property is a function entirely of two aspects of the property selling process.

Maximum exposure

The ability to achieve maximum exposure of the property for sale within the buyer pool is critical to engage and motivate prospective buyers to review the property. Any lost opportunity in this area is potentially the most damaging to the sale process and impact the sale and the sale price. Exposure is not simply being on the web, it also goes to the presentation of content with particular focus on the images of the property and how they are laid out.

Competitive tension

The ability to motivate the prospective buyer pool to actively compete to challenge one another to buy the property is key to a successful sale price. This does not assume that the only method of creating competitive tension is an auction although this can be an effective public tool to create emotional tension. A standard well facilitated negotiation between active buyers is just as likely to achieve a favourable result as would a tender. The key to creating competitive tension is the facilitation process which is in someways the greatest skill and attribute of a professional real estate sales person - the ability to maintain buyer interest and bring buyers literally to the table to make an offer and to be motivated to stretch to challenge competing offers so that the final offer meets or exceeds the expectation of the seller.

There is no doubt that the component of the property selling process comprising creating maximum exposure has in many ways been taken out of the hands of the real estate agent as the online medium is the aggregation of this exposure through sites like Trade Me Property and Realesatate, however to fully optimise the potential to achieve the best result for the seller the role of the agent is hard to ignore or dismiss as it would take a unique set of skills for a private seller to replicate this capability.


QR Codes in real estate - a missed opportunity?

by Alistair Helm in ,


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QR codes have been around a long time, infact they were invented over 20 years ago as a means of monitoring production lines in the automobile industry. Over the years I have heard it said that "this year is going to be the year of the QR code in real estate". How it will revolutionise the industry and empower the consumer. 

In my mind and in the context of real estate it is best seen as a technology looking for a solution.

I find it interesting that it is being used in very much a piece-meal fashion by some companies in the industry - a recent copy of the NZ Herald Home supplement showed QR codes on listings from Premium and Harcourts.

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The QR code on a printed ad makes sense - it can be a great "call-to-action" for access to more details of a property and that is what it does. What I find interesting, and if I may say a bit dumb is that the URL (the web address) behind the QR is not a unique link that tracks the people using the QR code but takes users straight to the listing on the company website. Try it for yourself below:

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The missed opportunity by these real estate companies is the ability to analyse metrics of the users of this QR code. To be able to track how many people actually used the QR code - when they used it and from which publication, what actions they carried out on the site once they landed there, what device they used to access the information. All of this, is vital information for the real estate company to assist the vendor and buyer.

All of this capability is free and readily accessible. I created the red QR code at the top of this article at QR Stuff and I also used the Google URL shortener which provides tracking metrics, so if anyone decides to try the QR code above then I can see the details, as you can here.

Given that in principle the QR code is the bridge between the printed media and the digital media in the context of real estate and the real estate industry is so fond of telling clients how important print advertising is, I am somewhat surprised that more of the print media does not undertake to create QR codes for all listings as a free service for agents and use the data to reinforce the true value of the print advert!

The other utilisation of QR codes has been on street signs for property for sale, there has not been extensive application of this in this country but my recent commentary about the UK real estate market showed a sign with a QR code. Again it makes sense as it can provide instant digital content without having to try to punch in a lengthy URL code for the listing.

However the process of accessing a QR code on a printed sign is lengthy - 6 steps in all

  • Switch on smartphone
  • Tap QR scanner app
  •  Tap scan
  • Hold phone to sign
  • Confirm link
  • Access to content

 

Compare that to using a smartphone app like Realestate.co.nz

  • Switch on smartphone
  • Tap Realestate.co.nz app
  • Tap 'Near Me'
  • Tap the listing flag
  • Access to content

5 steps so a little shorter. However the benefit of the app is the ease of use and the contextual information - once in the app you have all the other listings around you and the content is in a form best used to a smartphone as opposed to being on a webpage on a mobile device. You also in the case of the QR code need to get out of the car in the pouring rain and stand close up to the sign and focus the camera on the phone whilst passer-bys wonder if they should question your suspicious activity!

QR codes are a smart technology - I do suspect that they are not a perfect solution for real estate and I sense that there is better solution just around the corner.


Could the agent boycott of Trade Me end up driving more people to private sales?

by Alistair Helm in


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The old adage that ‘perception is reality’ could potentially be occurring in the minds of property buyers and particularly sellers in the Hawkes Bay and Hamilton areas of the country. For if you were a normal everyday property buyer or seller using your usual means to keep in-touch with the property market through email alerts and web browsing, what you would notice in these two regions is that there seems to be far more ‘Private Sale’ properties being advertised on Trade Me.

This increase in private sellers is the perception. The reality is that there are less agent listings. 

What the real estate agents undertaking this boycott need to appreciate is that their next client is not that likely to be reading this article (I actually hope they are) nor the other media outlets that are discussing this issue - their prospective clients are browsing the news headlines and then reading the weekly women’s magazines!

These clients pay no attention to the number of listings on any page - all they want are new listings. They continue to turn to Trade Me everyday in huge numbers to view new listings. There may be less new listings, but how are they to judge the reason for this?

They certainly are not likely to stop using Trade Me Property to browse property for sale - why should they? They have been doing it for years and in their minds eye nothing has changed. The site looks identical and new properties come on the market everyday. They are not conscious that there are less (in fact no) new properties from the likes of Property Brokers, Tremains, Lugtons, Lodge and Harcourts. What they do see is far more properties coming onto the market from private sellers.

Just compare the first page of new listings in the Hawkes Bay with a comparable region - say New Plymouth in the Taranaki. In New Plymouth the first page with 50 listings consists of 6 private sale listings - 12%. On average Trade Me property comprises around 16% private sale listings on average. Now examine the first page of 50 latest listings for the Hawkes Bay - 40 of the 50 are private listings - 80%!

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To the average property buyer searching the site today the one thing they notice is less agent listings. Do they instantly think - "ah yes of course my local agent is boycotting Trade Me so I must switch across to Realestate.co.nz" or could it be they think - "ah more people seem to be trying to sell privately, this must mean something, maybe when we come to sell we should try a private sales, after all everybody is doing it and it only costs around $400 which compares to 4% commission which based on the median price in the Hawkes Bay at $279,000 means a cost to me of $12,834 inc GST".

This is the second time in the past 12 months where I perceive that the real estate industry is maybe shooting itself in the foot - earlier it was their fondness of auctions that may be their downfall now it is their challenge to fees from Trade Me - chinks in their armour they may be; but sometimes death by a thousand cuts can be fatal!


TV campaigns by Trade Me Property & Realestate.co.nz

by Alistair Helm in ,


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The new year has kicked off with the two competing property portals slugging it out in a marketing war to capture the greatest attention and thereby assert their respective role as the platform of choice for advertising property in NZ - or is that really the story?

Trade Me was the first to kick off with their campaign. As a company they historically have not been a significant advertiser across what is generally described as traditional media - TV, radio and print media. The exception to this has been where they have faced significant competition (as in the case of Trade Me Jobs vs. Seek) or where they have a new proposition to convey (as in the buy new retail strategy). 

The reality is that Trade Me enjoys unprecedented spontaneous awareness and engagement such that they really have no need to tell people that they exist or how to use the site or the benefits of the service.

When it comes to real estate these facts are indisputable. Trade Me is used by all real estate agents and private sellers, it is the most effective means of advertising property for sale or rent. Buyers and renters go to Trade Me first and most often to check out the properties on the market as well as being driven there by email alerts. So why is it that Trade Me is running TV adverts as well as other media?

The simple fact is this campaign is not targeted at property buyers in an effort to secure greater usage of the site, nor is it really targeted at property sellers trying to encourage them to list on Trade Me Property as the creative would suggest. They have undertaken this campaign to put pressure on the real estate industry to secure continued listing support under the new pricing model implemented late last year and ensure the threatened boycott does not eventuate. The ads are very much a trade marketing campaign using consumer messages.

 

There are three 15 second commercials in the campaign each supported by other media using the same animated stylised imagery somewhat reminiscent of clipart characters. This is a new creative execution very different from the new products campaign run last year and the Trade Me Jobs campaigns.

The commercial are very focused on features, rather than benefits as befits the trade marketing strategy, example being “4 times more potential buyers than any other property site or No. 1 source of property buyers”, in this regard the commercials feel a trifle wooden. Trade Me over the years has built a close affinity with the population of NZ. A warm and engaging sense of the underdog championing the individual to allow them to buy and sell anything and be in control. To do things easily, cheaply and for themselves and in so doing become a trusted place “run by good people like us”. I get none of this sense from these adverts, they seem disconnected from the brand values of Trade Me and in someways have a smugness that suggests that they are overly sure of their position and merely need to state the fact that they are the No1.

Realestate.co.nz on the other hand are launching a TV campaign clearly with the intention of building brand awareness and through that to drive traffic.

The commercial plays heavily to the mobile platform and the iPhone app as the access point to the content. Unlike Trade Me the advert does not use unique features or facts to sell the message it simply takes the generic requirement of the market and state - “browse through thousands of properties throughout NZ - anytime anywhere”.

 

The short time frame of the commercial does not allow the opportunity to establish a classic call to action - such as to download the app or check out specific aspects of the site. The reality is that 15 second adverts as this is, are best when used as recall ads supporting a longer form 30 second or 45 second that establish the premise of the campaign. To rely solely on the 15 second version as this campaign seems to be doing leaves a risk of insufficient impact.

Realestate.co.nz has not used TV advertising since the launch campaign for the website back in 2006 and therefore they are effectively starting out as a new brand - pitching into the wide ocean of TV viewers. This is likely to see massive dilution of the message. Given the likely budget, the money would have been better invested into media where their core audience are more likely engaged.

Not knowing the scale of the expenditure behind these campaigns it is difficult to assess the relative impact. Clearly Trade Me has a considerably larger war chest of marketing dollars and could outspend Realestate.co.nz many time over, however I doubt they will. Their campaign as stated is really targeted at the industry as a trade marketing push, in this regard merely to be doing the campaign and telling the industry about it supported by the outdoor advertising will achieve the objective of exerting pressure for industry support without a massive expenditure.

Realestate.co.nz on the other hand in my judgement are caught as the expenditure of the campaign I suspect will not be sufficient to really influence consumer behaviour or drive action. Certainly they will benefit from trade support in that they will be seen to be advertising which has long been a call by the industry. 

Overall I am left with the distinct view that the total campaign of these two competitors is a complete waste of money. The beneficiary of this campaign are as ever the TV companies. The losers the real estate industry. The expenditure in the case of Realestate.co.nz takes money away from smart investment in the site and the apps and in the case of Trade Me the expenditure is a small investment which will ensure continued usage of the site and thereby further their financial ambitions to take more of the marketing dollar from the real estate industry.

If these campaign were really about seeking to market to property buyers and sellers the respective marketing teams would have bypassed old media and looked to established deeper consumer engagement within the respective groups through online campaigns and social media marketing.


Agents and portals - the differing approach of UK to NZ

by Alistair Helm in


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The real estate industry is universal, and in principle operates under a similar business model of commission based services in many countries of the world. The migration from print to online is well developed in most countries and therefore it is always interesting in my mind to explore the different approaches to marketing property from country to country.

I was recently in the UK, visiting relatives in Scotland when my eye was caught by this “For Sale” sign outside a property in Edinburgh.

As a backgrounder, the UK model of real estate is somewhat different to NZ with real estate agents largely salaried off a lower commission of around 1.5%. For this the role of the agent is more as a facilitator of the contact and managing the listing. Most properties are sold by negotiation. In Scotland the model is more unusual with a lack of real estate agents as independent entities. All properties in Scotland are sold through solicitors who operate real estate services within their company and therefore provide what amounts to an end-to-end service including conveyancing.

The property I was looking at in Edinburgh was being marketed by McEwan Fraser Legal. The marketing of the property through the exterior sign board was what captured my interest.

The most conspicuous aspect of the sign was the lack of smiling face of an agent. The property is being sold by a company, not an agent - a specialist real estate team as part of the legal company ready to take your call up to midnight on weeknights!. The prospective buyer will enquire of the company rather than calling a specific agent.

The other aspect that caused me to pause and capture this picture was the brand references to the main real estate websites on which the property is being marketed. The UK has a dominant player in this space - Rightmove; a significant competitor in Zoopla and also the Scottish market has a regional portal S1Homes

The selling company has a website on which the property is featured but the pragmatic approach by them is to highlight that this property is being featured on the major UK property portals and a specialist Scottish portal - a clear demonstration to the interested buyers that the property can be found and examined exactly where they expect to find them. This makes total sense, buyers are used to the functionality of these dominant portals - why encourage them to a company website that they may not have used?

I ask that question rhetorically - NZ real estate has always seemed reluctant to advertise any other website on street signs other than their own; this despite the fact that the consumer has little interest in checking out the details of a property on the agents site, when the details will be on Trade Me or Realestate.co.nz - sites that the consumer knows well and is aligned to the functionality and established process for storing favourites.

I find in retrospect this example in the UK even more bizarre when you consider that in the UK the real estate industry is seeking to start an industry owned portal - Agents Mutual as a consequence of what they see as excessive fees and profits made by the leading portals of RIghtmove and Zoopla.

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In New Zealand agents own a portal, Realestate.co.nz, yet they have never, despite the competitive pressure from Trade Me Property taken the decision individually or collectively to act to support this industry owned portal by advertising the brand on their “For Sale” signage or print advertising. The best they seem to be able to do is a discrete reference in the print media of 'contributor to realestate.co.nz’ - hardly a glowing endorsement. Such a missed opportunity!


No paper - no news!

by Alistair Helm in


So the line used to go..  when there's no newspaper there's no news. How different it is today in our multimedia age for without newspapers we are certainly not without news - 24 hours a day 7 days a week.

Yet this acceptance that the newspaper has lost its pedestal of relevance in the new age of multimedia still fails to make a dent in the marketing choice of most real estate agents and their clients. The fact is that the vast majority of property searching is done online, the vast majority of property enquiries emanate from websites and mobile apps and yet everyday real estate agents encourage their clients to sign up to advertise in newspapers and property magazines that barely get read and on average cost hundreds, if not thousands of dollars.

It is fair to say that 3 out of every 4 dollars spent by the real estate industry in New Zealand either in the form of brand advertising or property advertising paid for by agents or clients ends up in the wallets of the print media companies - APN, Fairfax and Bauer Media in their multiplicity of newspapers and magazines.

So it is kind of amusing that during the Christmas period when there are no specialist property magazines published for 2 weeks and newspaper property supplements diminish to a mere slither of their former size the property market does not stop. Listings do not dry up - check out the number of listings added to property websites with dates aligned to the statutory holidays of Christmas and New Year. Four days that actually witnessed 353 new listings coming onto the market. These listings are being marketed without any print media by agents that recognise that the web is open for business 24/7 and delivers leads 24/7. 

The real estate industry could very easily manage without print media No loss of marketing impact would ensue. Certainly some major economic impact would befall the print media companies as savings were made by sellers and their agents.

So why is it that this industry continues to promote the role of print media and why does the print media continue to benefit so disproportionately? In other countries the role of print media in real estate advertisings has fallen to 25% or 30% of the total spend and those markets such as the UK, Australia and the US have seen no impact.

It’s very simple - brand marketing.

In this case the brand is both the franchise groups - the Bayleys, Harcourts, Ray White, Barfoot & Thompson and others as well as the brand name of the agent. Print media is loved and supported by real estate agents because print media presents content in branded sections. Just look at the 32 pages of Harcourts listings, 24 pages for Bayleys and 30 for Barfoot & Thompson. Each page identical in format creating a brand statement of scale and presence. Properties are not sorted by price and location as the web delivers much to the delight of buyers. Try finding all the properties in a single suburb within a price range in a magazine next time you see one!

Agents love print and real estate companies motivate them to seek advertising in print because it is  in their best interest. Its a brand marketing war being waged in the print publications with their clients’ houses as ammunition.

It’s time for the property owners to wake up to this misrepresentation of marketing value. To challenge the notion of print first and to realise that there really is no value in paper any more - that’s the news, delivered via online!


What is a listing?

by Alistair Helm in


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It struck me the other day when reading a comment from a reader to the various articles regarding the reaction by the real estate industry to Trade Me Property new pricing structure for property, that part of the problem is in someways the words we use and the connotation they infer, borne of age-old experience.

Think about it for a moment, the heart of the discussion is around the notion of the cost / value of a listing. But what is a listing?

So much of our approach to this issue is governed by our old-media thinking. Newspapers still instruct our frame of reference. A listing in a newspaper was governed by column inches. Simply a list of articles for sale (in this case a house). Page after page of the newspaper were full of 'listings' - probably given the 6 column structure of newspapers you would have close on 100 house listings on a page. Such layout in simple black newsprint text could do nothing to provide more than the bare facts - suburb, size, features (though limited) and contact details or open home details. 

As such this basic listing, charged on a per inch basis was never expected to be significant as a true 'advert' for the property, it was simply a inclusion in a stock list. To achieve impact and draw attention of buyers it was necessary to pay for advertising in the form of 1/4 page 1/2 page or full page adverts with photos. In rough terms of cost a listing might cost $30 and full page advert $1,000.

So the use of the word 'listing' in the context of the web is entirely misleading for the costs of a 'listing on Trade Me Property' today costs upwards of $399 but delivers more than the $1,000 full page advert of old. Full colour images, comprehensive details, maps and social insight, contact details and contextual data. Not to forget that the advert is targeted to all property buyers and is seen by an audience of over 100,000 a day - challenge to any newspapers audience at the height of their era. It is also significantly important to remember that the advertising for the property is active 24hrs a day to a global audience until sold - the listing in the newspaper was classically there on Saturday and in the trash by Sunday morning.

So whilst somewhat over simplifying the situation - if we thought of a 'listing' on a website as an advertising feature or a webpage advert we might redefine our frame of reference and squabble less over the price of a listing and think more of the value of the advertising.

Interestingly though, now with over a third of viewing of property on mobile devices we should stake a new term entirely. How about a properties "Digital Profile". In that way you can pay $399 for the digital profile on Trade Me Property and then choose to do an enhanced Feature advert or Super Feature advert upgrade, which is interestingly not 30 times the cost of the old newspaper listing - why? because the basic "Digital Profile" delivers so much more advertising value!.

 


Some further thoughts on the industry reaction to Trade Me Property new pricing

by Alistair Helm in


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Today has been a flurry of calls and chats about this NZ Herald article citing an agent rebellion to the new pricing being implemented by Trade Me Property. I feel I presented a balanced and insightful article earlier and that has been ratified by the calls I have received. 

Those calls have also further reinforced my view and at the same time added some extra thoughts that I thought I would share here.

The article states that there is a belief that agents failing to promote Trade Me Property as part of the marketing campaign for a property will result in less listing on Trade Me Property which will see viewing numbers decline and thereby result in less private sellers. Lets examine this in more detail.

Real estate is a business carried out by c.10,000 self employed contractors who day to day pound the streets prospecting for listings, having secured an appointment to present a proposal competitively pitched against probably 2 other agents, you have to ask yourself which agent is going to dare say in the presentation when asked by the seller how they will market the property “well, you see, we as Company Y do not believe that it is best to advertise your property on Trade Me Property because we think that their decision to increase their fees to us from $1,000 a month for all our listings to $159 per listing is fair!

How do you think sellers are going to react to this statement, here are my view of the optional responses from vendors:

 

Option1 - Your petty squabble with Trade Me is of no interest to me - I just want to be on Trade Me 

 

Option 2 - OK so you don’t think there is value in Trade Me to justify a fee of $159 to advertise my house - yet you want to charge me $17,000 - next agent please!

 

Option3 - OK you can waste your time squabbling amongst yourself and Trade Me over which website to use in the meantime I will with my own credit card list my house tonight on Trade Me and I will simply deduct the $399 from your commission

 

Option 4 - Can I please speak to an intelligent agent who understands that with a daily audience of 120,000 buyers and viewers there is really no logic for not advertising on Trade Me Property - next agent please!

 

Option 5 - the smart agent adds “Now what I have just told you is the corporate line - but I am independent and I am concerned to ensure your property is marketed in the best way and therefore I will make sure your property is on Trade Me Property and I will pay this out of my own pocket” - vendor response - great, you’re the kind of agent I want to have sell my house, where do I sign!

 

The industry in this situation is not in control for as much as the corporate heads of Harcourts and Bayleys, Ray White and Barfoot & Thompson and others believe they can collectively boycott Trade Me. They cannot. The people who pay the fees to Trade Me are the franchisees of the corporates who actually run the offices in the high street and they pay the current subscription, but even they don’t hold the decision, as the real decision rests with those individual agents whose interests are best served when they do not have to overcome objections, especially ones that make no sense and come from “corporate”.

Now just taking this a bit further, the logic that a boycott if effective would diminish listings - could be possible. The problem is that buyers don't actually know what comprehensive listings look like - is it 14 in this suburb or 12 or 18 ?? Add to this the belief that viewers will somehow disappear. Not likely Trade Me remember is the only site with private listings which amount to around 18% of all listings - those listings are not on Realesatate.co.nz (and nor will they ever be!) so Trade Me still retains that relevance to comprehensive content.

My main fear is that this issue is a major distraction to the real estate industry. It does nothing to bolster professional credibility and worse it makes the industry look cheap - justifying commission rates that result in people paying $17,000 to sell a house and at the same time focusing on whether to pay $159!

Related articles:

Agents to boycott Trade Me - I don't think so

Trade Me Property solidifies status as property marketing powerhouse

Trade Me makes radical change to real estate agent fees

 


Agents to boycott Trade Me - I don't think so

by Alistair Helm in


The news headline from the NZ Herald: "Agents shun Trade Me after listings fee surge" is as ever an engaging headline but largely incorrect and unlikely to come true. As yet real estate agents have not shunned Trade Me Property and as the article goes on to suggest, I suspect that by February when they propose to recharge for these fees, this story will be history.

The fact is this resentment by real estate agents to accept a new fee structure from Trade Me Property is totally out of context to the true value of the service that Trade Me deliver. The context is this. To sell a house in NZ using one of the many name brand franchise real estate companies costs for an average house $17,000. The advertising budget for that house has to include online and has to include Trade Me. Now an agent may tell you that you need to spend upwards of $5,000 for a comprehensive marketing budget and it should include this advert and that full page and this flyer and that insert. The fact is you don't. There is Trade Me and that's it (add in professional photos and a sign board as well). The cost of that advert which promotes that property to an audience in excess of 120,000 visitors a day to NZ'ers and a global audience is just $399. Just $399 to sell a $500,000 property for which an agent charges close to $20,000. Oh and by the way an agent can get this $399 advert for just $159 + GST.

Now agents are up in arms because they used to be charged up to $1,000 a month to list all their properties, which for an average office which had 10 listings of property for sale a month was $100 per listing, now they are being charged $159 + GST per listing. Now certainly for a larger office which say lists 50 properties a month the cost will rise more significantly but you could argue the larger offices were paying far too little for the value of the service.

Trade Me Property have been explicit in their communication of this increase which they fore-shadowed back in September to recommend that agents pass on the cost to the sellers as sellers are well aware of the value of Trade Me Property and also well aware of what it costs to advertise on Trade Me.

So agents are up in arms - revolting at what they see as "astronomical" increases, Harcourts New Zealand chief executive Hayden Duncan stated the increases at Trade Me "unreasonable" and "nothing short of price gouging". He said if Harcourts' 181 branches absorbed the new fees it would cost tens of millions of dollars each year. This statement is very interesting - Harcourts have around 21% share of the NZ property market and are the market leading company. Each year they would list around 28,000 properties for sale based on the Trade me fee of $159 that totals $4.4million, hardly "tens of millions of dollars" and set against around $235 million in commission fees the $4.4m pales into insignificance.

The Bayleys Waikato regional manager Stephen Shale quoted in the article, predicted Trade Me listings in Hamilton would be "decimated" by February.

"Trade Me will have virtually no stock in Hamilton," Mr Shale said. "And the viewings will diminish if the stock isn't there to look at. If there's nothing to compare your property to, the private seller is the one who'll pay because you're not going to have the eyeballs on the site and the industry site won't allow private sellers."

What he fails to appreciate is that even if his agents tell vendors that they personally, and his office do not support Trade Me the vendors will simply go onto Trade Me and list their property themselves. Added to which it is hardly professional for an agent to state that they are boycotting the leading marketing platform over $159!

Real estate agents seem to have short memories. Back in 2007 the industry believed it could hold out and stem the rise of Trade Me. At the time Barfoot & Thompson as well as Harcourts refused to allow their listings on Trade Me - they supported and believed their own industry owned website Realesate.co.nz was the best place for listings. However gradually one by one, office by office the industry crumbled, as vendors listed their property on Trade Me themselves or switched to an agent who would list on Trade Me. Six years later Trade Me has only strengthened its position as the de-facto marketing for all property in NZ and now the industry believe that they can boycott Trade Me Property - I don't think so!

As was posted on Twitter - maybe vendors should boycott agents that won't advertise on Trade Me Property

If the real estate industry believe that their future lies in an industry owned property portal rather than a well established specialist marketing service that attracts the lion's share of viewers then they should know they are in good company - their colleagues in the UK and Australia share their views and frustration over what they see as a gorilla like site they have helped establish now charging heavy fees. The problem is their aspiration to divert traffic and boycott the leading site is a pipe dream. Have a read of an article I wrote earlier this year on Property Portal Watch titled "Industry Owned Portals - the Aspiration"

Related articles:

Some further thoughts on the industry reaction to Trade Me Property new pricing

Trade Me Property solidifies status as property marketing powerhouse

Trade Me makes radical change to real estate agent fees


Access to ultra fast broadband is a critical aspect of a property for sale

by Alistair Helm in


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This question was asked on twitter this week as to whether this property advert was the first in NZ to feature the proposal to be 'Gigatown-ready'? - it got me thinking about Ultra Fast Broadband int he context of property marketing. 

 

Now Gigatown, if you did not know it is a competition organised by Chorus, which over the next year looks to decide which NZ town becomes the lucky recipient of one gigabit per second internet connection.

Think about it - 1 Gigabit per second - currently copper based broadband is around 10 Megabits per second, that's barely one hundred's the speed, even fibre only gets to 100 Megabits - a tenth of the speed, and poor old dial up modems struggled to get just 56 kilobits per second. Put that in context, an episode of 'Breaking Bad' on iTunes is 1.5Gb in HD - so if you had a gigabit/sec download speed, just a couple of blinks and and its downloaded, but on a dial up modem you would be best to start downloading before heading to bed, as it would take 7 hours and 26 minutes!

Now the property for sale highlighted in the tweet was not as yet, the lucky recipient of one gigabit per second broadband speed, but clearly the agent selling the house Colleen Schofield of Bayleys in the Hawkes Bay was smart enough to recognise the value of marketing a property featuring the fast current broadband access of 100 megabits per second. 

This is a trend we are more likely to see in the future and something I think the real estate industry needs to incorporate into the component dataset of facilities in a property for sale. For just as important as the proximity to shops and transport as well as orientation on the section should be the current accessibility of broadband as ADSL or ADSL2 or fibre. 

Judging by the current selection of property on the market searching through Trade Me's listing, the real estate industry is not focussing on internet speed as a core component of facilities at properties. There are just 42 properties which include the search term 'ultra fast' on Trade Me Property today. More than half of these are actually future development properties, with just 19 being existing properties. 

From the latest government data there are now just under 10,000 homes connected to ultra fast broadband under the initiative which seeks to connect 75% of NZ to such access by 2019 - currently up to around 170,000 premises. On average of the more than 1.7 million properties in NZ around 3% are on the market at any one time - 50,000 properties.

If that ratio of 3% was applied to the number of houses with ultra fast broadband we should see around 290 homes for sale in NZ which have UFB - but we appear to have 19 - something is not right! 

The real estate industry needs to ensure that every property listed by an agent has details of the internet connectivity as standard - it is as important as the other utility services and in the case of UFB it is a selling point! 

 


What The Block can tell us about the Property Market

by Alistair Helm in


The live auction of 'The Block' properties last night was a media success. The format of matching reality TV with home renovation and the kiwi's fascination for all things property appears to be a goldmine not only here in NZ but in Australia, the commitment is there for a 3rd season. 

As for the programme as an insight to the property market, there are some interesting pointers to reflect on. 

Firstly reflecting on the 1st series which ended in early August 2012, I wrote a couple of articles at the time examining the lessons that could be learned from the auction, the insight as to marketing properties and also the overall commercial result for the media company. 

In anticipation of the auction held last night, I was of the opinion that there might be some very disappointed participants after the auctions. I questioned whether the scale of the projects might have pushed the properties into a price bracket that exceeded the market interest and potential. I felt that last year the programme was very lucky to sell all the houses on the night - the interest in the 4th house was so weak it only just made the reserve. 

In my opinion it is very unusual to find enough active, financially capable buyers who are prepared to spend c. $1m on a house in that area in front of the media spotlight, let alone find enough buyers for 4 properties.

The result of the 4 auctions left a single indelible message in my mind - The Auckland Property Market is very strong and holds strong demand which is why the auctions were successful. 

I think that unlike last year, this year's bidders at the auction comprised 4 discrete groups who each were focused on the house that they wanted to buy, whereas a year ago the interest was far more generic to 'the houses' collectively - which is why interest declined progressively after each of the houses were auctioned.

The success for Alice & Caleb was the result of smart renovation design combined with a property with appeal that offered good space. They had a property with character (a villa), their renovation was done to appeal to a broad audience and the result showed on the frenetic 95 bids that lifted the opening offer of $700k to the successful sale at $1,126,000, $181,000 over the reserve. It was irrelevant that their house was the 3rd to be auctioned, the property had appeal.

The same is true for Alisa & Koan who also had a character property which they renovated to appeal to buyers and 22 bids after their opening bid of $700k saw it sell for $1,014,000 a margin of $66,000 over the reserve. There was genuine demand for the property even thought it was the last to be auctioned on the night.

The other 2 properties which were the first to be auctioned achieved $25,000 and $27,000 over the reserve and attracted less bids and far less frenetic bidding simply because their properties lacked the character appeal and were somewhat more individualised in decor and design. Although ironically these were the properties that probably made for better TV.

So the lessons of The Block are clear - character properties renovated sympathetically with modern convenience to appeal to the broadest audience with good size and space will always capture top dollar, particular;y in that part of Auckland. As for the 'hoopla' of the live auction, I think this year it made no difference as the buyers of these houses came to an auction committed to buy these houses, the fact that is was televised was not relevant, the strength in demand for Auckland property shows no let up as was seen last night. There were undoubtedly pospective buyers who left last night not having bought one of the houses.


You are a savvy buyer!

by Alistair Helm in


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I should qualify that statement; you are a far savvier buyer than your parents. The fact is buyers and sellers in today’s property world are smart, well informed and able to make informed decisions far in excess of what previous generations could hope to achieve.

This is such an important fact to consider when you first start thinking about stepping onto the property ladder or taking a step up. Consider for a moment the things we take for granted today in the property buying and selling process that would have been merely a dream a couple of decades ago.

Twenty years ago say, there were only 2 ways to find out what properties were available to purchase. You would go visit the local real estate office. Not just one thiugh; you would have to visit them all to ask what properties they had for sale. Alternatively you would wait until the weekend to check out what properties were advertised in the local paper or property magazine. No such thing as email alerts or live updates of new listings then. You had to do the hard work, a regular visit to real estate offices to collect printed sheets of property for sale, if you were lucky the local property magazine was dropped off at your house.

Details on an individual property was sketchy to say the least. In the paper you might get a single photo – more often than not, a black and white photo. It was not uncommon to have just a few lines of description as properties were listed by suburb under general classifieds – pages of them! To get so see more of a property you had to visit the home. Yes open homes were, as they are today a valuable means of assessing a property. Alternatively you had to succumb to the company of your friendly local real estate agent who would drive you around a number of properties encouraging you to see this one… or this one… and maybe you should consider this one!

As for background information on recent sales prices or the current rating assessment from the local council, that data was safely locked up behind government departments with stern looking counter staff who reacted to official compliance request at glacial pace as box files were referenced to provide answers.

So every time you flick up a browser window, receive an email alert, click a smartphone app or download a property file give a moment’s thought to how lucky you are to have so much insight and information to hand to make you such a savvy buyer!

 


Why taking a home for a 'test drive' is illogical?

by Alistair Helm in


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Logically the idea of taking a new home for a 'test drive' always appealed to me despite the ensuing issues of security, privacy and logistics. After all you wouldn't put down $30,000 to buy a car without an extensive test drive which for many new cars is at least overnight, so why wouldn't you expect to at least try out a house you fancy buying for a couple of days - right? That was my view when I wrote this blog post in 2008 when I had seen such an initiative in the UK.

But recently I came across this video news article from Yahoo Finance in the US about a New York Realtor who had offered prospective buyers the chance to spend 12 hours in an apartment she had listed so they could take it for a 'test drive' .

 

Watching the video was enlightening, if you can see beyond the slick scripting of the presenter; for it provided for me a very powerful insight into the psychology of home buying.

Admittedly based on a sample of one, the comments of the prospective buyer were so insightful. These were his comments based on first impressions (before he spent 12 hrs in the property): 

  • "loved the apartment"
  • "great sense of energy"
  • "great storage space"
  • "lovely sunny southern aspect"
  • "great location"
  • "emerging area"

"Overall a really good feeling for the property"

Yet he decided not to proceed with the property because of these issues: 

"light switch in the bathroom not meeting code" & "no central heating" 

This says so much about the process of property buying. That initial impression or impressions gained via the walk through when the property was open for inspection speak directly to the features and benefits of the property that appeal to the buyer - location, aspect, facilities, amenities - these are the drivers of property buying. Contrast that with the negatives - suspect wiring and a broken heating system! Spending even a couple of hundred dollars could have solved this and yet these relatively small items played such an important and in the end critical part in the decision making process.

So for me this tells us heaps about marketing property for sale. Buying property is about the heart - an article I wrote last year reinforces this "Blink and you've bought a house". The little things can effect decision making - fix broken appliances! but more importantly present the house to really play to the emotional triggers. 

Don't even think about letting people go for a test drive - it's neither necessary nor beneficial, not because you are hiding things, its more about the impact that time plays in letting the logical brain start to overrule the emotional brain. This of course assumes you are buying a property because you want to live in it and enjoy the life it can offer you. 

 

 


Industry Authority issues warning over 'Quick flick' auctions

by Alistair Helm in ,


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It all started earlier this year as the active Auckland property market came alive and auctions became the guaranteed process to sell every property or so it seemed. At the same time as buyers became more desperate agents decided to shorten marketing period from the usual 3 to 4 weeks to a matter of 2 to 3 weeks.

Then of course we had that much publicised  'Quick flick' auction with a marketing campaign of 33 hours roundly defended by the real estate industry.

Whilst the industry locked arms and stated that they were merely responding to the demands of the market and serving the needs of their clients - the sellers of properties, the Real Estate Agents Authority (REAA) in their role as overseers and licensors of the industry reflected on this behaviour and when questioned in the NZ Herald article stated:

That the situation raised "significant concerns".

"The practice is not one that the authority encourages and one that we would strongly urge any vendor or purchaser to take legal advice about prior to entering into," she said.

"From a vendor's perspective, an issue is raised as to whether (they) could receive the best possible result from such a limited marketing campaign.

"For any short marketing or sales programme, the vendor should have been given adequate time to ensure they are well informed about the decisions that are being made and the potential consequence of those."

Over the past month the REAA has reflected further and just this week they have sent out  guidance to all licensees on this issue. In an email sent to the industry last week they stated:

There has been some media attention recently about property’s having very short advertising periods and being sold within days of being listed. While this may be a sign of the times in some markets around the country it does raise some concerns for us. We are concerned that the marketing period may not be long enough to achieve the best results for the vendor and that prospective buyers may not have enough time to do their due diligence and get legal and technical advice. As licensees you must point out these risks to both the seller and the potential buyers, and of course you must continue to meet all of your obligations under the Act and the Code of Conduct.
— Real Estate Agents Authority - Sep 2013 Update

I am pleased to see this communicate from the governing body of the industry. They have not made changes the code of conduct but I see this as a valuable communication especially as they make the point that licensees must consider the needs of buyers to ensure they have the appropriate time to undertake due diligence. Too often we only hear the needs of sellers being expressed by agents.


Auctions now judged to include pre and post under-the-hammer-sales

by Alistair Helm in


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Some months ago I wrote an article entitled “When is an auction not an auction?” highlighting what I thought was a misleading practice of the reporting of completed auction sales which were not sold under the hammer.

At the time I highlighted the advert published by Barfoot & Thompson which proudly proclaimed “593 Successful Auctions. All in April, all in Auckland, all by one company” That style of advert has continued to be published each month since then confidently stating the number of ‘successful’ auctions as the sum of those sold under the hammer, together with those properties sold pre-auction and those sold post-auction.

That article attracted a couple of encouraging comments supporting my view that the advertising was misleading. Encouraged by these comments and my own sense of principle I decided to file a formal complaint to the Advertising Standards Authority (ASA)  regarding the advert and subsequent adverts.

I filed a complaint stating that under the Rules and Code of Ethics these adverts were misleading and likely to deceive consumers into believing that the number of 'successful' auctions were more than the facts show.

The Complaints Board of the ASA judged that there was a case to answer and the board deliberated over the claim at a session held in August. The outcome of that hearing is now public record and accessible on the ASA website.

The outcome was that the complaint was not upheld

I was disappointed in the findings of the board. I respect the process and the organization. i do not intend to appeal the decision. The complaint is public record and the full decision can be read via a download file of the full written decision, if you are so inclined.

The summary of the decision of the board in not upholding the complaint was that "the advert should be read as a whole and on an objective basis, not only taken on part". That is to say they judged that the full analysis of the sales conducted pre-auction, under the hammer and post-auction were satisfactory to provide explanation to the headline and therefore the headline was not misleading.

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Choosing the right marketing plan to sell your home?

by Alistair Helm in


This may well be the shortest article I write. There is actually only one very simple, yet highly effective marketing plan to sell a home in NZ. It is two words.

 

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That’s it. Trade Me – let me say it again incase you missed it.

It doesn’t matter if you decide to list with Ray White or Barfoot & Thompson or Harcourts or LJ Hooker or Professionals or Bayleys or any other brand. The fact is that every real estate agent in this country will feature your house on Trade Me’s Property section in the same way. They all have a subscription to upload all their listings as part of a standard monthly subscription.

In addition to every property being marketed by a licensed agent, every property being sold by its owner privately will be on Trade Me. Futher more every property buyer, be they an investor, first-time buyer or traditional buyer will be using Trade Me, setting up favourites, receiving email alerts and using the mobile app. The old argument that there are property buyers who don't use the internet is just that an old and outdated argument!

Trade Me receives over 150,000 unique visitors a day to property listings – that’s far more than there are genuine buyers in NZ on a daily basis. You can be safe in the knowledge that within that total are the prospective buyers of the house you are looking to sell.

That’s it – done. The fact is at $399 it is the only marketing budget you need to spend.

There are in addition to Trade Me a host of other options for advertising property for sale; many of which real estate agents will try and convince you are critical to the sale of your property for this reason or that reason. The fact is you don’t need them. Let me be clear they are not irrelevant, however every one of them will be viewed by people who also use Trade Me and will see your property in all its glory on Trade Me.

My advice is to think of Trade Me as the main meal, everything else is simply fancy trimmings. This analogy does though highlight the other core part of marketing your home, for the main meal is not a main meal unless the ingredients are the most appetising - appetising ingredients like great photography is eye--catching and mouth-watering!

 

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So there you are just two / four words that are the core to the marketing plan to sell your home - Professional Photography + Trade Me!

 

Disclosure: Just in case you think this is in some way a piece of paid for advertorial by Trade Me, I can categorically say it is not. I spent 6 years competing with Trade Me when I ran Realestate.co.nz, which is a great site and hugely supported by the industry and loved by consumers, however in the online marketing world of property Trade Me is the King.  I should also point out that I have no financial interest in Trade Me as I do not own shares in the company.

 


Auctions – perfect for $million racehorses, so why not for property?

by Alistair Helm in ,


Image courtesy of the New Zealand Bloodstock Limited

Image courtesy of the New Zealand Bloodstock Limited

I was in the middle of a presentation the other day expounding forth on my favourite subject of the limitations of auctions as a process to sell a house when someone politely stopped me and said “How can auctions be so wrong when Sir Patrick Hogan has relies on auctions to buy and sell all of his horses – he can’t be dumb!”

I have to say that question stumped me for a minute, not being a horse race fanatic and having only the vaguest recall who Sir Patrick Hogan was. Rather than answer the question directly, I chose to politely state that I would need to consider the question as there was a valid point being made and it was worth the time to reflect on the comparison between auctions for horses and property.

So for the benefit of the questioner and the wider assembled group here is my response.

Auctions are a highly effective process to sell items for which there is competition, items that are rare and unique. Auctions suit Fine Art, Furniture, Racehorses, Classic Cars and in some cases Property. They also suit the clearance-sale approach where there is a need to complete sales quickly and where the buying audience can be brought together in person or virtually to focus on the sale.

Race Horse auctions are part of events held locally or nationally on an infrequent basis where buyers and sellers and their items for sale can be brought together so that you have the full universe of buyers to ensure the demand is strong and a good supply of items to sell to attract a wide audience of buyers. Imagine how inefficient it would be if instead of a quarterly Race Horse auction you had an individual auction at each stud every day – buyers would need to spend all their time driving around. So event based auctions suit horse sales in the same way as Sotheby’s and Christie’s auctions suit Fine Art.

So then why is it that I contend that auctions are not the perfect solution for selling property?

Well clearly you cannot aggregate all the properties in the market and sell them at events every couple of months – property marketing is time-bound, people want to sell today, or this week, they cannot wait until the end of next month for an auction. Despite this there have been some attempts by some of the real estate companies to create “Big Auctions” – I cannot for the life of me see the value in this. Auctions for houses need to be unique events where the potential buyers are placed in a position where they champion one another for the right to buy the house using price as the weapon.

This leads me to another aspect of real estate auctions which I think is not appropriate. The weekly auction room sale, where each week a collection of a dozen or more homes are auctioned in a sterile meeting room. Buyers are told the auction will start at 2pm but who know when they will get to lot 7?

Why is it in today’s world when real estate agents charge commissions of over $20,000 to sell an Auckland house can they not afford to hold an auction for a property at a set time and place (at the property) – why do such auctions have to be crammed into what is akin to a sale year – for whose benefit? clearly the real estate companies derived massive economies of scale - one auctioneer 20 properties in half a day's work!

So accepting that property auctions should be unique events held at the property at the very least thereby ensuring the buyers are not intimidated by random strangers jostling all around them, who are simply sitting round for a later auction, what is still so wrong with auctioning property?

The truth is there is nothing wrong with auctioning property. My primary concern is that it is seen as the nirvana of property sales process. It has its merits and its disadvantages. To provide some clarity here is my summation of the pro's and con's of auctions for property:

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A lot of my antagonism about auctions is driven by the recent trend of real estate agents blindly and with what I regard as blatant disregard to the needs of vendors, pushing every sale as an auction and in the frenetic desire to sell more houses more quickly, and in the process reducing marketing lead times to days rather than weeks, thereby driving panic amongst buyers who fail to undertake satisfactory due diligence. 

Property is a significant purchase decision and should be allowed to be reflected upon as a serious purchase decision. Please let us bring some sanity and pragmatism into the process as otherwise those who may get burnt in today's market may hold a grudge against the real estate industry when the market quietens down - which is what will happen in the coming years. 

 


Are real estate agents trying to establish a “Paywall” for buyers?

by Alistair Helm in ,


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The notion of a paywall is a hot topic in today’s digital media landscape as publishers try and control access to content not only in an effort to monetize the content and thereby offset the switch from paid content in print to notionally free content online; but also at the same time capture ‘subscriber’ information for future marketing.

I am wondering if real estate agents are beginning to question the loss of control they feel in regard to property marketing. The web has finally been seen, somewhat reluctantly by those in the industry, as the true democratisation of the marketing of property. As I stated at a recent speaking engagement without equivocation -

"there is only one task required to market a property today and that is to list it onTrade Me Property, everything else superfluous".

However I fear that as a result of this fact agents are trying to ring-fence buyers before property marketing even begins, in effect forcing them to come in behind a paywall to access the listings of agents and thereby avoid having to acquiesce to the power of the web and in some way take back control of marketing.

Let me explain my thinking and the supporting evidence.

I have this week been mulling over the reporting of the ‘Quick Flick Auction’ that occurred last week and has since been covered extensively in the NZ Herald and on TV3’s Campbell Live.

I have read and listened to the explanations and responses of the real estate agents involved and the Real Estate Institute. I am left with the distinct impression from their response that the overriding issue in their minds is the legal requirements of their role as agents and processes required under the Act; as if in some way their only concern was to compliance under the Real Estate Agents Act. The Real Estate Agents Authority on the other hand when commenting on this specific situation of the ‘Quick Flick Auction’ spoke of their significant concerns in the process, not purely from a legal perspective but from a wider position of asking whether the needs of all parties adequately met.

Now whilst the compliance to the rule of law is important as well as to the principle of professional service under a code of conduct, I have been reflecting more on these comments from within the industry and began to see a different underlying message.

Helen O’Sullivan, the CEO of the Real Estate Institute when commenting on the auction in the NZ Herald article made the statement “the property had been on Barfoot's internal system, available to 1,600 agents, since July 31”. This statement would seem to say to me that she in her role felt the actions of one of her members was acceptable because the property had been accessible to all of Barfoot & Thompson agents for a week and in someway this constituted acceptable marketing of a property before it was openly marketed to the wider buying public on the web.  As if to establish a 'two class' property buying market whereby registration with an agent confers priority and exclusivity.

To support this view as part of the Campbell Live feature on this auction the reporter discovered that the party who placed the initial offer that brought forward the auction to 1 day, had actually been through the property the day before it was listed on the web, before the agent had actually started to market the property.

What these seemingly connected messages are telling me is that the real estate industry wants to send a message to the buyers of NZ – get registered with us and we will tell you what is coming onto the market ahead of any competition.

 

Put another way – sign up to our database and you will be given priority, don't sign up and you will miss out!

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The question needs to be asked, should prospective buyers be forced to sign up with agents - all agents to be a good position to secure the latest listings rather than the method operated for decades of property being advertising openly. How could a buyer know all the agents to sign up with, unless the Real Estate Institute somehow want to become a central clearing agency? 

Now let me be clear here on one aspect of the real estate process, what is colloquially know an 'sleevies' (as in 'keeping property up your sleeve'). This is where an agent takes an instruction to list a property or is aware of a vendor being interested in possibly selling their property and through a database identifes a buyer who they show the property to and who makes an offer before the property is actually listed on the market. If that offer is acceptable to the vendor then the property can be sold prior to open marketing. That is acceptable, the buyer and seller make that decision with full knowledge.

What I have an issue with, is what I think is a subtle variation to this, which is what I think we saw with the ‘Quick Flick Auction’ whereby the agent had a buyer in mind and that buyer made an offer. However at that point one of two things should have taken place:

  1. The offer should have been accepted or possibly negotiated between buyer and vendor before the property even went on the market

  2. The offer should have been placed ‘on the table’ and the property placed on the market for an adequate period of time to allow the property to be marketed to attract a recognition in the market with all potential buyers allowing them the necessary time to undertake due diligence which in today’s market whilst not ideal may be as short as 2 weeks.

What I think is wrong is what might well have happened in this case where the property was not adequately marketed to provide the opportunity for buyers to undertake due diligence.

If a property is to be openly marketed, then it should be marketed for a minimum period of time. When I mean marketed, I mean openly advertised on websites. I think real estate agents need to accept that buyers don’t want to sign up to agent databases to be informed of new listings, they want to be informed through property portals such as Realestate.co.nz and Trade Me Property. By signing up to a property alert email from a property portal they know that their privacy will not be breached and that they will be updated daily on all new listings by all agents. The alternative of buyers having to sign up to all the databases of all the agents is akin to taking the industry back 20 years when the only way to access information of what properties were for sale was to walk into all the offices of all the agents in town.

The web has transformed the marketing of real estate. It has removed a part of the real estate process and massively reduced the costs of marketing. It is in the best interests of the buyers and sellers. However it is not loved by real estate agents because it removes the block form branding so prevalent in print media (12 pages of Barfoot's listing, 15 pages of Ray White listings, 17 pages of Harcourts listing; all of which in no particular oder). The industry cannot be allowed to corral the buyers and sellers and force them to come inside their databases to see the world of property for sale, listings need to be open, they need to be public – it is in the best interests of buyers and sellers and we don’t want agents building paywalls around their listings.

 


Real estate agents fondness for auctions may be their downfall

by Alistair Helm in ,


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There was a time back in 2005 when the real estate industry despite buoyant sales at the time, monetarily feared that their future was in jeopardy as Trade Me started to offer private sellers the opportunity to marketing their homes for sale in a way that could reach as wide an audience as the mainstream print media could do for licensed agents.

Further, home owners found that Trade Me could facilitate online auctions which generated genuine bidders and completed sales. At that time the selection of properties for sale on the site was purely limited to private sellers; as real estate companies saw no interest in what they saw as a “bargain hunting style site” in their view, hardly a credible place to advertise a property for sale by a professional agent.

Trade Me over the next 12 months made a strategic decision that was to lead to their future success and has contributed to the hugely successful listed company that it is today with a market cap fast approaching $2 billion. That decision was to withdraw from its role of endeavouring to reinvent the real estate industry through facilitated private-sale online auctions and instead focus on attracting real estate companies to advertise their listings on the site. A decision that in today’s market generates around $20m a year representing a large part of the $100m or so of marketing spent by the real estate industry each year.

 

Archived page from Trade Me real estate section from January 2005 shows only private sales with bids active for one of them via web.archive.org

Archived page from Trade Me real estate section from January 2005 shows only private sales with bids active for one of them via web.archive.org

What is interesting is that the decision did not in any way hamper the site from becoming the most important marketing platform for all property whether for rent or to sell, for private sellers or licensed real estate agents. And whilst the cost of advertising a single property for sale may have risen from $0 for a private seller back then to close to $400 today there is no doubt that the value for private sellers in having this ‘level playing field’ is immeasurable.

To advertise a property whether it be a private listings or an agent listing achieves the same level of interest on Trade Me as the detail below shows.

 

The 'level playing field' for the marketing of property online has been established, especially as Trade Me dominates the viewing audience with somewhere around 1.8 million unique visitors a month to property online vs. around 450,000 for Realestate.co.nz.

However as I have often stated, to sell privately is not simply about marketing your property online. The sale only occurs when the buyers have been corralled to front up with an offer, and this is where the professional real estate agent trumps private sellers as their experience and skills matched to their ‘thick skinned’ tenacity drives them to bring buyers to the table to sign an agreement.

However that marginal, yet significant point of difference, in my view is being undermined by the very tool agents seem to be in love with these days – the auction.

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Auctions are the preferred method of sale by agents, they have really taken off in the past couple of years amounting to over 40% of Auckland sales and ever and ever shorter auction periods which in my view they are simply getting out of control. Ironically it could be this ‘lemming like’ magnetic attraction to auctions that could ‘level the playing field’ of the selling process to match the ‘levelled playing field' of marketing property created by Trade Me.

Examine for a moment the components of an auction process run by a licensed real estate agent and contrast it with that undertaken by a private seller – because private sellers are turning to auctioning their homes.

  1. The property is advertised on Trade Me Property

  2. The auction date is set and a licensed auctioneer is booked

  3. The open home times are displayed

  4. Open homes are held

  5. Interested prospective buyer details are collected

  6. Interested prospective buyers are contacted (email / phone) to answer questions and remind them of the auction date

  7. Follow up contact is made of prospective buyers close to auction date

  8. The auction day arrives and the auction is held undertaken by a qualified auctioneer

  9. The property sells at auction or is passed in for further negotiation

  10. The legal agreement (the Sale & Purchase Agreement) is signed and the deposit paid

The 10 steps of the process to sell a property at auction. Nowhere in that list of 10 steps is there any difference what-so-ever between what an agent would do and what a private seller would do. There is no extensive facilitation or skilled negotiation, there is no time spent chauffeuring people around open homes or acting as a courier of sale and purchase agreements.

Auctions have been proven by the real estate industry to be an efficient process to sell a house. Auctions though are not the exclusive domain of real estate professionals. Auctioneers are a separately regulated profession governed under the 1928 Auctioneer Act. They oversee many forms of auctions from car auctions to art auctions to industrial materials auctions – all are professionally licensed and could turn their hand to sell a house by auction in exactly the same method as a real estate professional.

In my view the real estate industry has driven itself blindly down an alley that destroys the very essence that is their unique point of difference that distances a professional operation from a private seller; that of facilitating and negotiating the sale of the property. Yes, I can almost hear the cries from within the real estate industry as to the value of market knowledge and market appraisals to guide the seller. However ask the question of an agent of a property going to auction – “so what will it sell for?” – guess the reply… “ah that is what the auction will do, let the market decide, the process will establish the true market value!


Here is a selection of current private sale listings to be auctioned from Trade Me Property

 


Extreme property marketing forces buyer to front-up to auction in 33 hours!

by Alistair Helm in ,


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Barely 6 weeks ago I wrote an article entitled “Auctions getting out of control in Auckland” in which I highlighted what I saw as a growing trend to shorter selling periods for properties being marketed as auctions by real estate agents. The examples at the time were of campaigns of just 2 weeks, which I described as “dumb and somewhat illogical” and likely to exclude potential buyers from buying such properties.

So imagine my reaction when yesterday I was notified of a property just listed (Wednesday 7th August) which held its one and only open home last night and will be auctioned this afternoon at 4pm. So let’s see, listed at 7am on Wednesday and being auctioned at 4pm on Thursday, a grand total of 33 hours of marketing!

 

I am not sure to be quite honest what to make of this. My first reaction was to check to see if there was a mistake by the agent. No. The dates are genuine.

I contacted the selling agent by email seeking to confirm that the dates were correct and to get more details. I received an automated response email with the sale documents together with the statement “There has been a pre-auction offer at an acceptable level so the auction will open at that figure”.

I am struggling to understand how there can be a pre-auction offer when the property only came onto the market today? Clearly the agent has been marketing the property within a database of buyers prior to its listing. That is perfectly acceptable, but what eludes me is why the agent should imagine that the only buyer should be within the agent’s database of buyers. I might be interested in the property but the agent does not know me?

I do know of properties that are sold by agents that are never listed on the market. This is a decision the vendor makes, however in this situation having listed the property surely the vendor wishes to see the market respond? 

I am speechless. How can this auction process be in the best interests of the seller? How can the agent with all good consciousness and professional integrity state and demonstrate that they have fully marketed the property to as wide an audience to be in the best interests of the vendor when they are allowing a marketing period of barely a day when most campaigns are 3 weeks? Vendors deserve the opportunity to see what comes of a reasonable marketing campaign especially in today’s market where we are constantly told that demand is high and supply low.

In my judgment it is almost impossible for a prospective buyer to be able to prepare themselves to front up at the auction having done the necessary due diligence of title search, LIM report as well as finance. After the all the property details speak to the property being a great opportunity for a first time buyer.

Speaking of the property marketing the description reads “First home buyers or those looking for a project should move quickly”!! – “move quickly”! – from viewing an email on Wednesday morning to bidding at auction 30 hours later - how quickly does the agent expect the average buyer to act?!

I reiterate my statement that this marketing campaign cannot be in the best interests of the vendor, yet that is the ethical and professional responsibility of the agent. Certainly the vendor may be delighted to hear that there is on day 1 an offer at or above their reserve but why should that be the only buyer and why should that buyer’s offer be judged to be the value of the property in the market?

The real estate industry needs to take a good hard look at this situation and ask the question of itself – is this really how we want to be seen by our customers? Driving a culture of panic and hype such that property sells before it has been fairly offered to the market, or does the industry believe that marketing is irrelevant and all prospective buyers should be forced to registered with agents so agents can save on mainstream marketing and merely send emails to interested parties of relevant properties?

Update

The auction was held at 4pm at the offices of Barfoot & Thompson Ponsonby. There were around 20 people crammed into the reception area. I would say that of that total there would be 8 Barfoot & Thompson agents, the balance being potential bidders together with myself and reporter from TV3 Campbell Live.

The auctioneer introduced the auction and in referencing the agents handling the listing she made the comment "if you have been to the property over the last couple of days.." - seems hardly likely give the fact that the property was only listed yesterday!

The auctioneer then made the statement "the property was due to go to auction on the 28th August, but there has been an early offer on the property; that offer is at a level that is acceptable to the vendor, so that today will be the opening bid, its also the reserve price. So basically from the opening bid the property is on the market today". 

The auctioneer then started the auction proper by stating the offer that she was holding was for $1m, that is the opening bid, that's the reserve price, on the market at $1m. 

The auction then ran on for around 5 minutes during which time two parties competed to buy the property. I believe one of those parties was the party who placed the $1m bid and the other couple were unknown. The property sold for $1,050,000 after 6 bids.