Agents around the country are concerned about what are called ‘third party sites’ that sit between the agent and the seller and offer to put potential sellers in touch with the best agent. While that might not be the case, Greg Dickason says that these sites are becoming more common and more popular and agents need to adjust their model. What does that mean for you?
Kevin: You’ve heard us talk in this show about these third-party sites that will offer to put you in touch with a real estate agent. One of the ones we have mentioned in the past is Open Agent. There are other referral sites as well. I want to have a look at that now in my conversation with Greg Dickason from CoreLogic.
Greg, what’s your take on these? There obviously has been a huge uptake on these in Australia. Why is that?
Greg: Hey, Kevin. I think there are multiple reasons why there has been huge uptake. Some of it is simply they’re better at getting their brands in front of consumers, so when you go into Google or something and you search for “property,” their brands will pop up and the advertising is slick enough that people will click on it and go through.
Some of the uptake has simply been that they’ve been able to get right up front with consumers, but I also think some of the uptake has been where they have had a good experience with these type of sites that they’ve actually referred on and told their peers and their contacts about their experiences.
So, I think some of it is about their service and some of it is just about the advertising.
Kevin: Yes, because I’ve heard a lot of criticism from agents who aren’t on those referral sites – in other words, they haven’t agreed to pay them the 20% referral fee – so they’re missing out, some of them being very good agents too.
Is this only a matter of time before, as agents, we need to be looking at these and embracing them more, Greg?
Greg: I think it’s a two-way street. I think there’s going to be a shakeout in the industry. Open Agent, for example, is very good at what they do and they tend to do a lot of value-add, so they’ll actually help an agent if they’re used properly. But some of the others don’t necessarily help the agent; all they do is get a digital lead that would have come to the agent anyway. I think there’s going to be a shakeout on that side.
I think from an agent’s perspective, it’s something to look at as part of your mix of how you get customers. Ideally, the best way you get customers is through phenomenal service so that people will refer you and so their friends and family will use you, but if you’re not going to get leads through that, then which one of these sites do you work with to make sure that they give you the right kind of leads so that it’s actually profitable for you to work with them?
Kevin: Are we seeing these sites also in fairly popular use overseas as well, or is it just an Australian phenomenon?
Greg: It’s largely an Australian phenomenon. I’ve seen some of them overseas, but the Australian phenomenon seems to be quite strong now. I think it’s been a lack of digital advertising from our agents, so it’s almost a need in the market that’s being met by them.
Kevin: Is this highlighting a gap in professionalism with Australian agents? Is this the fault of the Australian agents that these people have been allowed to come in?
Greg: I think some of it has been because prices have gone up quite a lot. There’s been a perception in the market that agents get a fairly big commission, which is not actually true. If you look across the world, agents’ commissions in Australia are in a lot of ways some of the lowest in the world.
But there has been a perception – especially for multi-million-dollar properties – that the value hasn’t been as much as what the seller or the vendor expects, and so some of this has made it fertile ground for these kind of digital businesses to come in.
Kevin: Some of the marketing costs are very high too on selling a property in Australia. We talk about 1% of the value of the property should be spent on marketing, but quite often we see that having to be expanded with the introduction of the Internet.
Australia being probably the most expensive… Not “probably”; I understand it is the most expensive country in the world to advertise a property on the Internet. Has that caused this feeling of “It’s just too costly, agents make too much out of this,” people thinking that the agent also makes the money out of the marketing?
Greg: I think so. I think there’s a lot of pushback on some of the marketing costs – perception that the marketing costs are high. And unfortunately, with an agent, they have to pay the marketing costs up front even if the house or the property doesn’t sell, whereas in their case, they only get commission if it does sell.
We have actually encountered a few solution providers out there that are looking at ways in which they can reduce those marketing costs up front and basically insure your marketing spend so that only if you sell do you have to fully outlay your marketing costs. So, there are some interesting innovations coming in that space.
Kevin: Greg, that’s really exciting news. Thank you very much for joining us, and when there is an update on that, we’d love to hear from you. Thanks for your time.
Greg: No worries, Kevin.