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