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

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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.