By Bernard Hickey
Anger is building over decisions by real estate agency groups in Hamilton and the Hawkes Bay to pull more than 1,700 listings from Trade Me Property.
A vendor who contacted Interest.co.nz said she was disappointed and angry to find the listing for her house had been removed from Trade Me without consultation over the weekend.
"We're very serious about selling our property and we'd rather it was on Trade Me where you do get a lot of views," she said.
The vendor, who asked not to be identified, said she had complained to her agent after looking on Trade Me and finding the listing had been removed. She said she did not accept the agent's explanation that the listing was now available on Realestate.co.nz and this was a new company policy.
"Everyone goes to Trade Me. I've never heard of Realestate.co.nz," the vendor said, adding her listing had been difficult to find on Realestate.co.nz.
"I was really angry. I was kept in the dark and my commission is paying for any advertising. All it would have taken was a phone-call, but there wasn't any consultation at all," she said.
Trade Me has also said it was disappointed with the actions of the agency groups. Trade Me has sent letters to those vendors whose listings had been pulled, offering to reinstate them for free. The vendor who commented to Interest.co.nz had accepted the offer of a free listing for those whose listings had been pulled.
Interest.co.nz reported earlier that Monarch Real Estate Harcourts, Lugton's Real Estate and Lodge Real Estate in Hamilton had withdrawn their listings on January 17. Tremains, Sothebys and Property Brokers in Hawkes Bay have also since pulled their listings over the weekend. They argued they could not accept a quadrupling of fees by Trade Me, which has changed the structure of its fees for these offices from a capped monthly fee per office, to an uncapped fee of NZ$159 + GST per listing. See the changes detailed here at Trade Me Property's trade marketing section.
Trade Me said it had changed the fee structure to better reflect the value of the listings, given surveys showed half of property buyers in New Zealand found their homes via Trade Me and the website delivered over ten times more buyers than more expensive newspaper and agency magazine advertising.
See more on Interest.co.nz from research commissioned by Trade Me and other sources showing 47% of buyers found their homes through Trade Me and only 9% found their homes through newspaper or real estate listings magazine advertising. It also shows 81% of buyers used Trade Me to search for property and 68% said Trade Me was their primary search tool. The research found 35% had used Realestate.co.nz to search for property and only 6% used it as their primary search tool.
Helm says higher Trade Me fees justified, agents actions 'pathetic'
Former Realestate.co.nz Chief Executive Alistair Helm described the actions of the agents as amatuerish, embarrassing, pathetic and possibly illegal.
The Auckland-based Helm is now a real estate commentator and the publisher of Properazzi.co.nz.
He said the agents may be breaching the clauses of the Real Estate Agents Act that stipulate they must act in the best interest of their clients at all times, given property buyers now mostly used Trade Me to find property. Anything less would be limiting the potential pool of buyers, he said.
"When it comes to generating interest for property there really is no medium by which you generate interest outside of Trade Me. It's own data, validated by independent research, shows that 80% of all the time people spend looking at Real Estate is spent on Trade Me," said Helm.
Helm said the agents were taking a cavalier attitude and a big risk that clients would not get the best price because the highest possible number of buyers had not found the agents' properties.
"It's a very shortsighted and kneejerk reaction to something they should have thought about a long time ago, which is how are they going to deal with the fact that print is no longer relevant," Helm said.
Listing fees would inevitably rise to reflect the increasing use by buyers of online listings rather than print advertising, he said, pointing to the much more rapid switching of the relative shares of advertising spending in real estate markets in Britain, Australia and America, where around 50% to 100% of spending was now online, rather than in print.
He said New Zealand's real estate industry still spent more than 70% in print and less than 30% online because print advertising helped advertise and reinforce the major franchisor brands, including LJ Hooker, Harcourts, Bayleys, Ray White and Barfoot and Thompson.
Helm said he expected agents and home owners could eventually pay as much as NZ$1,000 per online listing, citing examples in Australia, where online listings were as much as A$850 a month per listing.
"If the agents are baulking at NZ$150, get real, it doesn't get any cheaper. And how much of their money or their clients' money are they prepared to spend in the Property Press? About NZ$1,500 per listing per week in Auckland. And they're baulking at NZ$159 for an unlimited time on the genuinely biggest medium by which you reach and audience?," Helm said.
"It makes the industry look pathetic and amateurish and self centred and money grabbing," he said.
All about branding in print
Real estate agency groups would have to accept higher online listing fees and eventually give up their long-established and lucrative arrangements with publishers such as APN, which owns the New Zealand Herald and Property Press, and Fairfax, which owns the Waikato Times, the Christchurch Press, the Dominion Post and many other community newspapers.
"They've (agents) had it great for so long. They've not really paid a genuine cost. It has quadrupled, but that was only because Trade Me was working hard to establish their audience base and demonstrate the value of online through lead generation. And now Trade Me is saying: OK, let's make this competitive with the medium you prefer to use (print), which represents around 70-75% of the dollars spent in the industry."
Helm said agents were currently prepared to charge clients NZ$1,000 to NZ$1,500 for a page of advertising in the Property Press, "which doesn't generate any leads and has no audience."
"It's in their best interest to perpetuate print media because it’s the most effective brand marketing that is available for their brands," he said.
"That brand presence and colour and design where the property is second to the brand suits their objective, plus the industry of print media is very much in bed with the (real estate) industry, spending a vast amount of money in hospitality and rebates and education to perpetuate the industry's love of them."
'Anti-competitive'
Helm added that the use of print to reinforce the brands of the big chains also served to stymie competition from new entrants.
"It's stops others establishing their position, whereas the web democratizes it, because the web is structured around what people want, which is location and price. You can't sort the Property Press into location and price. It comes to you sorted by brand because it's in the Property Press' best interest and the advertisers' best interest," he said.
The franchisors remained fixated on print advertising despite the evidence showing most buyers used online listings as their main way to find a home, he said.
"The training courses that real estate agents are entirely taught for print media, which is how to sell it and use it, and how it's great for the brand, which is good for the agents."
'Reaction may kill golden goose'
Helm said agents had better be careful not to overplay their hand for the sake of NZ$159 per listing, given home sellers could use their power to pay around NZ$300 to list privately and avoid having to pay around NZ$18,000 in commisions.
"The agents don't have the power today to boycott Trade Me. The consumer has the power because their strongest suit is private listings," Helm said.
"It costs the home owner NZ$300 (to list privately) and the home owner's going to pay NZ$18,000 for the commission? This is stupid. Why is an agent fighting over NZ$150 when they want to justify a commission of NZ$18,000 to sell the average home today," he said.
"It's so amateurish and embarrassingly unprofessional in my view."
'Collusion?'
Helm also questioned whether the revelations about agency groups talking to each other about the boycott represented anti-competitive collusion under the Commerce Act.
"That to my mind is very close to what the Commerce Commission considers collusion," Helm said.
"They haven't thought long enough about what they're doing."
45 Comments
Sounds like sour grapes from Helm given that he is no longer in charge at what soon may be the biggest real estate website in NZ.
Realestate.co.nz should have been pro active years ago and never allowed trademe to gain market control.
Personally I remember the forerunner to realestate.co.nz which was realenz.co.nz having many thousands of listings in 2000 when trademe had zero - surely this was pure mismanagement of what could have been an incredibly valuable asset had it never lost market share.
Chris J
I can assure you there is no sour grapes on my part. I have moved on. I left Realestate.co.nz because my view of what they needed to do to remain relevant and achieve a position as a credible competitor to Trade Me was not aligned to the views of the board and the shareholders at the time.
The core issue is that the website is not truly industry owned. To be industry owned requires equity fro the customers - those real estate companies like Lugtons, Lodge, Tremains and Monarch - these are the true customers and should be the shareholders as they paid the monthly fees where as the sharehlding in Realestate.co.nz is owned by the franchisor companies who with the exception of Barfoot & Thompson do not pay for the servcie.
Sure RealEnz was dominat in 2000 but then Trade Me di not exits. In 2005 RealEnz was still dominant when Trade Me Property started.
When I joined in 2006 and introduced a monthly fee of $200 for unlimited listings I spent the first 6 months talking constantly to almost all of the industry trying to justify the fee. I stated that if we did not support the industry site then Trade Me would take over this market and they would end up paying $1000 per month per offfice as was the price paid at the time by Australian real estate companies for Realestate.com.au. Thankfully I got 95% support and we built Realestate.co.nz into a great site.
I feel disappointed by the actions of the industry not for how it will impact Realestate.co.nz, Trade Me or the print media but for the reputational damage t will do for the industry.
Alistair Helm
Former CEO of Realestate.co.nz / Founder of Properazzi.co.nz
Thank you for the reply Alistair.
Personally I can't understand why agencies such as Harcourts ever started using trademe when in the early days they issued fines and bans for their salespeople if they used trademe.
Giving away control of advertising whether it is printed glossy magazines or websites seems illogical given that the agents not only supply the content, they provide the revenue stream, and control the distribution (of magazines) and direct buyers to the websites.
If the agencies collectively walk, trademe realestate is toast.
I have always preferred realenz/realestate but after 15 years the reality is that there is virtually no more functionality offered by trademe property today than in the early days (or realestate for that matter).
Where is the evolution and innovation?
Well they can walk over to http://sella.co.nz . Is that the old Trade & Exchange since taken over by NZ Herald?
It looks like it is cheap as chips.
Just needs a bit of support and Trademe would have to compete.
I have recently bought and sold 3 homes via Trademe.
I created my own adverts, photographs etc. All properties sold / bought within max of 3 days.
Real Estate agents need to wake up.
No commissions, happy sellers and buyers at minimal costs.
Our only costs were Trademe and the lawyer to do propeerty transfer.
All documents needed can be downloaded.
Have a word to a property lawyer Ricardo, be careful that with increasing number of private sales you might run the risk of being identified by the government as a real estate agent and charged with operating without a licence. I'm not sure of the detail but the fines and actions are serious enough to getting yourself up to speed.
Excellent comments Ricardo99.
I was one of the few agents that supported in main the changes proposed by the then MP Clayton Cosgrove to the Real Estate Agents Act and publically stated where I stood.
I coped flak, ridicule, personal verbal attacks on my character and such like form a miniority I admit but quite a large minority I might add.
I wasn't fazed or surprised by such personal attacks.
After over 20 years in the business I knew what I was getting into and knew many in the agency business had their heads in the sand,were reluctant to accept change, were ignorant , living in the past and greedy.
I see the same symptons appearing to those that are boycotting TradeMe and attacking Alastair Helm's performance at real estate .co.nz.
They do need to wake up and wake up quickly.
The public might well ask what do agents really bring to the table...?
one thing for sure it seems certainly not marketing expertise or knowledge and servicing their clients.
You comments are very true in my view and as yet the public haven't cottoned on and when they do......
... most of us potter around on TradeMe every day ... having an idle look at the weird , the wonderful , and some bargains ... and whilst we're there , we have a looksie in the real estate section .... it gets eye-balls onto it for a multitude of reasons besides just houses ...
Realestate.co.nz is just one thing , one product.... no point to going there for anything other than property ...
To those boycotting agents , $ 159 out of a cushy $ 18 000 fee is less than 1 % of the commission .... grow some nads , guys !
"It costs the home owner NZ$300 (to list privately) and the home owner's going to pay NZ$18,000 for the commission? This is stupid. Why is an agent fighting over NZ$150 when they want to justify a commission of NZ$18,000 to sell the average home today,"
My experience with real estate agents, at least the better ones, is that they'll either sell a home much faster, or for more than $18,000 extra, than an private listing would do. It would not surprise me if going the route of a private listing was false-economy for the seller.
If the trademe listing was part of the contract with the agent, and the agent isn't honouriung that contract, surely the vedor has a case. Agents were previously getting a very good deal. $150 is nothing compared to the commission agents get, where the rate is one of the highest in the world. Trade me property listings aren't great, tiny res photos, and only a limited number allowed, and no video walkthroughs. But most visitors viewing properties are viewing it on trademe over other websites.
Alastair Helm's logic is all askew.
When he hires a lawyer at, say, $250 an hour, does he ask them to pay for disbursements which might total just one or two per cent of the final bill? I suggest he doesn't. He is probably happy to receive their expert advice and is happy to pay for that advice. He would not be so cheeky as to ask lawyers (or any professionals) to pay for disbursements or any other add-on costs. But he expects real estate agents to pay for additional costs. I can only assume he doesn't like agents. Indeed, he has been critical of them in the past.
If, as he suggests, a fee of $159 plus GST is cheap, presumably vendors will be only too happy to pay it.
He compares NZ to Australia, for a reason that isn't at all clear. Australia is a high wage economy, NZ a low wage economy.
Sellers can be on Trademe if they wish. The only difference now is that they will have to pay to be on there.
Alastair refers to commissions of $18,000. He seems to have plucked that figure out of the air. In my region, the average (media) sales price is $220,000. Agents would have to charge about 8% commission to get $18K. That would apply elsewhere too, except maybe in the main centres.
One final point: the $159 is real and an up-front cost. The "$18,000" commission is notional (and grossly over-stated). It is only paid when a property sells. Some properties do not sell, or maybe sell after they have changed agencies. In other words, agents won't be taking the $159 out of their commission because there will be no commission.
Alastair's comments were one-sided and disappointing for someone in the industry.
Do you think we the public are stupid Committed?
Your region as you quote above is not your typical. Let's talk about NZ as a whole and you will see that Alistair's sums are not as you suggested, seemed to be plucked out of the sky.
Do your homework and your sums and come back to us with the results.
Your comments on solicitor fees.
One key point Solicitors are generally not getting nowhere near the fee that agents are presently getting if based on a hourly rate.
Do the exercise.
Compare the cost of selling a home in the present , mostly by auction here in Christchurch so therefore most if not all the marketing costs and auction fees are paid for by the seller.
Also take in the nunmber of days a property takes to sell and the clearance rate at auctions, plus the average sale price , all of which such statistics are provided br REINZ so we can assume are accurate and up to date, factor in the agents fees and than work out the hours the agent actually puts into achieving as unconditional residential sale and share with us the answer.
Finally answer me this Committed.
How do you justify your fees assuming they are based on the national average? What does the modern day agent bring to the table for their client.?
A thought to ponder on .
Over 25 years ago when I first entered real estate the agent paid all advertising costs and print media was Hundreds of dollars per insert if in colour with a border. The agent paid for any letter box drop and flyers.
Sole agencys were not in and of course technology like the internet , cellphones etc were unheard of.
Land line phone costs could be quite horrendous and were paid by the agency, as were property search fees.
Yet agents and sales people made a damn good living out of their business.
With marketing costs now only a fraction of what thet were and other substanial reduced cost why are agents moaning that they can't absorb a increase in TradeMe fees which are still very modest in my view.?
Modest?
I must be mis-reading the press announcements on this subject
Until now TM has been charging RE agents an omnibus fee of $200 per month for unlimited listings. Now the fee is going to $159 per listing
So, for an agency with 1,000 listings that becomes $159,000 per month
That's a lot to absorb, or am I misreading this
Maybe you are talking about auckland, where house are selling easily. However in much of the rest of NZ, many houses stay on the market for many months, even years with agents. Each time you renew a trademe listing, it goes back to appearing like a new listing, only the website views get carried across.
If it sells within two months, then agents have nothing to complain about, and 100% of the cost is passed onto the vendor anyway. It's not as though the agent is going to lose anything from it, and they actually make a margin from reselling a trademe listing to vendors. The old arragement was a great deal for agents, but probably not sustainable long term as a business model for trademe. It was probably initially introduced as a flat fee, to get agents to signup, but now it has increaed inpopularity and is more effective, I think they are still getting great value for money. When I listed a property with an agent, they provided stats to me, and 80% of website visitors came from trademe, and hardly any from either their own website or the realestate one.
I have also sold a property on trademe by myslef, and would love to only pay what agents get to pay. If anyone should be a little miffed with the fees, it should be private sellers, as those appear to have gone up a lot, and agents are getting a far better price to list properties than non agents. In my situation I had it on for 5 months, and rolled it over until sold.The only difficulty selling privately is the negiotation, as agents are more pushy to get the sale, and can turn fence sitters into buyers. That is where a good agent is worth their money over a poor one.
Agents don't have to use the trademe service, as trademe isn't a monopoly. But vendors will likely chose an agent who will use trademe over one that doesn't
Vendors are also charged other fees which they get charged whether the property sells or not. eg Listing fees, advertising fees (newspaper listings, letterbox drops, signage etc), and the agents make margins on all of those, whilst also advertising the company in the advert. So the trademe fee doesn't come out of the commission anyway, so the amount they get from the commission is irrelevent when it comes to trademe.
Yes they are, and it makes you wonder why agents quote the mediam instead of average.
Median is very inaccurate when there are only a few houses sold in an area. eg If only five houses sell in an area, and three sell for $200,000, and 2 sell for 2 million, then the median house sale price in that area is just $200,000, which is very in accurate. Especially as the average would be close to 1 million.
You maths is incorrect. Must have gone to a NZ school.
Your inital comment re:inaccuracy is correct.
The median is 920k but as none of the properties were in that range it is indeed inaccurate.
The difficulty is that the price range is bi-modal. The wide spread of the data population proves that, for whatever reason, there are marked characteristic differences between the properties. Thus it is unlikely that they can be grouped together in any meaningful way that includes that characteristic. (eg year of the sale? size? location? condemed/not condemed?)
Thus the only way to meaningfully show an average for the group, is split the group along a line related to the characteristic diffence. Using mode average is an excellent way to coarsely process such data. most common occurence of your population is around 200k and most common occurence of the rest of your population is around 2M. :. split to 2 groups, find the characteristic, test if it holds true outside the small group, go from there. Far more useful information and worth the effort to report/know.
PS the "standard deviation" is the technique/formula used to identify the spread issue you've identified.
I went to a NZ school ... some of my best sleeping was done at a desk in the maths room , and Rob's example seems plausible to me ....
5 houses sold : 3 of $ 200 000 each , and 2 of $ 2 million each .. ...
.... median sale price is $ 200 000 ... the middle one , i.e. number three in the sequence ...
... average sale price is $ 920 000 .... sum of $ 200 000 multiplied by 3 , and $ 2 million multiplied by 2 , total is then divided by 5 ...
Many leave because some of the shifty internal dealings.
You think your fresh starry eyed real estate agent with all the promises and not a lot of insider knownledge receives all (or even most) of the commission for their efforts...or even the full recognition/reward for achieving the close?
Many only work part time, and 40k is a heck of a lot for many. Especially as many agents do have a lot of spare time. I am constantly getting contacted by agents wnating to do free aprraisels etc and they go around the streets here, so they must have a lot of time on their hands to do those.
Its canvassing. Junior staff have to do it to build up portfolios, get their names in deals. The more houses on the books the much higher chance of getting a buyer/seller match up. It's all about the networking (and the beng ready to dump everything in your life and throw on your best suit and rush to a clients side to be fresh, clean, and happy, as if you've been waiting on their word all day)
You have to research why they are leaving?
Money might be part of the reason, but also work ethics,lack of training, the economy, never suited for the job and so on also I believe have to be considered.
To say thosands have left the industry in recent years while probably factually correct .
I also like to compare numbers overall year by year and put into the equation so it can reflect what really is happening in the industry.
The one thing no one seems to have touched on in TradeMe debacle is the manner in which the IRD treat agents.
In my humble opinion another reason why those boycotting TradeMe on their arguement they can't afford to absorb the cost of any increase is bunkum.
... compared to the cost of advertising in the print media , TradeMe is an absolute bargain .... a one off fee of $ 159 , to keep a listing posted , with heaps of information and photos ...
The boycotters are fools , they just don't know how lucky they are .... contact Fairfax guys , and run a similar sized ad in one of their daily newspapers , until the listing sells ...
... then tell us which of them , TradeMe or newspaper , is better value for you ....
And as for realestate.co.nz .... most folks have never heard of it .... everyone I know goes to TradeMe , it's become their default setting for looking at property , mine too ...
What codswollop GBH.
I advertise in the Press and get a house let with one $9 ad, or should I pay trademe's $129 and get untold inane emails from people who never respond or dodgy emails from Nigerian scammers?
Trademe are overpriced thieves who provide an excellent resource for: burglar's wanting to steal my hot water cylinders, access to my contact details for those Nigerian scammers and for hopeless no hopers trawling ads for witless landlords to milk.
If a tenant or buyer is genuinely looking, they use all available avenues, and I'm afraid trademe is nothing special. The dopes that spend all day adding "views" to your trademe listings are not worth having.
I'll add GBH, that I have in the past (when it was $99 to list a private sale) listed 5 properties for sale on trademe.
On those I got 2 offers, one fell through and the other confirmed but defaulted and did not settle.
I also listed 3 properties on Sella back when it was free, I sold one of those from one of those ads.
I've also sold privately just from a sign on the fence before (which cost $0 for the recycled sign and a little ink).
Of the trademe ads I then listed them all with Harcourts and they sold 4 of them above my original expectation in a short period of time.
I haven't bothered with trademe since. Trademe is overpriced and ineffective and in general people don't like dealing directly with property owners so even though you may be paying large commissions you often get a better result selling with an agent.
A different perspective from a user
Having just been through a 2 year process of searching and locating and finally deciding on our next perch - here is our experience
While TradeMe was helpful, found that most of the advertisements were real-estate agents, which led me to the Real Estate Agency's web-site, which in turn, had a different cross-section of listings
One thing we learnt from that was which RE's to avoid or ignore
In all the searching Sella.co.nz never once popped up. Only became aware of it the other day in one of the comments here on interest.co.nz
On progressing through the search process discovered realestate.co.nz
That discovery was via TradeMe through to the RE's web-site on to Realestate.co.nz Months of searching used the services of both TM and RealEstate.co.nz
Once we narrowed the search possibilities down to a particular location we then became interested in the surrounding neighbourhood for which we used Street View on Google Maps. To get a feel for the immediate houses in the street. Then we were interested in what other houses were for sale in a particular suburb or particular street
For that we used Google
Search on "For Sale Street Name or Suburb"
Interesting results
Realestate.co.nz produced all the "SERPS" in the world
Plenty of "SERPS" from individual RE's
Trademe.co.nz was totally absent
Never once saw Sella.co.nz ever
The web-sites of both TM and RE did not provide a satisfying user experience
TM less so than RE
OK to get an initial feel for prices etc
Google was better for the finer detail
The Property Press was just glossy eye-balm - useless
Realestate.co.nz provided the better user experience
The one we finally chose was not discovered via TM
Firstly iconoclast, sella was essentially shut down a couple of years ago and no longer is available for free listings (now just part of nz herald).
Secondly GBH, trademe is of no use because genuine buyers actually visit the local agencies and very quickly find the local methods of advertising.
In Chch it's the Bluebook and the Realtor as the main sources with the Property Press and Saturday and Wednesday's The Press also very important.
In Dunedin it's the Property Press and Saturday's ODT as the main sources.
In Auckland, the Property Press and Saturday's Herald are the main sources with numerous smaller publications worth keeping an eye on too.
In Wellington it's the Property Press and Saturday's Dom Post.
Buyers find property easily enough, no need to pay a premium to use trademe. Look at Auckland or Christchurch, all you need is a sign on the fence in a no exit street with no passing traffic and you will still get half a dozen buyers!!
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