Who’s really “disrupting” the real estate market?
I’ve been party to a number of conversations in forums recently where agents are commenting on the various threats to their livelihood – conversations about lead-generator/interceptor sites, vendor advocates and fee-discounters which I think in general are missing the mark slightly when they focus on these types of operation and rail against them and how they’ll “damage” the broader marketplace for agents.
In my view, there’s a place for advocates and the discount and do-it-yourself models, but let’s not get confused – all these platforms are really doing is monetising an existing practice for their own reward by expanding on a practice that’s been around for years, so they’re not true disruptors.
The advent of these DIY marketing sites and the like can, in many ways, be attributed to the public perception of agents and the mistrust the general public has of the industry, but also to the industry’s inability to create value around what they do, and then communicate to potential clients that there’s skill involved in marketing correctly and negotiating the best outcome for the client – it’s more than just sticking an ad online and waiting for the enquiry.
Importantly, from my standpoint as an advocate, what I can see is a much greater disruption to the traditional estate agent which is already at play – that of the media companies and their advertising portals; and agencies now need to define and communicate their value points in the face of what could be a very real, very powerful disruption to their business model.
Without being alarmist or trying to create some sort of conspiracy theory, the reality is that two real estate advertising portals have become dominant over the past couple of decades, and as part of their protocols, they’ve quietly gathered the names and contact details of anyone who registered to undertake a detailed search on their sites or made an enquiry, along with their property preferences.
As this information matures, they are able to build a very, very clear picture of the Australian property client – you’ll note I’m saying “property client”, by that I mean vendors, buyers, landlords and tenants in all facets of the industry, not purely residential.
Think about it – somewhere in the cloud sits all the data from every online real estate search or enquiry made in the last 20 years, and that information is marketing gold to these portals, and they can and do now market to property clients directly.
So, imagine if you will what would happen if they decided to create their own, branded, real estate companies with the sole purpose of transacting property – a duopoly of sorts – their reach would be vast and instant as their brand recognition is already national; a high number of the costs of operating a traditional, non-digital, agency would be offset within the framework of their current structure – from a marketing perspective they’re already highly visible; their costs would be greatly reduced as they wouldn’t need shopfronts, and they wouldn’t need anywhere near the number of staff that most agencies have to operate with. No agent or franchise group that I know of would be immune from their effect and they would change the landscape to the extent that agents could well face irrelevance.
At first there might appear to be savings for the property client, but as happens with this sort of market power, it would short-lived, and the benefit of this new landscape would evaporate rapidly.
If this duopoly does eventuate, it won’t be the good news that they’ll make it out to be for either vendors or buyers, as the real value of agents lies in their ability and skill as influencers, negotiators and marketers of property, and this cannot be replaced by a DIY approach to the sale or purchase of an asset of high value such as property.
That said, I’d just about bet that somewhere within the strategy of these portals is a view of themselves as a market leader in more than just their media operations. If it’s not, it most likely soon will be.