Mainstream media questions value of agents

Disintermediation has returned to the agenda after a major newspaper highlighted how vendors could benefit from cutting agents out of the loop.

A feature article in the Australian Financial Review charted the rise of disruptive for-sale-by-owner portals and their potential threat to the real estate industry.

One vendor who had sold direct to the public told the paper that he and his wife “have no idea” why people would use agents.

“Seriously, anyone can do a six-month course and take everyone’s two per cent. Agents come across like they have a black book of clients, but they don’t,” the vendor said.

“All you are paying the agents is for them to babysit your house for an hour a week over a five- to six-week campaign … it’s money for jam,” he said.

Clarke & Humel Property principal Michael Clarke, who placed seventh in the REB Top 100 Agents ranking, said the way for agents to remain relevant is for them to be able to offer clear value to vendors.

“Unfortunately, for the agents who aren’t actually adding value, they’re the ones who need to be concerned about the disintermediation of real estate agents,” he told REB.

“Most real estate agents are hard-working and add a lot of value. We’ve just got to get better as an industry about making sure that the value we add is continually reinforced by everything we do and then continually articulated.”

Mr Clarke said an agent’s value lies not in selling a property but in achieving the maximum price – and this needs to be explained at every listing presentation.

“Where the agent adds value is [where] the agent is a good agent and gets the process correct they can ethically influence someone’s perception of the value [of the property],” he said.

Richardson & Wrench executive director Andrew Cocks said while the industry cannot ignore the threat of disruptive portals, agents will always handle a majority of sales because the typical owner does not have the confidence to run their own campaign.

“The vast majority of people in the marketplace won’t ever want to put themselves into the confrontation of dealing with someone face to face when you’re trying to sell them your asset at a certain price and they’re trying to knock you down and buy it for as little as possible,” he said.

Mr Cocks also told REB that owners who bypass agents could cost themselves tens or even hundreds of thousands of dollars, even accounting for the saving in commission.

“In Australia, there’s not a lot of information about price variation that occurs [in] for-sale-by-owner transactions compared with agent-based transactions, but I know in the US they talk about a 15-20 per cent premium that is achieved for sales that are made by qualified people,” he said.

[Related: Real estate prepares for its Uber moment]

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