Around one in 10 real estate businesses in South Australia ceased operations in 2011, a senior industry executive has claimed, and more could close their doors as principals near retirement age and agencies underperform.
“I have seen unprepared offices go under because they are unable to adapt to the current climate,” Raine & Horne SA chief executive, Kevin Magee, told Real Estate Business.
“Our sector's biggest failing is that principals only see their offices as a real estate business rather than a business in real estate. It completely limits the way we do business exchanges and I see a lot of offices closing because of that.”
According to Mr Magee, the reasons for most office closures relate to a combination of baby boomers trying to exit the business for retirement, and offices that have only come into the market in the last two years. Many of the latter attempted to slash commissions in an attempt to garner business, he said.
“What we have right now is an ageing workforce, but the market conditions aren’t conducive to retiring or hiring new staff in large numbers. This year is going to be about redefining of real estate practice. Those who can adapt will do well,” Mr Magee said.
“While many groups have come a long way in terms of evolving their branding and marketing of the whole group, you still see many individual agents working according to a 1950s business model. Either they are closing a sale or chasing a new listing, but when the market is flat and the turnaround on these tasks is much slower, they’re unsure of what else to do. They become slaves to the business with little reward at the end.”
But the answer to surviving the tough SA market is investing more in professional development and creative marketing strategies, he continued.
“Over the last three years Raine & Horne SA have implemented many initiates to put us in the great position we are today. We have created a youth grant for young people to come into the industry and move up to business ownership as a way of combating the aging population within the business,” he said.
“We have also introduced management development that trains agents in ways to make their offices more efficient and modern, hence making them more desirable for a buyer who is interested in taking over the business.
“Social media also plays a big role in our marketing strategies in 2011, the group established itself as the number one represented real estate brand in SA on YouTube, LinkedIn and Twitter.
"It was the first in SA to adopt QR codes in print advertising and signage.”