Real estate agents are fast becoming irrelevant to consumers, according to one leading real estate professional, and in order to combat this he has set in place what he believes is an innovative business model.
“There is a thin line between a real estate agent and a vendor,” Barry Goldman, general manager of LEDA Real Estate, told Real Estate Business.
“If you can sell your own car online why can’t people sell their own home?”
Mr Goldman, who has 40 years' experience in real estate, believes the industry is not giving consumers what it is they are after - value for money - and thus, over the last three years has developed a new real estate business model.
LEDA Real Estate operates out of one central office in Sydney and employs sales staff to work remotely from home offices. The staff are ideally parents who are very connected with their community (real estate background is not compulsory). LEDA Real Estate charge a 0.5 per cent commission fee no matter what the home is, and a $1,450 cost for marketing and an extra $500 if the vendor uses an auction campaign.
“We are not a discounting agency, we do not discount our fee - we ask for one flat commission rate and one marketing rate, there are no hidden fees. We are upfront with our consumers,” he said.
However, the biggest difference in his model is that the vendor operates the open home.
“Who knows their home better than the vendor?” Mr Goldman asked.
“LEDA staff will set up the open home and train the vendor in what they need to do, but the actual face-to-face relationship is developed with the possible buyers and vendor.
“They can tell them about the best place to put certain plants in the garden, or where the kids like to play.
“As a business, you are saving on overhead costs of having 10 open homes running every Saturday. If we wanted to we could have 1,000 open homes occurring every weekend.”
According to Mr Goldman, the way LEDA Real Estate is structured means the consumer receives a hybrid model.
“Consumers are not interested in paying some kid to stand at their front door and write down names,” he explains.
“I went to an open home recently and asked a young employee to tell me a story about the home - he said he couldn’t.
“If I were that vendor I’d be furious that I was paying people who know nothing about the property.”
Mr Goldman warns that agents need to start thinking differently or risk being left behind.
“The industry really needs to start thinking outside the box with how they run their business or they won’t survive in the current business climate,” he said.
At the moment LEDA Real Estate operate with seven sales staff in Sydney, with plans to grow into Brisbane and Melbourne in the next year.
LEDA Real Estate is also trialing a new model for property management, however it is yet to be launched.