Real estate agents will increasingly need to diversify their services if they want to remain profitable in business, RE/MAX Australia owner and managing director, Michael Davoren has claimed.
Speaking at a mini conference held by mortgage broker aggregator, Vow Financial, in Parramatta NSW earlier this week, Mr Davoren said there is mounting pressure on real estate agents to reduce their commissions.
As a result, Mr Davoren said agents who wish to remain profitable must diversify into other services including mortgage broking.
“While every state is different, I can safely say there is mounting pressure being placed upon real estate commissions,” he told Real Estate Business.
“We have already seen a lot of discounting businesses come to the fore, while many haven’t lasted, I don’t think we have seen the end of them.
“If that is the case, and real estate agents want to retain some sort of profitability, then they have to look for other forms of income.
“Real estate agents must diversify into other financial and property related areas.”
Mr Davoren said referral relationships with mortgage brokers work particularly well as the two services complement each other nicely.
“If both parties are committed to providing the best possible service for the end client, the relationship will work well and be very profitable for both brokers and estate agents,” he said.
According to a recent Real Estate Business straw poll, just over half of respondents said that they did not offer finance services to their clients.
Of the 305 respondents, only 4.6 per cent said they were considering offering financial services and 37.7 per cent said they had diversified their business by providing finance services.
A variety of real estate groups already either have mortgage broker divisions, including McGrath Estate Agents with Oxygen Home Loans and LJ Hooker with LJ Hooker Home Loans or, as in the recent case of Richardson & Wrench, have set up arrangements with independent financial services groups.