Fresh fuel for the listings fire was added yesterday as chief executive officer of REA Group Tracey Fellows admitted to upcoming changes to the pricing model of its premier listings packages.
REA Group today confirmed to Residential Property Manager's sister publication Real Estate Business changes to the premier pricing model will be implemented around the middle of November, with its current rate of 250 different price points being cut down to a maximum of 12 price points used to evaluate the cost of the premier listings.
A spokesperson for REA confirmed the changes will allow everyone who uses the service access to the same listings price in the same suburb.
Estate agents believe the move could not have come quicker.
Ray White agent Robert Norgate said the listings portal had been carried away with its pricing structure recently and on the face of it, the proposed changes are a good concept.
Mr Norgate said he is skeptical about the change but open to the idea of suburb-based pricing.
“A lot of colleagues strongly disagree with the idea of suburb-based pricing, but based on traffic the whole idea could be a good thing,” Mr Norgate said.
“Activity in some suburbs doesn’t occur in the same way as others, and if the prices become cheaper in terms of location then that is a good thing … I have heard they will base some pricing points on average income in the area, but if they reduce the pricing points down to 12 that may not even be a factor – some prices I hear quoted are ridiculous.
“There is a lot of confusion around pricing from suburb to suburb and from what we have seen it is not very accurate … from what I see a vendor in Double Bay has a lot more scope to invest in marketing and should not be paying the same price as a vendor in Penrith – one property is worth $10 million, the other $450,000 maximum.”
Mr Norgate said enquires from the Domain website had increased over the last three to six months.
Managing director of Cunninghams Property John Cunningham said the industry had a strained relationship with REA Group for the last few years and the market-based pricing move broke the strain. Mr Cunningham said if the industry is looking for a knight in shining armour then it may be from another player.
“The pricing move is a definite reaction to the fact some agencies are facing four to five different prices in their own areas – just look at Palm Beach, where properties can range from $1 million to $4 million but the reality is what REA has gone and done with the market-based pricing concept shows a lack of foresight in terms of the impact of the day to day of an estate agent,” Mr Cunningham said.
“This is the first sign of possible change, with a new CEO and they are hoping the industry listens to what they say.
“The changes to the pricing points go a short way to making up for REA’s errors of its ways, but it remains to see what impact it will have.”
Domain chief operating officer Tony Blamey said it has been Domain’s business model to maintain a lower price point than REA and it has been a deliberate strategy to not just increase prices. Mr Blamey said only now are agents starting to see genuine competition in the marketplace.
“Gone are the days of unfettered pricing power,” Mr Blamey said.
“Agents have realised they do have an opportunity to push back on unacceptable price increases.
“We have seen that in some markets and think the reaction is a consequence to some pricing models.”