Franchise promotes lower-fee strategy

Franchise promotes lower-fee strategy

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One franchise boss has bucked the trend by advocating a business model that involves flat fees and lower commissions.

Go Gecko chief executive Noel Scully told Real Estate Business the price-focused strategy has given the 19-office Queensland franchise a competitive advantage.

According to an in-house study of 1,000 sales last year that had a median price of $450,000, the average fees were $7,500 for Go Gecko and $12,800 for the industry, he said.

Mr Scully said vendors appreciate having certainty on price, making it easier for Go Gecko to win listings in what he described as an increasingly competitive market.

“From an agent’s point of view, I think everyone is keen to sell higher-value property because there's more in it,” he said. “From our point of view, we're chasing volume.

“Securing the listings is ultra-competitive and that's where we have an advantage. The pricing offer is an advantage in that environment so the agents get more volume.”

Go Gecko gives its agents a range of fees, allowing them to negotiate a price with the client.

Mr Scully said that despite Go Gecko’s price-focused strategy, it doesn’t support the “cut-throat commission levels” he says are increasingly common in southeast Queensland.

“There are a lot more discounters in the market than there were before. We actually see some silly behaviour in terms of pricing, typically from smaller independent agencies.

“There are people operating for $3,000 or $4,000 per sale – you can't sell a house for that price.”

Mr Scully forecast that it would become increasingly common for agencies to offer flat fees with a possible success fee included.

“That practice has been interstate for some time but you don't see it very much in Queensland,” he told Real Estate Business.

“I think that's a mutual benefit-type scenario that helps the agent and the consumer and the client.”

Mr Scully said Go Gecko had ambitions to eventually take its pricing strategy to other states.

“It would certainly suit areas in Sydney and Melbourne although they're both very competitive,” he said.

RE/MAX managing director Michael Davoren recently said many Queensland agents have increased their commissions since the state’s fixed-fee model was scrapped in December.

[Related: Stop talking about price, says customer service expert]

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