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One of the world’s great entrepreneurs has warned agents that they could be digitally disrupted just as his business once was.
Richard Branson told the Titans of Real Estate conference that his Virgin Megastores were rendered obsolete by iTunes – but that the Virgin Group was able to survive because it had diversified into other fields, such as mobile phones.
Agents must keep a close eye on how new technologies or changing consumer habits could threaten future income streams, according to Mr Branson.
“As an estate agent, you need to think: ‘Is there anything that could happen to us that could really damage us? How much of a threat is the internet? How much of an advantage is it? If those people we’re putting lots of business on the internet for ever were to turn around and start taking lots of business direct, what would that do to our business?’” he said.
Sales coach Aaron Sansoni, who also spoke at the conference, told attendees that they were naïve if they didn't believe the real estate industry was a prime target for disruption.
“Every year, your industry makes $6 billion of commissions in Australia alone – $6 billion. That’s how much you make between a buyer and a seller and just clipping a ticket,” he said.
“It’s the only industry in the entire planet of that level of money made that has not had 100 per cent tech companies coming in and changing it and disrupting it – it’s the only one.”
Mr Sansoni said the problem the industry faces is that many consumers have a low opinion about the ethics and skill of real estate agents, and so would consider cutting out the middleman and selling their home through an online alternative.
“Even if [only] 10 per cent of your market smells an opportunity to save itself $15,000, that is $600 million gone,” he said.
“Let me be clear: even if you can get me a better price, if there’s an opportunity to save $15,000, if we’re reasonable – will someone give it a go?”
McGrath Estate Agents chief executive John McGrath told attendees that agents have nothing to fear from digital disruption – provided they focus on “adding massive value” to their clients.
“There was a time and a place where you could’ve turned up and you could’ve signed an agency [agreement] [...] and eventually sold the property and got a reasonable price and probably built a fair business. Those days are gone,” he said.
“Now it’s about excellence and design and transparency and ethical brands and sustainability. There is a whole heap of new things that are really driving success going forward.”
The Titans of Real Estate conference was organised by Glenn Twiddle.
[LinkedIn: Should agents be worried about the threat of online rivals?]
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