PROFILE - Selling in paradise

It was 1971, the year in which William McMahon succeeded John Gorton as prime minister and a time when men dominated the property management industry.

It was also the year in which Andrew Bell, as a fledgling 17 year-old, began his real estate career, working in property management for Sydney-based Edwin W Harris.

Now CEO of Ray White Surfers Paradise and in charge of 240 people, Mr Bell feels his initial role, as a letting clerk, was a good way to move into the industry.

“It was incredibly beneficial because you got to learn so much about property,” he recalls. “First of all, you got to learn about blocked sewerages, electrical problems and all forms of construction, dampness coming through… I got to learn about people, their challenges, about paying rent and all the stories they tell you to get out of things – and landlords, and their expectations.”

Mr Bell’s subsequent move to the Gold Coast also taught him something about the industry’s demographics: “[Property management] was very male dominated until we moved up here to Surfers Paradise, and I was surprised to see there was a female property manager,” he says.

“Over the years up here, nearly all of the applicants have been females. We’ve only in recent times managed to attract males. We’ve got four or five amongst our 28 property managers.”

Mr Bell doesn’t believe the role is suited to one gender more than the other.

“I’ve seen plenty of organised males as well as plenty of disorganised females,” he says. “It’s just the nature of the person [that’s important].”

EARLY DAYS

Mr Bell moved to Surfers Paradise in 1989, having spent the best part of 19 years working in Sydney, including starting his own franchise in 1980 under the auspices of Electronic Realty America (ERA).

“It was a franchise group that had a lot of unusual features, particularly in Australia,” he recalls.

“They had two different programs: One was, if you list with us and we don’t sell your place, we’ll buy it from you.

“There was an incredible amount of fine print qualifying it. They did buy some amongst our group at the time, but certainly not through our office.

“The other [offer] was home warranty, when they bought a property from us they automatically got a home a warranty [in case] anything went wrong in the first 12 months.”

Mr Bell remains an advocate of working in a larger network environment. “We understood that being an independent wasn’t getting traction, and if we were going to mix it with the other guys who were franchises we just needed a little more horsepower. So, we joined ERA and we were with them for about four years, until the mid-1980s.”

However, the US parent group decided ERA was losing a lot of money in Australia, and so the business was sold to Ray White.

Mr Bell has been with Ray White ever since and having operated three offices in Sydney’s eastern suburbs, he moved to Surfers Paradise, an office that expects to have written more than $1 billion in sales in 2011.

Independents are doing it tougher, he feels, although he acknowledges that some also do well.

He believes that where the independents have particular relevance at the moment is in the individual names that have a relationship with their marketplace. “But as those people leave the industry or retire, the relevance of that name or that identity will start to fade,” he says.

“With the world moving more to a national and international type of market, those businesses are going to find it hard to get the economies of scale they need to be relevant beyond their local market,” he says.

And vendors like what Mr Bell and his team – as part of a bigger network – have to offer.

“I think what people look for is threefold,” he says. “One, they’re looking for a strong organisation. They want an agent with a lot of resources, who can show you how you’re going to get the property out there.

“The second thing they look for is great service. Everyone promises that, and that’s where we can probably compete equally.

“The third thing I think they look for, increasingly, is evidence that you can do all you say you can do. They’re looking for an agent with points on the board.

“The first, your strength, is how you win your listings. I think, increasingly, people are going to say, ‘how [much reach] has your internet site? How big is your database? What’s your presence in the local media? And how strong are you on the internet?’

“It’s hard to dominate if you’re a one-man office.”

IN-ROOM AUCTIONS

Mr Bell’s speciality is in-room auctions, which he began doing in 1975. The benefits of this selling method are numerous, he says.

“One, you’re guaranteed a crowd,” he says. “Second is that you have a structured environment. I’ve had onsite auctions where there’s been a bloke trying to stare down people at the front of the crowd. Also, I find that when people are wandering through the house just prior to when the auction is on, they’ll hear comments like ‘Oh, the rooms aren’t that big, are they’ – that can be off-putting.

“We will do onsite auctions though as there are occasions when we have a property that we see as something special. You could imagine the crowd being there on a Saturday morning, on a glorious sunny day, going ‘This is where I want to live’.”

Vendors also feel better about the in-room auction process, to the point where it’s now one of the most common ways of selling property on the Gold Coast.

“Most people are happy because they don’t like the thought of hordes of people wandering through their house,” he says. “At our auctions, they can sit in a room that’s adjacent so they don’t have to be in [the auction]. They just feel more comfortable.”

TOUGHER TIMES

While Mr Bell has enjoyed plenty of success during his career, current market conditions on the Gold Coast have been testing.

“The volume of sales on the Gold Coast has dropped – for all agents – by 60 per cent since 2007,” he says. “It’s been a dramatic decline.”

Apart from Cairns, the Gold Coast has been the Queensland tourist area hardest hit, much of it due to a rampant Australian dollar – and all this on top of the impact of the global financial crisis.

“As a result, we’ve suffered with four years of price declines,” he says.

These developments have led to some changes in Mr Bell’s business. “We haven’t put anybody off, but what we’ve had to do is grow our market share, which we have been doing substantially,” he says.

“We do a lot of mortgagee work and we win that because of the results we’re getting. The diversity of our operation means we’re doing a lot of things that single offices can’t do. We handle commercial; we do hotels [Ray White Hotels]; we did management rights the other day; we can handle boats [Ray White Marina]; and we can do houses and apartments.

“We’ve [also] worked very hard to expand our property management [business],” he says. “We’ve got 2,500 properties under management now, and we’ve got strong growth occurring in that area.”

“The other thing we’ve had to do is work harder on attracting buyers from outside the region. In the higher end of the market, in the higher price brackets, as much as 60 to 70 per cent of our sales come from outside the Gold Coast region.

“The biggest market of all for us is Brisbane, followed by Victoria, then by NSW, and then overseas. We’ve had to shore up all of our activities and all of our marketing in those areas.”

Mr Bell’s office has also completed 80-odd sales from overseas buyers this year and the expansion looks set to continue. He now has operations in Singapore, working with another company there; in China, where he has his own operation; and in India, where he has sales representatives working on his behalf.

REVENUE VERSUS COSTS

While as CEO, Mr Bell oversees Ray White Surfers Paradise’s entire operation, he also maintains a hands-on interest in the company through its prestige division.

“I run my own team because I like to be close to the market and involved in it and so I still go out and do presentations and meet sellers.”

A veteran of five real estate cycles, what does Mr Bell believe are the key things principals should focus on in tougher times?

“One is to continually look at ways to have greater efficiency to cut costs,” he says. “At the same time, you’ve got to be looking at getting growth in revenues. You would expect they would be counter to each other, but that’s the two focuses you have to do.”

With revenue growth, it can concern either the type of ‘product’ you sell or the commission rates you charge.

“A lot of people think that can’t be done, and that the only way to win business is by cutting my fees, but that doesn’t reflect a good strong business,” Mr Bell says.

Improving efficiency can be as simple as saving on energy costs and he saved around $1,800 by changing to energy-efficient light globes in the office.

As someone who runs a large business, one thing Mr Bell won’t accept is the idea that somehow the fundamentals of a good business change.

“What I do today is what I used to do 20-odd years ago, but on a bigger scale,” he says.

“It’s been built on the same fundamentals that helped us grow from one to two to five – that’s still the core auction business, and giving great service to people. It’s almost as simple as that.”