A highly targeted approach to recruitment and locations, along with a desire to build a business his way, has served Peter Peard well, he tells Real Estate Business
TURNING $10,000 into a seven-office business that generates $32 million in sales commission revenue and incorporates a rent roll worth $12 million is no mean feat – plus, there’s another three offices coming soon.
Yet that’s what Peter Peard, founder of Perth-based Peter Peard Real Estate Group, has managed to do over the past 15 years.
While the business was originally established to sell blocks of land on a big estate in Perth, several associates were keen to set up a residential agency business and they helped to change his mind.
Mr Peard’s initial reluctance was linked to the way he saw the local residential agency industry – something akin to a “cottage industry” that didn’t generate much profit, and where principals could be held to ransom by sales agents continuously looking for pay increases.
“I’d seen too many [principals] run businesses like that and work for 30 years and walk away with no money,” he says.
That wasn’t going to be the way he ran his business.
“It was my way or the highway,” Mr Peard says. “I’ve maintained that attitude through the whole business. Fifteen years later, I’ve got the business to where it is, without being arrogant, but with the same attitude.
“If you want to be here, great; if you don’t, that’s OK as well.”
“We pay above-average commissions, but we still make enough,” he continues. “We work on volume – we’ve got big volumes, so we can make good money out of the business. So, it went from there.”
BUILDING A BRAND
Mr Peard says his brand, which targets the “mid to top end” of the market, developed from taking a professional approach to marketing and sales. This included employing a marketing person to produce his listing magazine, and creating signboards that were a step above what was then on offer.
“Our normal signs [cost] $500 to $600 each, and our premium signs are over $1,000 each,” he says. “We’ve got 1,500 of them out there at the moment, [or] $1.3 million worth. We invest a lot of money in the signs, and we did that to create the profile.”
He hopes consumers perceive his company “as being good operators, honest, ethical, getting things solved – like our days on market would be half the industry average, I would think,” he says.
A post-sale vendor survey mostly comes back “spot on”, Mr Peard says. “If it [doesn’t], we’ll confront it and find out why it wasn’t right. A lot of clients come back to us because we’ve dealt fairly with any problems.”
Mr Peard also targets the corporate market with signage at West Coast Eagles AFL games. “We’re the only agent [group] that does things like that,” he says. “We want to be seen in the corporate arena, we are corporate, and that filters down.”
He is also very clear about the group’s online strategy: “We’re going through a process where, over the next six to 12 months, I’m going to pull probably 90 per cent of our spend [from] the newspapers and just go internet-based, throwing more money at realestate.com.au, REIWA.com and Domain.com.au. I think it’s the only way to go.”
A key point of difference between Mr Peard’s group and others in WA is how his office network is developed and structured.
At the time of writing, the network was busy building three more offices in Leederville, Canning Vale and Ellenbrook, bringing its total number to 10. While Mr Peard would like to increase this to 15 WA offices, and he has plans to open in Adelaide, finding the right people and locations for new offices takes time.
“We’re not interested in having 40 offices scattered all over the place,” he says. “Our average office sells 30 houses a month. The franchise groups average around four to eight sales a month.”
And when Mr Peard talks locations, he’s talking shopfronts.
“When I say the right location, I still believe in photos in the window,” he says. “I always like to go where people shop, eat, get entertained, so there’s always people dealing around your shopfront.
“The idea of hiding away is not on to my mind. You pay expensive rents and all the rest of it, but I reckon it’s definitely the way to go – to let people know you’re there.”
Once Mr Peard has found the location, the team comes next.
“I take a year or two to get the right people in line,” he says. “Most times we’ll have staff, managers and everything ready to go into the new shop, so I’ll start getting out and selling some shares in the business…but I’ll build the team and make sure we’ve got the fees [first].
“Generally, if we do it right, we’ll have our money back in about 14 months.”
Recent wins at The Australian Business Awards 2012 – for Recommended Employer and Community Contribution – have helped attract people to the company, he adds.
Yet it’s his business model of which Mr Peard appears to be the most proud – it works and he’s happy to prove it to anyone interested in joining his group. “I’m an open book,” he says. “I’ll tell you everything. Everyone that’s bought into my company and sold has made money on their shares.”
Head office, which incorporates key business functions such as human resources, recruitment, marketing and senior management, is crucial to the business structure.
“We’ll conduct on average four interviews a day for all sorts of different staff,” he says. “We recruit a good one or two managers, we get them to buy shares in the company, so we set it up so that we own that office … as a shelf company, and then we sell shares in that and we sell up to 49 per cent [of that office]. We retain 51 per cent control.
“We’re very, very selective on our partnerships, and in that partnership they get shares,” he continues. “Nowadays, because we’ve got financial backing, we ask them [to invest money] but we don’t care whether they put money in or not. I prefer it if they do, because they’ve got some real skin in the deal then, but if they’re young people coming through the ranks and they haven’t got the money, we’ll just fund it and they pay us back out of annual dividends.”
From this point onwards, their role is relatively straightforward.
“All they’re expected to do is help us recruit, manage the team, and attend to the team’s day-to-day issues … that’s the sort of thing I can’t do, because I’m not there every day.”
“We [head office] do the BAS statements, all that sort of thing,” Mr Peard says, “That frees [the business operators] up to be good managers.
“We then make sure we’ve got the best administration people, because what I’ve learnt over the years, the more I analyse it the more I realise that if you get the management right, and the administrators right, everything looks after itself.
On his company’s culture, Mr Peard is clear: “I’ll always say to a prospective partner, we’re very serious about our business, we’re very serious about making money. But we make sure we have a lot of fun along the way, we live up to that. Our parties – which in the industry are well-known – our trips away, our functions… All that sort of stuff is top notch.
“The business is known to be very generous, caring for their people. I know if a rep’s got a problem – I’ll ring them up. If they need a hand financially, we’ll help them out.”
Real estate sales are just one of the group’s revenue streams. Property management, according to Mr Peard, “has been massive for us.”
While that isn’t necessarily unusual in an industry seeking steady cash flow, he says his property management department is purposely overstaffed to ensure quality service.
“We probably average 100 properties per property manager,” he says. “We’ve got 2,000 properties that we manage in our group. That’s been a big focus and very profitable for us.”
The company also has a settlement business and a finance brokering business, with six mortgage brokers servicing his offices.
“We’re lending up to $28 million [the month before last] – that’s huge – but we’re averaging $15 million a month in loans. Not many, about eight per cent [of our real estate sales are financed by us].”
Mr Peard believes these numbers will grow, and he aims to mirror the car industry where it’s common for buyers to get asked about finance. “I want that to come from our reps as part of their duty to offer it,” he says.