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Can real estate groups help you tackle disruption?

By Reporter
01 November 2016 | 12 minute read
robots and duck

Here at REB, we’ve noticed that some of you are sick of being told you’re about to be ‘disrupted’. You’d rather just get on with doing what you do best. So how will Australia’s real estate groups help you as the market continues to change?

We’ve all heard it before. Disruption is coming. Or, depending on who you ask, maybe it’s already here. Do you feel disrupted? Do you think your industry is about to fundamentally shift? Or do you believe we’re just talking about it so we have something to write about?

Maybe you can feel it, but you don’t mind. Or maybe you believe the ‘people’ and ‘personality’ factors crucial to real estate transactions and the emotions that come with it will insulate you against any automated alternatives, online options or robots.

Is this attitude simply confidence in what you do and in the unique skills and experiences you can offer clients and the Australian real estate market? Or is it arrogance – believing your personality and the traditional model will be enough to get you by?

Let’s look at the taxi industry. Yes, it is still here, but it has no doubt been disrupted by Uber. It can be argued that the taxi industry has no excuses for not preparing for the oncoming onslaught. All the signs were there. It had happened in international markets. We could have prepared. Australian taxi operators could have leveraged technology to launch their own apps, spearheaded initiatives to connect more with customers and looked to overseas markets to see what was in the pipeline.

It can be hard for a small business operator though, especially if you’re out on your own, to prepare for a fundamental market shift. What, if any, changes are even coming in real estate? Who are the threats and who are the wannabes? Who is our Uber?

Can Australia’s real estate networks, with their systems, processes, research capabilities and investment initiatives help agents in this country prepare? And who do they believe are the real threats anyway?

When we speak to Barry Plant’s CEO Mike McCarthy, he immediately starts talking about disruption, saying it is the biggest challenge facing agents in the market. 

However, he says disruption won’t come in the form of Purplebricks.

“I think Purplebricks is another low-cost model and there will be a place for them. I think the real disruption is what I call ‘lead interceptors’ ... they probably call themselves ‘lead generators’,” Mr McCarthy said.

“There are many companies out there who are intercepting our customers before they get to us. And they are saying, ‘Come to us. We can give you information about your local agents, about their market share, about their commission rates, about their performance, about their rating, whatever it might be. We can then better equip you as the customer to then go and talk to the agents, and in fact we’ll actually do the introduction for you.’

“And on the way through they take a share of the commission, which they’re not very transparent about.”

That share of the commission is anywhere from 20 per cent to 60 per cent.

Now, you might be listening. Commission you say?

“We’re seeing a very rapid acceleration of those sorts of players in our industry, who are very quickly eroding the profit margins of the traditional real estate agent,” Mr McCarthy said.

Are you worried yet? You might be thinking, “I’m hearing a lot about what’s going wrong, but is there even a solution?”

According to Mr McCarthy, the solution two-fold – part of the responsibility will fall on you, the agent, and part of the burden can be shared and thus alleviated by your real estate group.

“[Agents and agencies] have to get better at making sure that we get to the customer first, so we build that relationship with the customer, so the customer doesn’t feel like they need to use these external services ... they’ll only use them if they see value. If they’ve already got a great relationship with us, then for the vast majority of cases, they won’t bother using those services, he said.

“So we’ve got to get better at that and make sure we really nurture and develop those long-term relationships so that we don’t give away our profit margin to people who are intercepting the leads and passing them on for a fee.”

Right. That’s the agent stuff taken care of, but how can a real estate group help you to weather the oncoming storm?

Well, Australia’s real estate groups, by and large, have strong brand recognition and can help you connect with customers before they even realise they might need your services.

“Brand recognition is important. If people know and trust your brand, then you will be top of mind, Mr McCarthy said.

“And I think that’s where it’s important for us as franchisors to make sure that our people are armed with the right tools, that we’re doing the right marketing – in particular marketing increasingly online, social media and database marketing ... something we’ve got to get better at and make sure our franchisees and their terms are better at as well.

“I think it’s a matter of utilising the brand and the individual to build that relationship so that people don’t feel the need to look outside of it.”

Mr McCarthy said Australia’s real estate networks should equip their agents with everything they need to set real estate groups apart from those out there working on their own.

“If you’re with the right group, they’re going to do these things for you,” he said.

Mr McCarthy added that over the next 12 months, the group will be disrupting the disruptors in order to maintain the profitability of Barry Plant franchisees.

REB is not sure if this makes Barry Plant a disruptor, a disruptee or something else entirely, but we’ll keep you posted.



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