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Private selling sites – growing up!

3 minute read

Over the past few years we have seen many private advertising sites hit the market. Many of these are pretty poor sites and get little to no traffic and therefore little to no real benefit to advertisers. This post is not designed to promote these types of sites, but to make agents aware of these types of developments as they mature.

Domain.com.au allow private advertising on their website and it may well be worth alot of money to them. I had a meeting before Christmas with one of their representatives and he told me that it was a very small amount of their revenues.

Newspapers for years have allowed private advertisers and its seems that real estate portals are now seeing real revenues from this sector. Realestate.com.au do not allow private advertisers, however many more agents now just charge a flat fee for listings, sometimes as low as $750.00.

Most of these agents are targeting the lower end of the market. However a few weeks ago I came across a site, that will make many agents skin crawl, but from a technical point of view it shows that this market is growing up and agents are going to have to sharpen their minds as this onslaught continues.

The site I am talking about is zeroagents.com.au and it really is an attack on real estate agents – and makes no bones about tapping into popular misconceptions of agents in some of the consumers minds. Here is the offer for premium advertising from this site @ $297.00 Inc GST.

You get 4 months advertising on Zeroagents.
In Zero Agents your Internet property advertisement will appear at the top of searches above standard listed properties.
You get 2 corflute signs delivered.
You get 4 months advertising on Domain, Trading Post and Hot Properties websites.
You get real buyer exposure. The thing that impressed me about this site, is that it is polished and shows a maturity in the understanding of the Internet. It does have its flaws but it is easily the most impressive site for private advertisers on the market today.

So what does this mean for agents?
For me, it is all about getting your message right, simply shrugging your shoulders may not be enough going forward. Many claims these companies make cannot be proven – just as many claims agents make cannot. So the must be a better approach taken to this. Of course the success of private sales is far far lower than through real estate agents, and yes sometimes they may sell for less. Most of the time they get agents through their homes to get a price and then list privately at around or above that price.

Agents of course can go through these sites and market their products and services to these people, however from talks with some agents this can be annoying, maybe a softly approach, an introduction, a “Mitsubishi……please consider”.

The reality is though, that private advertising is only going to grow stronger each year, as the Internet lowers the cost of entry. So agents have to be able to counter this in many ways.

The days of the glitzy multi office agency maybe coming to an end, replaced by mobile salespeople from an office and on the road.
Your thoughts?

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15 Comments

  • Robert Simeon
    Posted February 1, 2007 at 9:12 pm 0Likes

    Peter,

    Sorry I can’t agree with you on this issue as the days of the “glitzy” offices are only getting stronger. These are the offices that have invested back into IT and their resources, which the smaller agencies simply can’t afford to participate in.

    Private sales are something that in our area contribute less than one per cent of market share. I don’t have a problem with Fairfax offering private sellers this facility, as we are afterall a democratic society. In my opinion a true property portal should be exactly that open to each and everyone.

    More private sales happen in our industry from unsolicited approaches. Not, from owners deciding to be both vendor and agent.

    Our industry has experienced a huge make over with the introduction of the internet. More importantly, agencies that are database driven have come to the fore.

    I have never heard of zeroagents.com.au before, so how would a purchaser know of them. They keep arriving on the horizon and they keep sailing off, not into the sunset. Maybe this could be different which would be an industry first.

    Love the super hero theme – never heard of them and never made a sale (that I am aware of).

    What will be interesting to see is whether REA or Domain allow them to advertise on their portals.

    I doubt that very much – and I think that Fairfax in particular will be much more protective of their online brands in future.

    A classic example of a one off spend as against an ongoing spend. We all know who would win that one !!

    Ho hum !!

  • Peter
    Posted February 1, 2007 at 9:41 pm 0Likes

    Robert – Thanks for that, we will have to agree to disagree on the glitzy office. Good operators will always do well, but I know of many agencies now that have 20+ agents from one office and others that have multiple offices and around 5 per office. SO I suppose what I was saying that having many offices in a smaller area will be a dangerous game to play going forward. That one office with 20+ staff will have much lower running costs than say 4 offices in the same territory.

    As for zeroagents. I love the pick of the moustache agent (sleazy) , I must say it is a polished site and they have only about 244 listings but that equates to around 70K in revenues, which if they operate from one office, is not too bad to start with. I will keep a check on the listings.

    As for about 1% of the market it sounds about right, but I think that will increase to around 10% in the next decade as bigger companies get involved (with bigger budget). The only one I would be worried about would be maybe a Aussie Home Loans or a Virgin.

    As for Domain not accepting their listings – well they already do!

    http://www.domain.com.au/Public/PropertyDetails.aspx?adid=2006157164

  • Robert Simeon
    Posted February 1, 2007 at 9:53 pm 0Likes

    Peter,

    If the property market is not challenged it remains stagnant – and goes further on the nose. In 2007 – I believe that our industry will (at the expensive end) move into strong video streaming home presentations.

    It will follow the examples of youtube.com for example. Where agency guidelines will change definition whereby they become media companies.

    This in my opinion will see property portals completely change their approaches as still photography photos, will still be there. However, the industry will move to ready – set – action property deliveries.

    Otherwise known as moving with the times.

  • Dave Platter
    Posted February 2, 2007 at 1:40 pm 0Likes

    (I work at realestate.com.au Ltd)

    Good points, both of you. I have to say that I tend to believe Robert is right on zeroagent. I expect to see it sail back over the horizon when its founders get bored with it.

    Why?

    1–It’s expensive for them to reach customers and users. If people as plugged in as Peter and Robert are just now hearing of them, they certainly can’t have been very successful at reaching average consumers.

    2–The majority of their possible customers (home sellers) would rather use an agent. We know this, because they already DO use agents.

    3–While their name may attract sellers, it won’t attract users. Web users want to see lots of properties, period. But zeroagent’s name communicates that this site will ONLY carry a tiny fraction of the property currently on the market.

    Have a great weekend everyone.
    dave

  • Robert Simeon
    Posted February 2, 2007 at 8:28 pm 0Likes

    Thanks Dave,

    What many appear to forget is that the home in the majority of cases is their largest asset. If you get the first marketing campaign wrong (no sale), then the market can punish vendors.

    Whether it be do – it – yourself kitchens, bathrooms, pergolas, fences and water features. Most formulate the opinion that it is best left to the professionals. With real estate property owners do have a choice with preferred agent or method.

    If it were that simple the question beckons, why developers in the vast majority of cases use agents as their preferred selling choice.

    Good luck to zeroagents, although I would back my argument that private sales majority are from unsolicited purchaser contact. Not – private sales marketing campaigns.

    Oh !! and if you are online you do require a small thing called database.

    Cheers

  • Elizabeth
    Posted February 6, 2007 at 8:12 am 0Likes

    Good Morning Gentlemen,

    I would really like to see the REINSW engage in some research into the value proposition vendors see in Private Sales.

    We have seen these sites come and go, yet I only remember rhetoric no real look into why vendors go down this route.

    It does disappoint me that domain accepts listings from the public. however, as long as they deliver results I have an uneasy truce with them on this.

    A thought I often ponder in recent months, is IF Google enter the market, and IF the new homehound called Myhome is successful and domain finds that they have to cultivate the private sales market in order to meet competition…. these two scenarios only stand to cultivate this market.

    In another Blog or Thread (ok I am starting to lose control of my understanding of what it is I am doing on here) which talked about Microsoft in the United States of America playing a pivotal role in the demise of Travel Agents.. and just wonder what their plans are in their foray into the Australian Real Estate industry.

    Time will tell. Technology can either facilitate or foster the growth of this area.

    I doubt technology will be the agents friend in this regard.

    E

  • Peter Ricci
    Posted February 6, 2007 at 9:06 am 0Likes

    Elizabeth

    1. Each post is a thread
    2. This site is a blog
    3. You me and everyone else are bloggers
    4. People who make comments anomonously from companies pretending to be someone else I call ‘foggers’ hiding in the mist, I like that – what do you think?

    We will call them foggers…………! You read it here first!

  • Peter Ricci
    Posted February 6, 2007 at 9:17 am 0Likes

    On the issue of private advertisers on Domain and other sites. Newspapers have been doing it for decades even though 99% of their revenue comes from agents. As agent abandoned newspapers (more and more each year) you will find they will actually promote this more and more.

    Microsoft and travel agents is completely different. And it was not them that caused the demise of travel agents, it was the Internet! In Australia travel agents are more into packages than domestic flights.

    If agents truly believe they offer more value for vendors then they have nothing to fear, pushing to block private advertisers will just make the case stronger for anti-agents sentiment.

    If Microsoft, Google or Yahoo enter the property market it will be a free for all, however the one thing the majority of private advertisers do not have – and I have 7 years experience with them online – is negotiating skills.

    The only thing I feel is wrong with the attitude of some private advertisers is that they get agents to come through and quote a price and then advertise privately from this.

    You will see budget agents popping up all over the place, we have seen it here in Sydney with fixed fee products – some as little as $1000.00 + advertising.

    In the end and what I am trying to highlight is that agents must come together, to simply brush them off and say they will be gone in 6 months – especially the excellent development (technology wise and systems wise) of the above company will not cut it.

    My estimates is that they have already turned over 75K on a development and system that might have cost 50k

    Now if this is a one or two or 3 personal operation with a systems controlled business and they can turnover $500k per annum they are well on there way to being a success.

    Regards Peter

  • Michael
    Posted February 6, 2007 at 5:57 pm 0Likes

    Ladies and Gentlemen

    I feel like i am about to hop in the lions den – with slabs of red meat hanging around my neck……

    But i felt i would like to comment about the above blog.

    Firstly…. thank you for all the positive comments regarding our website. We have spent many hours and dollars to get to this stage, and to hear this feedback from “agents” has been very reassuring. Infact we would often visit this site for industry tidbits so we were quite surprised to see the home page load up with zeroman.

    Agents vs DIY

    I could sit here and debate many of the issues, and in many cases we all would be right and wrong. Especially when comparing competencies of individuals across the industry.

    I believe the system of remuneration for real estate agents is broken. It’s success based and whilst that sounds fair, it’s what i believe encourages a “do what ever it takes” mentality for some elements within the industry. The legal industry typically charges for service not results. When it is based on success, they are referred to as ambulance chasers, same conditioning process i believe.

    Sorry i don’t have a real suggestion for fixing this though the recruitment industry would be a good place to start. They charge anywhere between 25 to 40% retainer at the beginning.
    They are paid for work performed, and receive the balance upon successful completion of assignment.

    Owners of property should have the choice. Do it myself or engage a professional to do it for me. They have these choices for buying or selling cars, for hiring of staff, for domestic help.

    The value model is what is critical. The property owner must feel it is more convenient and the value is there for a professional to be engaged rather than doing it themselves.

    Largely they have been restricted access to “buyers” in the past. The internet will change that. And that’s the landscape we all work within.

    With access to buyers available to anyone – the real estate agent now has to differentiate themselves to encourage engagement.

    In the recruitment industry this has been achieved through testing and assessments of applicants. Advanced tools that are not available to most employers. Maybe in real estate it has to be through the provision of additional property based services.

    As for our objectives…. we want to provide a value based service that provides great results and which encourages referral business. We want to be proud of what we achieve and earn good income in the process.

    I am pretty sure that would be the objective for most real estate agents.

    I do want to comment though about “negotiation” skills. If this argument is really applicable then AUCTIONS should be a thing of the past – particularly if selling under the hammer. Additionally it suggests than any buyer should have a representative as well, and we would then have a US based buyers agent and sellers agent system.

    I think people in general are quite competent negotiating, they manage to convince agents they are going to buy through another agent, or to reduce their selling commission, or that they won’t pay a single cent more.

    I think the issue is individual specific not industry specific – because i am unaware of any formal qualification for a Bachelor of Negotiation.

    Until there is a standard to evaluate negotiation skills i am dubious of attaching the qualification “negotiation skills” to agents.

    FSBO will be a competitor to agents who don’t provide value based propositions.

    Turning up with open homes signs will not be the formula for success it once was.

    The funny thing is, i believe the people who are participating in this blog, are more than likely the forward thinking agents/agencies which will flourish because they will embrace change and respond accordingly.

    And – to finish – i would love to hear from anyone who has any suggestions for how we could improve our site. If you were to design a DIY site what would you do differently?

    Regards

    Michael – ZeroAgents

    P.S. Please be gentle

  • Elizabeth
    Posted February 6, 2007 at 8:00 pm 0Likes

    Ladies First it would seem…

    Michael,

    I have to say that I am extremely impressed with your blog entry (someone please let me know I have it right now), and I commend you for entering the debate with what I have to say is a well constructed argument.

    Do I agree with everything you say? Initially no, as I applied to my own circumstances. But then I thought of the local franchise chain down the road, where they follow the model blindly, and I could see some elements of what you are touting.

    I agree that the internet is going to foster the Private Sales Market, but I do not think that we will see anything changing too fast.

    The challenge for you is to get results. And I am sorry to say, that even the local franchise outlet down the road will most likely deliver better results than you at this point in time.

    Many people come to well established local agents for advice, guidance and a physical being whom they can relate to and trust, to get on with the business of selling their property. Their biggest asset in most instances.

    You may be able to provide marketing access, and the vendor may be able to see what local properties sold for… however this does not compensate nor measure up for expertise and know-how.

    If you will accommodate me – let me apply your model of remuneration for just a little.

    Doctors. We pay them regardless. If they operate on us and we die, our estate pays them. Is this fair? If not, why not? and if it is fair, then how can you have a different slant?

    I suggest that there are many more examples out there which just may contradict your approach.

    So to sum up, I thank you for taking the plunge and participating in this forum. Your argument is good, however I am not convinced at this stage that what you have is a run-a-way success.

    But I do agree on one level, the internet, and emerging systems do stand as a threat to the traditional real estate agency. Access to Agents marketing channels and systems, along with evolutionary cultural and transactional change, will be the driving forces for the Private Sales Market.

    Interesting future.

    E

  • Michael
    Posted February 6, 2007 at 8:23 pm 0Likes

    Doctors – now that’s a remuneration model i would like to adjust.

    How about we pay them each week when we are well.

    We stop paying when we are ill.

    If we die….damn make em get buried with us.

    Now they are remunerated and motivated to keep us fighting fit!

    Has some mileage i reckon…hehehehe

  • Robert Simeon
    Posted February 6, 2007 at 8:25 pm 0Likes

    Thanks Michael,

    Quite interesting to read your thoughts on private sales. Having been in sales for 21 years in my opinion because of technology the number of private sales have actually diminished. My business is in Mosman and at a guess I would suggest that less than 1 per cent sales are private sales via FSBO whereby the “do it yourself” model fails.

    We have observed an increase in unsolicited sales where purchasers letter box drop properties of interest and owners then engage in one on one negotiations.

    We live in a democratic society and all property owners have a choice on their preferred methodology of sale. Just that what continually resonates is that with their biggest asset it is best to leave it to those who actually know what they are doing. As against trying to save money by doing it yourself.

    The good agents time and time can add another ten per cent to vendors through their negotiation skills.

    Mathematically, they can save on 2 per cent and lose 8 per cent.

    I wish you all the best with your business endeavours.

    Cheers

  • Nick
    Posted February 18, 2007 at 7:46 pm 0Likes

    IMHO Agents feeling threatened by direct sales really just reenforces the view (whether it has merit or not) that as an agent. Most agents seem to offer nothing to justify the commission you’re paid, other than your own active obstruction to the public being allowed to use services like RealEstate.com.au

    Agents will argue it’s their elite sales skills, vast networks of contacts and solid industry knowledge that are the keys to selling property – and perhaps it is… But if this is the case, you guys really should having nothing to worry about. Get some confidents in your own ability as a skilled professional and stop acting so threatened by vendors attempting to sell direct.

    It would be like me living in fear of the public having access to DreamWeaver incase they attempted to build their own website and put me out of a job. My reaction is: Go right ahead, take a shot at it – all you’ll do is waste a LOT of time and possibly gain a deeper appreciation of my trade and the money I charge for the service I deliver.

    Surely as a talented and experienced professional at the top of your game – you offer more to your clients than just a means to listing on RealEstate.com.au – You need to have some faith in yourselves or no one else will.

  • Robert Simeon
    Posted April 27, 2007 at 11:10 pm 0Likes

    Michael,

    You previously stated that this property was sold and listed the fantastic savings to the vendor. I note that since my previous post that Michael is no longer posting with such confidence.

    Your website claims this property as sold – yet your site still shows this property as being available ?

    http://www.zeroagents.com.au/Search/View-Property.aspx?PropertyID=1383

    You claim that agents tell porky pies – yet based on what you have previously stated your business struggles with the truth. Now I doubt that we will ever hear from Michael again, as his business model struggles.

    However, with any opportunity when a private claims a victory – it should be pointed out that neither party was booking a removalist despite claims of a sale.

    Maybe Michael can advise us as to why his previous assertion on savings to the owner resulted in nothing.

    I can only assume that this very same scenario applied to Michael by his employers when they reviewed his sale results.

    A WOT = Waste of time !!

  • Mark Tull
    Posted April 30, 2007 at 4:48 pm 0Likes

    Very interesting discussion. I would like to add my 5 cents worth, given our clients demographics. At the end of the day, it comes down to money and time. Some don’t want to spend the money on an agent and some don’t have the time (or inclination) to sell their property themselves, therefore it’s an agent. I know from the clients we have advertising on Google and Yahoo direct that there is a mix of both of the above. I think the price lowering model attracts a certain proportion of the market and alway will. Then there are the DIY’s then there are the ones who want a professional and are prepared to pay. To address Nick above, I believe that if you need to sell, its got to look good and be functional and have both an impact and a call to action. If you see the growth in professional photographers for real estate as any indication, then it definately can be the difference between a glance and a LOOK. Websites and web marketing is just the same.

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