Over the last few months it has become increasingly aware to me that Australia’s largest real estate portals are toying with the idea of playing with their fee structures charged to agents for advertising their vendors listings.
So why would they be doing this? Because they want to make it fairer? Guess again muchumbo, this is all about making more money for their companies/shareholders. You can argue that this is fair enough, as this is what they exist to do. Howeve, they have this opportunity only becuase agents support them and without these agents, they would not attract visitors and therefore 3rd party advertisers like banks and those pathetic what price my house websites.There are some valid arguments for maybe one of these models, but they have to tread very carefully.
So lets look at some current models and possible models or fees.
Well put simple they charge you a certain fee based on population or region, such as city or country and in some cases their popularity within a region. The reason for this is the thought that city agents turn over much more stock than their country counterparts and therefore make more money. Well, of course this is true, but think a little about it. John and Jill in a country town, also pay a lot less for renting or buying their offices, they pay a lot less for staff, they pay a lot less for advertising and have many cases have much less competition.So that throws that thinking out the window! The only reason Domain do this – is because they can where they have strengths. I do know of many agents that can play a little game with domain against realestate.com.au and get pretty good discounts, so get them to sharpen their pencils. You could tell them that you are thinking of only going with only one portal (tougher times) and get the price down. Yes, Domain.com.au do deals!
Set Monthly Fees
Realestate.com.au currently use this system and it has served them well, everyone pays the same basic rate per month and can list as many properties as they like (obviously franchises get better deals). Prices have increased by around 15% per annum since they started ($150 per month) up to around $400 per month today.
After the debacle of the email problems from a few months ago, realestate.com.au have lost a fair bot of faith from their agents and really have to work hard to gain their trust. The revelation that they wish to gain another 30-40% increase in revenues from agents over the next year will do nothing to help help them win the trust again. I simply cannot see agents accepting en-masse an increase of 30-40% per month without some serious extra benefits. However if they did, I doubt too many agents could do anything about it. My guess is that they will drop the base subscription and try to move everyone up to the next level and introduce another higher level of membership. This will mean all agents will get a logo next to their listings (WOW) and some extra benefits.
I received an email yesterday that told me that they considering a similar model to domain.com.au because they believed it was “fairer”. My guess is whatever they do, it will be to increase revenues, so do not be fooled into thinking you will be any better off under a new subscription offer. Again it will be all about extra $$.
Per Listing Fee
This one is a simpler approach, you pay certain amount of money per listing whether you are in the country or city. The only difference is whether it is a basic listing or a premium listing and the price per property listing will be different depending on your subscription level. I do hate all these different levels of membership, but they are a fact of life – even the free sites are trying to work this in to make some money. This model actually gets rid of problems like agents listing the same property in multiple suburbs and also re-listing properties multiple times. It also creates a more level playing field going forward as many agents are closing multiple offices to lower overheads and doing more from a central office and this must effect REA’s bottom line in some way going forward.
Currently no major portal does this, although I think that this is a better option. It will be a reasonably high price per listing, and agents would have to get their calculators out to make sure it was worth their while. The one problem for a portal choosing this method is that they will be at the mercy of the market and how many listings that come on during different cycles, but with nearly 10 years of data, I am sure they would work it out in their favour.
Free with paid features.
Currently MyHome and Homehound offer free listing website with an option to upgrade your listings to feature listings. I am never a fan of this type of thing, but I do think Agents need to be on these sites at a basic level. Most of these get a fraction of the visitors of the big portals, but by supporting sites like these they will slowly build their visitor numbers as the sites. There are a few more of these around and some have some quite interesting models.
With Properazzi, Google Base, Dothomes coming so Australia sooner rather than later and of course MyHome (now free and gaining quite a few listings) it is not the time to be getting agents offside, so it will have to be a very measured approach to charging more or changing pricing models.
Whichever way portals do go, I think that agents would like to know what effect that it will have on their business and to be able to easily calculate that effect. Many agents across Australia are struggling in these times and whilst some pockets are still strong it is not gong to get any better in the short term being in the middle of the world-wide financial crisis.
Note: Simon Baker (Ex REA) has launched a new website called Property Portal Watch