A few posts in recent months have focussed on the concept of the virtual agent. Dave Platter first commented on events in the states and how that might effect the local industry in a post titled “Victory for Virtual Agents in US Could Lead to Threat to Traditional Agents in Australia”
Dave followed up with “The Rise of the Virtual Real Estate Agent” and then again with “Inside of the Mind of a Road Warrior a Real Estate Agent Who Replace Her Office With Technology”
During all the discussion Dave came up with a good definition of a Virtual Agency :- “Agency whose principal storefront is a website, that acquires and serves customers principally online, that serves either or both buyers and sellers. May also be a discount agent.”
Many agents have a great virtual presence but nobody for mind could be considered as a true Virtual Agent. Teena Andrews from Dave’s third post was really more of a remote worker to a bricks and mortar agency and Dave called her a “Road Warrior”.
The other day I had call from Dave Paddington, a friend who had left the real estate industry in July last year selling his rent roll and equipment, or so I thought. The call was over another matter but the conversation quickly turned to his new business. It turns out he had not left the industry at all but had been busy developing a Virtual Real Estate Group called Uhoo – www.uhoo.com.au. A franchise that if Dave has his way will place a virtual agency right in the backyard of many traditional agencies.
I fired off some questions to Dave that you might find interesting.
When did you launch?
We started building the business model and our software platform about 12 months ago and got off the ground in September 2008. We haven’t officially launched yet and our growth so far has been through word of mouth.
What is your background in real estate?
I started as a sales agent in 1995 in a traditional franchised office and then in early 1998 looking for a better opportunity I opened my own independent office. I have a diploma in Real Estate Management and during the time I owned my own office, won a couple of awards for innovation.
Are your business partners from a real estate background or any associated or complimentary fields?
Troy was a part owner of one of PRD’s highest profile offices. He has spent 20 years in Franchise consulting and Marketing.
James was Raine & Hornes Trainer and Auctioneer for many years. He also set up the Realway franchise which he built up to 60 offices before selling out to his business partner.
Why did you leave a traditional real estate agency model?
A blow out in overheads prompted me in late 2007 to sell my business. My first attempt was to sell it as a going concern but quickly found that nobody wanted to pay the large rent and other fixed costs we were paying. My next option was to sell off my rent roll. I did this, then negotiated the termination of my lease and sold off the equipment.
Where did the idea of a Virtual Real Estate Franchise come from? Have you modelled it from an operation in the states?
The idea came from personal experience of running an office in the industry and the successful uptake of the internet for marketing property in Australia. History has shown that the next progressive step to improve their financial / lifestyle situation for most great sales people is to own their own agency. After they have made the step they find they are deficient in one or all of the following three areas. Property Management (rentals) , People Management or Business Management. The idea behind franchising Uhoo was to offer a business opportunity for great sales to operate their own business without the distractions and high risks associated with running a traditional office.
When I first put the idea together I had no idea that other similar models existed. I still had clients wanting me to sell their properties after I closed the office. I couldn’t believe how easy it was and loved the fact that I didn’t have to fork out the majority of it to cover overheads.
Are you just based in Brisbane, Queensland or do you want to operate nationally?
Are initial focus is South East QLD with plans to operate nationally.
Are you a full fee real estate service or do you offer a discounted commission rate?
This question has been asked of us many times and our rate is the standard fee that most agents offer. Without the distractions of the day to day operation of a business our Franchisees can deliver the good old fashioned service that some agents still neglected to deliver. You are also dealing in most cases with the business owner who can negotiate and make decisions for their clients on the spot rather than seeking permission from the boss.
Do you receive pressure from sellers on discounting commission because you do not operate a bricks and mortar store?
We haven’t yet received pressure from sellers wanting a discounted commission. Our strength is our ability to deliver speed to market of our listings through our software and exceptional personalised service with exceptional local area knowledge.
Do you handle primarily residential sales or are you after other markets as well?
Our franchisees are “Sales only” agents who work in the residential market. We only take on the best experienced agents with a proven track record in the area they wish to operate in.
Whats been the response to your model from buyers since you launched? Do many of them even know that you are a virtual agency?”
They love the name and the branding. Buyers don’t really mind who has the property for sale. If it’s the property they want, they will buy it. With the rapid successful growth of online property marketing, statistics show most buyers do their property hunting on line rather than a shop window.
Do you think Australia is ready for the virtual real estate agent?
Absolutely ! For years the Finance and Insurance industries have been working a virtual model and it’s working for them. We do more on-line marketing than most other business however we seem to have stuck to a traditional shop front model to do business.
Do you believe this is the way the industry will gravitate and your an early pioneer or are you providing a niche service suited to real estate salespeople who want to work for themselves without the overheads of a traditional office?
I predict that with in the next 5 years, at least 70% of agents will be working under a virtual model of some form. It will appeal to sales agents wanting to make more than they currently are but aren’t ready to make the commitment to open their own shop front office. It will appeal to the Agency owners who are tired of issues with staffing, business management, large overheads and want to get back to what they enjoyed most in their previous life – Selling property.
What resources, systems and procedures do you have in place for your agents?
All of our Franchisees receive a Virtual business pack which includes all the tools required like Laptops, printers etc to operate remotely.
We also have systems manuals – Operations, Local area Marketing, Recruitment and other resources.
Our software enables them to manage contacts and properties, upload property listings to 3rd party websites, print brochures, email buyers, Trust accounting and it integrates with other industry products like ADL, Realworks etc. It has some other pretty cool bells and whistles too.
We have some really fresh and cutting edge marketing available for all franchisees to use and order on-line.
Your franchise fee appears to be 14% of the commission. Do you believe these resources, systems and procedures support this level of fee.
Yes, two of my business partners have both consulted to some of the larger Real Estate franchises in Australia and they have commented on the two areas most lack support. National marketing /Branding & IT Development /Support. These are both covered in our 14% Business development and support fee.
Being a “virtual” real estate group are you biased towards internet marketing or are you still embracing traditional media?
If the trend toward online marketing keeps heading in the direction it has, I can see print media being a thing of the past. We operate exactly the same way as a traditional Real Estate office other than having a window display. We still use signboards outside our properties, we still advertise in newspapers and magazines and still do open homes.
We are however engaging smarter ways to improve our web presence so I guess my answer is yes.
Does your model operate on a singular level with individual agents taking out a franchise or can one of your franchisees operate their own team of salespeople?
A Franchisee can operate as a sole operator or have a team of Sales people working with them. The advantage for the salespeople is the Franchisee has very little overheads and can offer the salesperson a higher than industry average commission to work for them. We suggest for ease of people management that they only take on a maximum team of 4 salespeople. Our software has a function within it to help manage staff on a daily basis, all remotely.
What does a typical day for one of your agents consist of?
Shane rises around 8.00am and has breakfast with his wife and daughter. From 8.30 to 9am he checks his emails and messages and plans his day. After that he drops his daughter off at school and then spends a hour at the gym.
The rest of the morning is taken up with following up clients, conducting appraisals and inspections. He takes an hour or so for lunch with his wife and then spends the afternoon prospecting and marketing. 3.30pm he picks his daughter up from school and spends an hour playing with her. After that he is either conducting inspections or working on admin tasks like changing script and photos on the net, registering feedback to his clients etc. Dinner at 6.30pm and if there is still work to finish off he will attend to it.
Now I can’t say that I agree with Dave regarding Virtual agents being responsible for 70% of the industry in just 5 years. Virtual agents will no doubt be more common place but I believe that they will still be relatively small percentage of the industry in 5 years. Maybe 10 or 15% but even at those levels that is a damn lot of real estate sold through a virtual agency.
Personally I think it is more about a niche solution to provide those salespeople who want to be their own boss, but just don’t know how to go about it. Not everybody can work remotely without oversight and direction driving them on a daily basis. But for those that can its going to be an interesting option as their only competition in that space would have to be Remax.
What do you think?