With the real estate market slowing and the number of property leads delivered from real estate portals reducing, agency principals across the country would be paying close attention to the value they receive from their real estate subscriptions.
Over the past two years both Domain and REA have increased their fees, yet it can be argued that the number of property enquiries delivered to agents hasn’t increased by the same proportion. Do these portals have the correct pricing model in place, is there a better method which would justify them charging agents more money?
Outlined below are the different portal fee structures which are currently available in the marketplace:
Fixed Fee Monthly Subscription
This is the most traditional method and highlights how closed and regressive the portal market is in Australia. Both REA and Domain operate using this method, meaning an agent with 2 properties will pay the same monthly subscription fee as an agent with 182 properties. Domain operate a slight variant of this where agents situated in ‘Popular Areas” (with more page views) are charged a higher monthly rate than agents in less popular areas.
Pay Per Property Monthly Subscription
This subscription method is used by all of the leading portals in the UK and is based on paying a monthly fee according to the number of properties listed. Here are the subscription costs for Find A Property in 2008:
Entry Level – 25 properties £150
Small Branch – 26 to 50 properties £225
Medium Branch – 51 to 75 properties £275
Large Branch – 76 to 100 properties £299
More than 100 – available on request.
So an agency will pay between £3 and £6 per property listing per month. Although the rate per property is a lot more for agencies with less properties this method is more equitable than the fixed fee monthly method used Australia. Also, paying a fee per property is less of a headache to on-charge to property vendors.
Commission Share Structure
This is the least successful subscription model and involves an agency paying nothing to list properties with a portal but paying a commission to the portal if the successful buyer lead was generated through the portal. Sounds great on paper but would be a logistical nightmare to enforce. Homes Go Fast experimented with this model but found it hard to collect their share of commissions from agents. In Australia On The House offer private sellers the option to list for $250 or 0.5% commission on the sale price of the property.
Pay Per Lead Method
This is the most recent subscription method brought to market and has been trialed by a number of real estate portals in the UK. Zoopla and Property Index do not charge agents to list properties, rather agents pay £1 for a buy lead and £5 for a vendor lead each time an enquiry is delivered to their Inbox. These portals are all about bringing efficiency to the market by only charging for genuine property and vendor leads.
With the large amount of spam circulating around the internet today a concern would be that you end up paying money for an enquiry which is just spam. Property Index allows agencies to challenge enquiries which they believe are not a “Qualified Lead”.
“A ‘qualified’ lead is an enquiry which includes a full name, contact telephone number and email address. “
The only downside I see to this method is that portals forgo revenue if the enquiry is made by telephone rather than an email, as you only pay per email received. A major benefit to property seekers, is that this encourage agents to prepare better quality property listings containing more information to avoid trivial enquiries about properties.
I certainly think REA and Domain should consider changing from the fixed fee monthly subscription to the pay per property monthly subscription. Perhaps the pay per lead method should be considered as an alternative pricing method, especially given portals are always spruiking the amount of page views and enquiries they deliver. They’re guaranteed to come out ahead if they charge per lead!