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Real Estate Portal Fee Structure

4 minute read

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!

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19 Comments

  • Ex-Portal Man
    Posted April 27, 2009 at 9:47 am 0Likes

    Domain Qld at least have pkgs at different levels to suit agencies with minimal properties. ie: if you have under 20 properties the prices are just about half the normal sub rates.
    There is also a 6 month trial sub (usually for independents with minimal properties).

    VIC have a pay per property model, but it is a logistical nightmare. It was trialled in Qld for a short while and was scraped within a few months because the systems could not handle the different scenarios.

    They were looking at a ‘pay per lead’ model to trial with one of the major franchises 12 months ago. One problem was how to deal with the non-business enquiry, consumers who send multiple times and agreeing on a set rate per email.
    I personally think this is still the way to go as it is results based marketing. Similar to how Google run its CPA (cost per acquisition) model.

    I know for a fact that to stay competitive in Qld, Domain have held their overall Qld sub rates in 08/09. The key really is how well you know and get on with your Account Manager as they now run their territories as their own business and will decide who pays what.

  • Adam
    Posted April 27, 2009 at 10:12 am 0Likes

    Pay per property uploaded I think is the way to go, this is the fairest way to handle this.

  • PaulD
    Posted April 27, 2009 at 10:51 am 0Likes

    Adam, Have another think about pay per property uploaded. On one hand you have a city based agent who can have a dozen listings at any one time all similar properties. On the other hand you can have a regional based agent who can have 100 listings – all different. Blocks of land, rural properties, small houses, large houses, units. The regional agent needs all those listings to make a living. The city based agent can sell 50 properties a year and do very well. The regional agent has to sell twice as many to make half as much. Please explain how a pay per property uploaded model is fair !!

  • Sal Espro
    Posted April 27, 2009 at 1:45 pm 0Likes

    PaulID, it’s probably not a matter of fairness in pricing between client types. It’s more a matter of whether or not it’s up to the portal/tech provider to determine who can afford what.
    And then isn’t it really a matter of what price can be offered to get/keep the business in a competitive environment? And the portals seem to be doing OK getting/keeping business at the moment. Just ask the struggling free offerings of new comers.

    On the face of it what Adam says seems fair in our market-driven pay-per-use society. However, PaulID’s more Socially-minded approach based on what the client can afford, also seems fair. However, the toll-roads don’t concern themselves with the value of the user’s vehicle though, do they. (I personally like the UK sliding scale).

    (As an aside, my guess is that listings/sales are a function of agent ability no matter what region you service. Average sale value may be more important. I also question whether good non-metro agents (not agencies) really do list more properties as metro agents however (??) )

    Just for interest, our ‘uploader’/online management system charges us an extremely low annual sub and then per listing added (which again is extremely low).
    I know it’s not a portal, but it seems fair to us. (And it operates just like a toll-road on a load your money in and use it as you go or just pay as you go)

    Sal 🙂

  • Glenn Rogers
    Posted April 27, 2009 at 1:51 pm 0Likes

    Fee structured on the amount of listings you upload is the fairest way to go.

    ie: for the base fee you get”x” for a higher monthly fee you get “y” and so on.

    There is also a strong case to overlay this with a concession for regional customers, outside the main CBD areas, the agent in Camberwell will get more visitors than the agent in a country town for instance.

    Most importantly any scheme must not be ramped to the point where there is a disincentive to list, the quality in the total index is of paramount importance to the success of the portal.

  • Glenn Batten
    Posted April 27, 2009 at 8:29 pm 0Likes

    Glenn,

    Amount per listing may seem attractive now, but you can bet anything put in place will not see a cut to current revenue’s just a redistribution amongst who pays. So what happens when stock levels increase because that would mean that the portals would automatically get a huge increase??

    Short term gain might mean long term pain.

  • Bryan Thomson
    Posted April 27, 2009 at 10:16 pm 0Likes

    I repeat yet again, look at the New Zealand Industry owned portal. $200 per office per month for all you can eat. How you must look back and wonder what you were thinking in Australia when you allowed the media to gain control. Perhaps now is the time to act?

  • adam
    Posted April 27, 2009 at 11:15 pm 0Likes

    Paying per listing is fair, every vendor should know how much it costs to have their property appear on any website, if the agent is paying per listing, then they will know how much to charge the vendor.
    Those agents with lots of stock need to collect a fee for each of of those listings, after all, each property loaded is taking up space and pushing other listings further down. The current unlimited listings system encourages agents, builders, developers to upload, house & land/apartments one after the other. This can quite often be exactly the same property on different lots. Most buyers find these annoying and want to get past these to get to the more traditional listings.
    Agents that upload property after property should get a discount of some kind however still pay more then those agents putting on fewer properties.

  • PaulD
    Posted April 28, 2009 at 11:43 am 0Likes

    Adam, Two things. You are obviously not an agent – no problem there, but you are really speaking from either a website owners’ perspective, or someone who doesn’t know how to search for properties. You sound like it is a finite resource, and we are “filling it up” It’s not like buying petrol. If people want their properties on the internet, then we do that. What happens when the same property is on two websites – do we get penalised and charged double because it is on twice ? The website search capabilities make it possible to search for properties in an extremely narrow range. If you use that range and come up with a property listed by two agents – then I’m sure it doesn’t take too much time out of your life to just pass on to the next one ? I have seen the same property listed by 4 agents in the same suburb 4 times in a row on the same website. People have a look at it once and then move on. Some even look and see which agent has the most information and then call that agent.

  • Sal Espro
    Posted April 28, 2009 at 1:18 pm 0Likes

    Bryan,
    Property.com.au *was* the only and Industry controlled portal. (It started the whole Australian portal model back in the 90’s, would you believe!) (And while NZ was approached to join with it, it went it alone and ensured that its market coverage would remain parochial).
    REA was only able to dominate once it got control of Property.com.au – after the Industry got rid of it to private hands.
    (Unfortunately, I think you’ll find that Ian Carmichael & Kevin Sheehan et al who were the agents who ‘did the deed’, (through their lack of vision or ‘respect’ for Fairfax’s ‘Rivers of Gold’?), buggered it for the rest of us!)
    The more recent Realestateview ‘Industry play’ some years later is really just emulating the Domain and REA model, isn’t it.
    And then there are Homehound et al…
    So, I guess I’m saying, Bryan, that I think you’ll find the horse has bolted. Better just settle-in, thank the old-timers for creating this rort and sell some stock to pay for your subs.

    Sorry,
    Sal 🙁

  • snoop
    Posted April 28, 2009 at 2:57 pm 0Likes

    200 bucks a mth for nz wld be fair
    its only 4m people
    and most live in Auckland!!
    Aus 22m people 600-800 a mth
    Seems pretty relative if anything NZ is too expensive prob why REA got out.

  • Robert Simeon
    Posted April 28, 2009 at 3:25 pm 0Likes

    I don’t believe either party are in a position to do anything – just yet. All will depend on the success of the Google property portal when it launches in the second half of this year. Assuming that Google then becomes the number one choice then it would be fair to assume that their respective prices will start coming down not up. Which explains the current position of freezing prices as Google has both companies feeling a tad cold. 🙂

  • Paddy
    Posted April 28, 2009 at 5:26 pm 0Likes

    A few random thoughts.

    1. Property.com.au was owned by RPData wasn’t it? RPData sold property.com.au to REA as part of an overall deal regarding data and what appears to be display advertising. Sal are you saying that RPData bought it from the ‘industry’?

    2. Bryan Thompson – you and others keep talking about NZ being a best practice case. But isn’t it more of a case of being lucky?

    Think about Property Page Partners NZ Ltd, and their relationship with the NZ institute over the years (I am not even raising the PPLNZ and PPL AUS touchy relationship). It is only in recent years that the relationship started to work.

    Then think about NZ only having 1 (one) REI, and favourable legislation towards it by the Govt. Essentially a closed shop philosophy.

    Is it more of a case of, how amazing is it that NZ took so long to get it right?

    Congratulations to all in NZ, the result is great. But given all the market conditions, the result should have been achieved many years ago.

    3. The established portals will want to stay with their Subscription model, purely because with an ‘all you can eat’ price point, they get all of a subscribing agents listings. (i.e. all the content for consumers).

    They know that if they go to a per property model, that they will lose content, and most likely the ability to sell ‘depth products’.

    They will most likely implement ‘packages’ of 0-10, 11-20 etc… packages, but only if Google’s foray starts delivering results for agents.

    4. Google – has a great opportunity, but there are some issues to over come. EG. Private Sellers will be able to list (is everyone ok with that?), there will be duplicate listings (harder to manage without a dedicated Property category IT team), you will most likely not have an account manager, so who do you talk to, to get things resolved? What about Data ownership – who owns it and what will Google do to prevent agents listings properties they do not have the authority for?

    Still, if we all have realistic expectations for Google, and realise it is Search based on Maps, and not another REA or Domain – then the end results could be very exciting.

    No wonder REA and Domain are ‘tad cold’ as a % of their revenues are at stake. Which makes more sense:

    a) Paying a Premium Subscription or Feature listings on the established portals. (Basic Subscriptions do the job, as home buyers will look at all online properties which match their criteria)

    or

    b) Paying a smaller amount of money to promote your listings, business and website on Google? Access to Google’s UB’s is extremely attractive, particularly if your listings are bringing people to your website.

    It is certainly going to be interesting.

  • Sal Espro
    Posted April 28, 2009 at 6:01 pm 0Likes

    Paddy,

    Property.com.au was originally Real Estate View (truncated to R.E.View), a JV between the REIV who assisted with marketing to other states. Following the debacle previously mentioned, it was ‘taken private’. It ended-up at PMP (the Yellow Pages and mag publishers and printers) which was controlled by Murdoch, who was very keen on it. Murdoch saw PMP collapsing and got out leaving Property.com.au to be picked-up by RPData who sold to REA – giving them the aggregation of their then major competitor whom they needed to dominate.

  • Robert Simeon
    Posted April 28, 2009 at 6:04 pm 0Likes

    Paddy,

    You make some great points. Regarding private sellers – if agents are concerned about advertisements appearing on property portals they should have a good hard look at their respective business models. I don’t have a propblem with this at all – as the smart agencies should use this as a perfect point of difference where their business model excels under such scrutiny.

    I see a major problem in our industry where agents keep taking investing back in their respective businesses for granted. No better example than the internet. An over reliance on third party assistance is a scary business model in my opinion.

  • Sal Espro
    Posted April 28, 2009 at 6:09 pm 0Likes

    Does anyone know what the deal is between RPData and REA?

    I heard that RPData is getting ‘very quick’ ‘feeds’ of listings from REA as soon as agents take them ‘off’. They then sell them back in ‘value-added’ form to the agents. So, how much is REA making from this? And if they are, what are the agents due from the process?

    Given copyright vests with the content creator, does this breach the listing agent’s copyright ?

    (Despite M McNamara and RPData’s mantra, I believe the base value in such data is in the listing and data addition provided by the agent – anyone can get Govt and vals type data but it is the original property listing and sales price etc that is the gold!)

    Perhaps agents should be placing a value on their listing and recouping some subs costs from RPData via REA (and Domain who owns their own data house)?

    Sal

  • The Insider
    Posted April 29, 2009 at 9:54 am 0Likes

    Ex-Portal Man, I think you’re right in that none of the portals have the technology required to offer a pay per lead model and would need to invest money to build the systems required to do this.

    Paddy, your comment about content is important. I don’t see any Australian portal moving to a subscription model which encourages agents to list less properties. Portals survive on content and having lots of it, so they want agents to list as many properties as possible.

    The current pay per property model works against this goal in that you pay more per property when you creep into a new pricing bracket. Looking at the Find A Property subscription costs, when you list 25 properties you pay

  • John the agent
    Posted May 4, 2009 at 9:59 pm 0Likes

    I just heard on the grape vine that REA is holding a big get together of all its global staff at a luxury resort in Queensland in July. Now I know where my subscription fees are going.

  • Paddy
    Posted May 5, 2009 at 4:53 pm 0Likes

    Paid for by the price freeze which still saw the annual price increase in the financial year John!

    It seems incredible that REA would be having a huge party, flying everyone from their global operations, to a luxury resort, whilst their customers face hard times.

    I wonder how many will be flying business class?

    A bit of fat at REA it seems.

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