By Bernard Hickey
Anger is building over decisions by real estate agency groups in Hamilton and the Hawkes Bay to pull more than 1,700 listings from Trade Me Property.
A vendor who contacted Interest.co.nz said she was disappointed and angry to find the listing for her house had been removed from Trade Me without consultation over the weekend.
"We're very serious about selling our property and we'd rather it was on Trade Me where you do get a lot of views," she said.
The vendor, who asked not to be identified, said she had complained to her agent after looking on Trade Me and finding the listing had been removed. She said she did not accept the agent's explanation that the listing was now available on Realestate.co.nz and this was a new company policy.
"Everyone goes to Trade Me. I've never heard of Realestate.co.nz," the vendor said, adding her listing had been difficult to find on Realestate.co.nz.
"I was really angry. I was kept in the dark and my commission is paying for any advertising. All it would have taken was a phone-call, but there wasn't any consultation at all," she said.
Trade Me has also said it was disappointed with the actions of the agency groups. Trade Me has sent letters to those vendors whose listings had been pulled, offering to reinstate them for free. The vendor who commented to Interest.co.nz had accepted the offer of a free listing for those whose listings had been pulled.
Interest.co.nz reported earlier that Monarch Real Estate Harcourts, Lugton's Real Estate and Lodge Real Estate in Hamilton had withdrawn their listings on January 17. Tremains, Sothebys and Property Brokers in Hawkes Bay have also since pulled their listings over the weekend. They argued they could not accept a quadrupling of fees by Trade Me, which has changed the structure of its fees for these offices from a capped monthly fee per office, to an uncapped fee of NZ$159 + GST per listing. See the changes detailed here at Trade Me Property's trade marketing section.
Trade Me said it had changed the fee structure to better reflect the value of the listings, given surveys showed half of property buyers in New Zealand found their homes via Trade Me and the website delivered over ten times more buyers than more expensive newspaper and agency magazine advertising.
See more on Interest.co.nz from research commissioned by Trade Me and other sources showing 47% of buyers found their homes through Trade Me and only 9% found their homes through newspaper or real estate listings magazine advertising. It also shows 81% of buyers used Trade Me to search for property and 68% said Trade Me was their primary search tool. The research found 35% had used Realestate.co.nz to search for property and only 6% used it as their primary search tool.
Helm says higher Trade Me fees justified, agents actions 'pathetic'
Former Realestate.co.nz Chief Executive Alistair Helm described the actions of the agents as amatuerish, embarrassing, pathetic and possibly illegal.
The Auckland-based Helm is now a real estate commentator and the publisher of Properazzi.co.nz.
He said the agents may be breaching the clauses of the Real Estate Agents Act that stipulate they must act in the best interest of their clients at all times, given property buyers now mostly used Trade Me to find property. Anything less would be limiting the potential pool of buyers, he said.
"When it comes to generating interest for property there really is no medium by which you generate interest outside of Trade Me. It's own data, validated by independent research, shows that 80% of all the time people spend looking at Real Estate is spent on Trade Me," said Helm.
Helm said the agents were taking a cavalier attitude and a big risk that clients would not get the best price because the highest possible number of buyers had not found the agents' properties.
"It's a very shortsighted and kneejerk reaction to something they should have thought about a long time ago, which is how are they going to deal with the fact that print is no longer relevant," Helm said.
Listing fees would inevitably rise to reflect the increasing use by buyers of online listings rather than print advertising, he said, pointing to the much more rapid switching of the relative shares of advertising spending in real estate markets in Britain, Australia and America, where around 50% to 100% of spending was now online, rather than in print.
He said New Zealand's real estate industry still spent more than 70% in print and less than 30% online because print advertising helped advertise and reinforce the major franchisor brands, including LJ Hooker, Harcourts, Bayleys, Ray White and Barfoot and Thompson.
Helm said he expected agents and home owners could eventually pay as much as NZ$1,000 per online listing, citing examples in Australia, where online listings were as much as A$850 a month per listing.
"If the agents are baulking at NZ$150, get real, it doesn't get any cheaper. And how much of their money or their clients' money are they prepared to spend in the Property Press? About NZ$1,500 per listing per week in Auckland. And they're baulking at NZ$159 for an unlimited time on the genuinely biggest medium by which you reach and audience?," Helm said.
"It makes the industry look pathetic and amateurish and self centred and money grabbing," he said.
All about branding in print
Real estate agency groups would have to accept higher online listing fees and eventually give up their long-established and lucrative arrangements with publishers such as APN, which owns the New Zealand Herald and Property Press, and Fairfax, which owns the Waikato Times, the Christchurch Press, the Dominion Post and many other community newspapers.
"They've (agents) had it great for so long. They've not really paid a genuine cost. It has quadrupled, but that was only because Trade Me was working hard to establish their audience base and demonstrate the value of online through lead generation. And now Trade Me is saying: OK, let's make this competitive with the medium you prefer to use (print), which represents around 70-75% of the dollars spent in the industry."
Helm said agents were currently prepared to charge clients NZ$1,000 to NZ$1,500 for a page of advertising in the Property Press, "which doesn't generate any leads and has no audience."
"It's in their best interest to perpetuate print media because it’s the most effective brand marketing that is available for their brands," he said.
"That brand presence and colour and design where the property is second to the brand suits their objective, plus the industry of print media is very much in bed with the (real estate) industry, spending a vast amount of money in hospitality and rebates and education to perpetuate the industry's love of them."
Helm added that the use of print to reinforce the brands of the big chains also served to stymie competition from new entrants.
"It's stops others establishing their position, whereas the web democratizes it, because the web is structured around what people want, which is location and price. You can't sort the Property Press into location and price. It comes to you sorted by brand because it's in the Property Press' best interest and the advertisers' best interest," he said.
The franchisors remained fixated on print advertising despite the evidence showing most buyers used online listings as their main way to find a home, he said.
"The training courses that real estate agents are entirely taught for print media, which is how to sell it and use it, and how it's great for the brand, which is good for the agents."
'Reaction may kill golden goose'
Helm said agents had better be careful not to overplay their hand for the sake of NZ$159 per listing, given home sellers could use their power to pay around NZ$300 to list privately and avoid having to pay around NZ$18,000 in commisions.
"The agents don't have the power today to boycott Trade Me. The consumer has the power because their strongest suit is private listings," Helm said.
"It costs the home owner NZ$300 (to list privately) and the home owner's going to pay NZ$18,000 for the commission? This is stupid. Why is an agent fighting over NZ$150 when they want to justify a commission of NZ$18,000 to sell the average home today," he said.
"It's so amateurish and embarrassingly unprofessional in my view."
Helm also questioned whether the revelations about agency groups talking to each other about the boycott represented anti-competitive collusion under the Commerce Act.
"That to my mind is very close to what the Commerce Commission considers collusion," Helm said.
"They haven't thought long enough about what they're doing."