Hamilton and Hawkes Bay real estate agents pull 1,700 listings from Trade Me after change in fee structure; Trade Me appeals directly to home sellers

Hamilton and Hawkes Bay real estate agents pull 1,700 listings from Trade Me after change in fee structure; Trade Me appeals directly to home sellers

By Bernard Hickey

Real estate agency groups in Hamilton and the Hawkes Bay have pulled more than 1,700 listings from Trade Me Property since mid-January, arguing they are not prepared to pay a quadrupling of fees.

Describing the new fee structure as an "arrogant, dumb and stupid hydraulicking" of prices, some agents pulled their listings from Trade Me without first telling their customers and said they saw it as an opportunity to break away from Trade Me and re-direct vendors and home buyers to Realestate.co.nz, which is controlled by agents.

Trade Me founder and director Sam Morgan later tweeted: "Trade Me is the best value way to sell your home. Costs $159 through an agent. Agents cut off noses to spite face. Turkeys."

Others said they had been telling vendors since late last year they planned to withdraw their listings from mid-January and were hopeful Trade Me would revisit the fees structure. The agents are now offering Trade Me as a 'cost-plus' option, although some are telling vendors any extra spending would be better used on print advertising or feature listings on Realestate.co.nz.

Trade Me said it was disappointed by the agents' decision to pull the listings and had sent letters by courier directly to the around 1,300 vendors whose listings had been pulled, offering to reinstate them until their property is sold. 

Late last year Trade Me told smaller real estate agency groups it would begin charging NZ$159 per per listing, rather than a capped monthly fee per real estate agency office. The agency groups involved said the change would quadruple or quintuple the monthly cost of their listing fees, which they had previously absorbed within their own fee structures with vendors. They are now being encouraged by Trade Me to 'on-charge' the fees to vendors.

'A small proportion of overall agency commissions'

Trade Me said the change to a per listing fee rather than a monthly per-office fee meant small offices with a few listings saw costs unchanged or even lower, but it acknowledged the larger offices would have to pay multiples more than the 'tiny' average fees previously paid. It said the NZ$159 fee per listing remained a small proportion of overall agency commissions and better reflected the value Trade Me delivered, given half of buyers came via Trade Me and the website delivered over ten times more buyers than more expensive newspaper advertising. Larger real estate agency groups remain on larger bulk deals with lower average fees per listing, although they are due to expire later this year.

Hamilton's Monarch Real Estate, a Harcourts franchisee, and Lugton's Real Estate in Hamilton have both confirmed to Interest.co.nz they withdrew their listings from Trade Me on January 17. Trade Me said Lodge had also withdrawn listings. A spokesman for Lodge did not respond to Interest.co.nz's messages to confirm the withdrawals. There were 9 Lodge listings on Trade Me as of Monday evening, while there were 102 Lodge Hamilton listings on Realestate.co.nz. Property Brokers' Hawkes Bay offices had also pulled their listings as of Monday, Trade Me said. A spokesman for Property Brokers has yet to respond.

Monarch Harcourts General Manager Brian King said his agents were still offering Trade Me listings to vendors, but only as an add-on with an extra cost of NZ$159 + GST per listing. King said Monarch Harcourts would continue to absorb the cost of print ads in Harcourt's fortnightly bluebook and the Waikato Times, as well as the cost of listing on Harcourts.co.nz and Realestate.co.nz

"The cost of this has been hydraulicked. If it was a gas station or supermarket, there'd be people standing outside with placards," King told Interest.co.nz.

He said the Trade Me listing costs were four to five times the previous costs and Monarch could not absorb it. 

"I don't see value for every listing being on Trade Me for what they're trying to charge us now," he said.

Monarch Harcourts had told its agents to inform vendors whose listings had been withdrawn. King said there had been two or three complaints and only half a dozen vendors had taken up the option of paying extra for a Trade Me listing. Monarch Harcourts had previously had up to 500 listings on Trade Me at any one time, King said. There was just one Monarch Harcourts residential listing on Trade Me on Monday evening. There were 213 Monarch Harcourts listings on Realestate.co.nz on Monday evening. 

"You can't just expect to put up your prices so much and expect people to just sit down and take it. It just doesn't work," he said.

Lugton's Real Estate Sales Director Simon Lugton said Lugton's was no longer recommending a Trade Me listing and any vendors wanting a Trade Me listing would be charged the NZ$159 + GST. Lugton's started telling vendors in November that it wouldn't be absorbing the cost of listing on Trade Me from early in the New Year.  

'Quintupled costs'

Lugton said only four out of 100 vendors had chosen to take up the option of paying extra for a Trade Me listing and he had not received any complaints.

He said the change in the fee structure would have almost quintupled Lugton's Trade Me costs.

"It was a bit of  a dumb strategy and a little bit arrogant of them," Lugton said, adding Trade Me did not have a monopoly and vendors could still use the agents' own websites and Realestate.co.nz.

Lugton's would continue to absorb the cost of putting listings on Lugtons.co.nz, Real estate.co.nz and publishing black and white newspaper ads in the Waikato Times when space permitted.

He said Realestate.co.nz now had 915 residential listings from all Hamilton real estate offices, while Trade Me had 454 residential listings for Hamilton, including both private sales and agency represented sales.

"We saying to our vendors: 'You may as well be on the site that's got everything -- Realestate.co.nz. If you want to spend NZ$159 + GST, we can find a better way for you to promote your property. That would be print, or signage or a feature listing on Realestate.co.nz."

Lugton said the fee changes came at an opportune time.

"When I heard the news I thought it was a great opportunity to move away from Trade Me. I wasn't particularly happy about being on there in the first place. We went onto Trade Me a number of years ago. We felt we were forced to because our competitors were on there, but we didn't want to go there," he said.

Not all Hamilton agents have pulled their listings from Trade Me. Bayleys Waikato had 148 listings on Trade Me on Thursday evening, while LJ Hooker Hamilton had 82 residential listings, Eves Hamilton had 66 listings and Ray White Hamilton had 117 listings.

Lugton said he had some discussions with other Hamilton agency group principals, but the decision was a commercial one taken by his agency alone. He noted he had received calls from elsewhere in New Zealand about the Trade Me fee increases.

"They're of the same mindset that they're moving out of it," he said.

The linked agencies of Tremains and Sothebys in Hawkes Bay also confirmed they had pulled their listings from Trade Me as of February 1.

Morgan later described the comments at "Agency collusion at its best."

See more commentary from a vendor and industry veteran Alistair Helm in this piece on Interest.co.nz

David Hargreaves also comments on the issue here at Interest, comparing real estate agents to the printing unions in the pre-computer era and saying it was a battle they could not win.

'Nothing's forever'

"The cost proposed to us by Trade Me we couldn't live with, but nothing's forever," said Tremains Sales Director Cam Ward. 

"Everyone is trying to run a business and jostle for business and that's the tack they've taken, and we're happy to discuss it with them," Ward said. Tremains had withdrawn around 350 listings, he said.

"It's unfortunate. I'd like to think we could work out an amicable agreement where everybody's happy. At the end of the day we want to best serve our vendors and this at the moment is probably not the best way to serve our vendors, so if we can work something out that works for all parties concerned that would be the best outcome right across New Zealand," Ward said.

Tremains advised vendors in writing of the change, he said.

Trade Me said it had sent letters to around 300 vendors with listings through Tremains and Sothebys.

Trade Me responds

Trade Me Chief Executive Jon Macdonald said the fees had been changed to better reflect the value offered to vendors, given around half of buyers came via Trade Me.

"Under the new model, we believe our fee for agents of less than NZ$200 + GST per listing until the property is sold still represents great value for money," Macdonald said.

Trade Me said Nielsen Online data showed it received more than four times the visitors that Realestate.co.nz received and research Trade Me commissioned from Perceptive showed Trade Me Property was the source of over 10 times more buyers than newspapers.

Macdonald said he was disappointed some offices had taken down the listings before the end of the month, given the offices had already paid for them. 

"The crazy thing is these listings have already been paid for, either by the vendor or the agent. It's disappointing to us that some real estate offices have chosen to take this approach and disadvantaged their current customers," he said.

Macdonald rejected the criticism that Trade Me had overplayed its hand and defended the higher fees.

"Our fees are only about 1% of the commission an agent will get on an average-priced house – pretty good given that more than half of the buyers of houses come through Trade Me," he said.

See more from research on what tools buyers and sellers use to buy and sell their properties.

(Updated with Property Brokers Hawkes Bay pulling listings to, and link to article with research on how property is bought and sold, also updates with Sam Morgan's comments and a link to David Hargreaves' commentary)

 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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I like the way the agents say they can't absorb the costs.The truth is that they charge like a wounded bull and costs come out of the commission.If they don;t do this then they are nuts.
Nothing is free in this life.

... who'd have thunk it , our real estate agents are revolting  ... ... nyuk nyuk nyaaaaaaah !!! ...

Haha Mr Bear, i will have to start getting up earlier in the morning. Saw that that headline and thought the same reply. It was just asking for it.  But you beat me to it.

Just sold a house privately via Trade Me. $399 well spent compared to $12000 plus from an agent. About time agents looked at their fees before blaming others.

Cue several agents telling you they would have sold your house for more than $12k+....
 

Odds are that you sold for a lot less than what an agent could have got less their fee.
 
Some agents actually offer guarantees that if you don't a minimum price then no commission is charged:
 
http://timaruhomes.co.nz/content/price-quote-guarantee.html

Ha ha definitely not. Was told by the local agent that our asking price was too ambitious and that we would be better off dropping our price and listing with her.
A good sign, Trade Me and a fair price......one week later an unconditional offer. Happy seller ,happy buyer, happy Trade Me.
This was in a small town where real people deal with real people. A handshake and the lawyers do the rest.

Yep, suits me, less of those detestable "price by negotiation" or "offers over" agency sludge phishing for greater fools clagging up the site. Honest vendors seeking the true value will remain.
TradeMe will be the only place I look.

..... me too ... and if the vendor is too lazy to work out the actual price they want for their property , they can keep it ... turned off by " tenders " , " offers over " and " PBN " ....
 
TradeMe is still the only place I go looking ....

Fair enough the estate agents shifting their business away from Trade me.
It's always puzzled me why they used Trade me so much when they have their own web presence and could market it and use it so much more effectively.
Not everything has to go on Trade me does it.
PS: Isn't Trade me a website best suited to poor people looking to sell their second-hand undies and shoes to each other? Correct me if I am incorrect.

I will correct you as you are (incorrect or "wrong")
Some people think that instead of buying something new it might make more sense to buy second hand to reduce waste and energy comsumption on the production of more crap we don't need.  
 
I'm starting to understand the frustrations that steven and PDK show in their posts.  Do you really not get it?  We live in a finite world....   In saying that secondhand undies is probably a step to far.

... if you're going camping this summer , a secondhand pair of Gerry Brownlee's undies would make an excellent tent ....

Only four people in our family though Gummy :)

..... rent out the left side and the " action man " jockey support gusset to folk with earthquake damaged homes ...
 
The kiddies can use the triple width elastic band as a rollercoaster ride ...

Well it sells second hand clothes, cant say Ive looked in that section though so no idea if it has second hand undies.....
and yes he's wrong, great place for hard to get or obsolete parts, parts sold by web presence only startups at a good price and not a bad spot to sell off no longer needed items for a return.
No he'll never get it until he hits a brick wall, as will profile and in particular libertarians and many hard left or right wingers...their entire mantra/outlook goes bye bye once they can get cheap energy.  
Probably quite a few more customers for Brendon to look after.
regards

Yours is a sophisticated veneer, a fashionable reason, for admitting Trade me is for poor people then?

Trademe is for Traders...are you too rich to use it my Landlord...do you buy everything brand new?

Yep... used stuff looks terribly out of place around here. 
And I am definitely not a trader, prefering to buy and hold.

Yours is a sophisicated veneer of ignorance then?

Welcome to the "Free Market" real estate agents .....and a "goodonya" Trade Me as in a free market , you can charge what you like.....and RE agents can advertise where they like too.  
 
Until the Real Estate industry in this country becomes more "transparent" in the way it advertises the price or a price indication for it's properties, instead of all the "Auctions", "PBN's", "Offers" and "For Tender" etc etc ....all to promote the "greater fool" theory, I will have very little time for them.  
 
 
 
 

If most agents don't advertise on Trademe I would just use realestate.co.nz. I won't lose any sleep about it.
 
Looks like a bold but smart move by the RE industry. Never understood why they didn't do it sooner. I expect to see TM rolling out a different approach very soon whilst they lick their wounds. 

These agents have had such a good run in the past year in Auckland , they have no right to complain . Their  commissions are extortionate
And they dont hesitate to show off the bounty either
An agent I have known for years was a real battler  and job-jumper  , works on the East Coast Bays just bought himself a new crisp white BMW X5 diesel ( not a used import either) , with a new jetski in matching colours .
I hope the wheels dont come off

REA commissions and the prices TM charges to advertise on their site are two very different things. 
 
Good to hear of people working hard and doing well.

Exactly as predicted.
 
All agencies should collectively ditch trademe and advertise solely on realestate.co.nz.  Trademe has useless functionality when it comes to realestate searches so they deserve to be outin the dust bin.

Would it be anti competitive for all real estate companies to get together and boycott trade me?
I'm not sure trademe has thought this through - their real estate business could be wiped out in a matter of days!
I heard an ad for trade me real estate on the radio yesterday, never heard one in the past!

That Alistair Helm is a real negative bugger.... How did he ever get a job at www.realestate.co.nz?

I'm not a great fan of real estate agents...but good on them for making a stand against the fees increase.   Did TradeMe change the level of service provided ? No .   They just thought that they could get away with charging more for the same  and call it "value".

If you are an existing customer and prices rise, this is seen as a loss, especially if no reason or appropriate explaination is given to justify it. Customer flight is be one reaction. On the other hand if you are new to, in this case TM, you will make a judgement on your research as to the better deal, i.e. current price for listings and benefits that suit you. No history, no reference point.
That is all there is to it, RE agents like all others in the selling and buying game should be free to list, market, advertise where and how they think fit.