Alistair Helm explains why real estate agent boycotts of Trade Me Property are marketing madness

Alistair Helm explains why real estate agent boycotts of Trade Me Property are marketing madness
Difference in listing numbers between Hawkes Bay and Tauranga post Boycott - Properazzi

By Alistair Helm

This week has seen significant media interest in the boycott of Trade Me Property by agents particularly in the Hawkes Bay and Hamilton City.

Articles written have proffered opinions that "The real estate industry has a lot more to lose than Trade Me" and gone as far to look to whether the Commerce Commission will investigate the potential breach of the Commerce Act or whether the governing body of the Real Estate Agents Authority will clarify if the action of these agents is against the best interests of the vendor as the agents clients.

shared my opinions with Bernard Hickey as in my judgement this is a matter that should not result in vendors' property listings being used as pawns in this standoff.

The fact is that there are vendors in these two regions of the country who are missing out on valuable marketing on Trade Me and as ever with the web, the data is there to back up the story.

Firstly look at listings. Generally Trade Me and Realestate.co.nz enjoy the support of all licensed real estate agents across the country (up until this time), Trade Me holds a larger stock of listings nationally as they feature private sale listings which are usually around 15% to 18% of the total of property for sale.

Looking at the Hawkes Bay data on the respective websites today based on comparable listings of residential and lifestyle property shows that there is most definitively a boycott. Compared to a similar sized area such as Tauranga the Trade Me listings are down 55% as compared to Realestate.co.nz in the Hawkes Bay whereas the listings ratio should be similar to Tauranga with around 15% to 20% more - this means that around 1,000 properties in the Hawkes Bay are not being featured on Trade Me Property. These are listings from offices of Property Brokers, Tremains, Sotheby's and others. Importantly these offices have withdrawn all the listing - recent listings as well as older listings.

These c. 1,000 listings are not attracting potential buyer interest from the more than 120,000 property buyers per day using Trade Me Property.

As a buyer accustomed to using Trade Me when searching for property there is no recognisable experience that will tell a person that there has been a boycott.

The functionality of the web allows for tailored searches by location, price and type and at no point do you get a sense of the number of listings in relative terms. That is why the level of viewing of individual properties in the Hawkes Bay has not changed since the boycott began. This can be proved by this simply analysis.

Taking two properties that are advertised by Ray White (who have made no mention of their intention to join any boycott) that were both listed on the 5th February. The level of viewing on these properties comparing Realestate.co.nz and Trade Me continues to show the general trend of a 10+ fold higher viewing on Trade Me Property.

Now look at a couple of examples of the c. 1,000 listing not shown on Trade Me Property, they are not getting more viewing on Realestate.co.nz because they are not on Trade Me - here are comparable stats. It clearly shows that there is no greater viewing on Realestate.co.nz because these properties are not on Trade Me Property.

The vendors of these properties are not receiving the exposure they should. The scale of the loss is substantial - every day these c. 1,000 properties are missing potential buyers which has the potential of lessening the sale impact and competitive pressure in the market. The fact is the medium of choice when searching for property by over 90% of home buyers is the web. There are only two websites for real estate in NZ and Trade Me dominates to such an extent that not being on the site is marketing madness.

What perplexes me is that the real estate industry continue to think of online advertising as a cost, in the same way as they think of the photocopier as a cost or the phone system. They do not think this way about their preferred medium of choice - the newspaper or property magazine, that they think of as a re-charged advertising medium.

A single property advertised on Trade Me Property cost them $159 + GST. That advert works everyday to market that property until sold and would costs private seller upwards of $400. So why don't they front up to their clients and say " Our recommendation is that we market your property on Trade Me Property at a cost of $200 and Realestate.co.nz for $100 - that way your property will reach 90% of buyers" (that cost includes a small margin for admin - which they need to disclose under the REAA). If they are not confident to ask for the money upfront they could suggest adding it to the commission upon the successful sale.

This boycott is hurting the clients of these real estate agents, vendors will very soon be up in arms and potentially pulling their listings and moving across to agents who don't treat their property as a pawn in the internal squabble between Trade Me Property and the agents. These agents would be wise to reflect that to the average kiwi Trade Me is far more loved than a real estate agent!

For reference here are the links to these listings highlighted above:

Ray White Listing #1 "When location counts" on Trade Me

Ray White Listing #1 "When location counts" on Realestate.co.nz

Ray White Listing #2 "Seriously Special" on Trade Me

Ray White Listing #2 "Seriously Special" on Realestate.co.nz

Property Brokers Listing "Rural views" on Realestate.co.nz

Tremains Listing "Modern Brick Home" on Realestate.co.nz

This article was first published on Alistair Helm's Properazzi website and he is the former Chief Executive of Realestate.co.nz.

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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This is codswollop.
 
Buyers are not that dumb that they can't find where properties are advertised!
 
Trademe gets masses of hits mainly from time wasters who are whiling their boss's time away.  Agents own sites or sites that they are directed to, get the real lookers.
 
The fact is most agents dealing in a specific location have their own sites, and buyers in those areas know where to look or are given the information on the open home scene.
 
Trademe is just a redundancy.
 
Do you Alastair or Bernard seriously believe that it would make one iota of difference to the Ponsonby market, for instance, if trademe wasn't used?  I don't think so.  The only persons slightly disadvantaged might be private sellers, however in places like Chch where the 1% agents thrive, you can latch onto the real estate websites, and get a middle man to do all the donkey work for a tiny fee.  Maybe Auckland just need some low fee agents?

Interestingly trademe now down a third from its peak $5.43 to $3.52, clearly the market realises trademe offers nothing unique and charging obscene fees is destroying any market share they thought they had.
 
Another accurate piece of foresight from myself...

Whos replacing them?
I can see no one yet.
 
regards

Goodness, Alastair, how ever did properties sell before Trademe!
 
I'll repeat my comments on the other thread which quoted him at length:

When he hires a lawyer at, say, $250 an hour, does he ask them to pay for disbursements which might total just one or two per cent of the final bill? I suggest he doesn't. He is probably happy to receive their expert advice and is happy to pay for that advice. He would not be so cheeky as to ask lawyers (or any professionals) to pay for disbursements or any other add-on costs. But he expects real estate agents to pay for additional costs. I can only assume he doesn't like agents. Indeed, he has been critical of them in the past.

If, as he suggests, a fee of $159 plus GST is cheap, presumably vendors will be only too happy to pay it.

He compares NZ to Australia, for a reason that isn't at all clear. Australia is a high wage economy, NZ a low wage economy.

Sellers can be on Trademe if they wish. The only difference now is that they will have to pay to be on there.

Alastair refers to commissions of $18,000. He seems to have plucked that figure out of the air. In my region, the average (media) sales price is $220,000. Agents would have to charge about 8% commission to get $18K. That would apply elsewhere too, except maybe in the main centres.

The $159 is real and an up-front cost. The "$18,000" commission is notional (and grossly over-stated). It is only paid when a property sells. Some properties do not sell, or maybe sell after they have changed agencies. In other words, agents won't be taking the $159 out of their commission because there will be no commission.

Alastair's comments are one-sided and disappointing for someone in the industry.

By the way, about 97% of all agency listings are on www.realestate.co.nz. I understand this is more than what's on www.trademe.co.nz.
 
Alistair, you might like to explain how Trademe justifies it's astronomical hike in fees when it doesn't promote all listings, and whether this represents good value when the company that advertises more properties charges nothing to vendors.

Yeah, but trademe changed the way Real estate agent's do business, Remember the days the Real estate agent would never give you the address (only six years go), ie show you a picture but provide you no address and little information, you would then have to ring the agent who would then try to upsell you - this changed when trade me came along. 
 
So trademe has in effect changed this behaviour - i just wish iron bridge would show the address, saves time.  The other thing with trademe is the qv reports sometimes, having just been in the market can give you a rough indicator to price expectations etc, i use trademe and then http://www.realestate.co.nz/.

I was definitely using realenz (predecessor of real estate) in 2000 and I think I started searching  using realenz in 1996 ish although I may be mistaken on the exact year.  I've always favoured realenz/real estate over newcomer trademe.
 
So trademe did't invent anything and they aren't even doing it better, it's just that they are more seen.

Isn't that the point though - "they are more seen", as you put it?
 
I'm with Alistair on this one - it makes no sense not to be on TradeMe given the familiarity of the front end/interface is so widely known. For the small price of an agency listing, sellers need to be there.
 
Given this recent move by some agents, I just today set up an account on realestate.co.nz - which is annoying given I already have an account on TM and am familiar with the site.  As a buyer, I'll look everywhere .. so no real issue for agents there - but as a seller I wouldn't go with an agent who didn't list on TradeMe as well. Would I as a seller be prepared to reimburse the agent their costs for a TradeMe listing - probably - but then I'd also be likely to prefer the agency that paid for it themselves as it is a very small cost.
 
I recently sold a property myself via a TradeMe listing because it was a very large LSB/small farm and I knew no agent could/would drive and walk prospective purchasers around the property like we did.  TM is an important alternative to agents for property owners - particularly those with properties that have unique aspects to them.

Don't tell me the wind finally got to you.  So now its a place by the beach?
 
You didn't comment on this thread I was waiting for you.
 
http://www.interest.co.nz/personal-finance/68343/nz-has-no-option-co-ope...

Hi Andrew, (haha) - no it wasn't the wind (it was worse on the beachfront at Kapiti!); more the size of the property - too small to make a return (or break even!) and too large to relax by doing nothing.  They say LSB can stand for life sentence block .. we know what that means now :-) as there is always something to upgrade or maintain, no?
 
So we've moved back into town, bought the sports car and and yes, still looking for the bach - have my eye on a classic 30ft motor sailer; need to consider where to moor it if we go that way.
 
Yes, I read the FATCA discussion thoroughly. My US passport has expired and so I'm keeping my head down watching all this bed in, so to speak :-).  Haven't lived there since I was 21 and don't think I ever filed a tax return while there (given I was only ever doing part time work as a student up until I left permanently). Plan to apply for NZ citizenship (so I can get another passport!) - meantime, I'm grounded :-).
 
 
 
 
 
 
 
 

I had a laugh with our local MP once, its was just after GST came in. They picked a few who had never registered for an IRD number. They were invisible to the IRD, when GST came along they picked up a dentist in AKL who had been running his business for over 20 years and never been registered for tax and never paid any tax or accountancy fees.
 May the force be with you

Thanks! I do have an SSN - and believe it or not after all these years I can still quote it from memory. Oddly, I can't do that with my IRD number. Weird, eh? Must have thought myself more of a number when living in the US!

Well gas prices are better noiw, Im paying about $3.20 a gallon. The economy I think is in the 'new normal' phase, going no where.  All the local business owners are being hit with Obamacare and the local cobber told me its costing him an extra $1200 a month.
 San Fran looks prosperous but still lots of beggars around, the rest are all working as much as possible to survive.   Traffic is crazy almost all the time.
   I keep my cottage empty if you want a break in the Bay let me know.