The world of real estate is changing at a rapid pace, and the industry itself is facing a number of fundamental shifts. With a host of industry disruptors entering the market, it’s no surprise that some agencies are starting to sweat – but could any of these new start-ups really challenge the status quo?
At first glance, it can appear as though some of these new players have the potential to change the game. However, once you look a little deeper and cut through to the core of their offering, you’ll quickly awaken to their bargain-basement style of service, and like anything in life, you get what you pay for.
Essentially, these businesses are based on the concept of selling property for a cheaper price, where sellers agree to pay agents a flat fee rather than a percentage of the total sale price of their home. While these sorts of arrangements promote the idea that they save the customer money, they effectively remove all incentive for the agent to strive for a better sale price, which could of course mean a difference of tens of thousands of dollars.
That’s hardly what I call better value!
Here are my top 5 reasons why discounters will never replace the need for a traditional agent.
1. They don’t invest in advertising
As the CEO and Director of Biggin & Scott Knox and creator of the $1M Agent System, an innovative real estate agent training methodology, I firmly believe that a strong marketing and advertising strategy is absolutely crucial to bring in the best possible sale price.
Advertising is one of the biggest areas where these budget agencies fall short – because good advertising isn’t cheap. Advertising is essential, because it creates buyer competition, which ultimately drives up the price. By failing to implement the necessary advertising campaigns, agents will consequently provide a substandard result.
2. Agents lack the skills
Following on from my last point, I truly believe that agents gravitate towards cheaper brands because they lack the skills to be successful in a more competitive environment. Whether it’s the skills to advertise, to negotiate, or properly present the property, lacking in these essential skills can seriously jeopardise an agent’s career.
Although some agents overseas may have seen success with agencies like Purple Bricks UK, it’s important to consider the major differences between the UK and the Australian property market. In the UK for example, a lot of the properties are very similar, which leads to direct comparisons with respect to selling prices.
On the other hand, properties in Australia are highly versatile and usually not consistent with neighbouring properties. This changes the playing field because there is so much variation. Comparing two neighbouring houses could be like comparing apples and oranges, and the need for a well-trained and highly skilled negotiator can make a world of difference to the sale.
3. Local knowledge drives better results
One of the many benefits of working with a local agent is the abundance of community knowledge and expertise that is invaluable when it comes to selling homes.
When a vendor chooses to hire a traditional agency, they’re not just hiring one agent, they’re employing a team of agents who are all motivated to get the best price for the property. Additionally, a traditional agency has built up a substantial database over a significant period of time, which they know intimately and can tap into when finding interested parties.
Alternatively, when the vendor decides to work with a budget agency, they will be working with one lone operator who doesn’t have the advantage of a skilled and well-connected team or database to leverage off.
4. Smart sellers know better
Years ago, the Australian dream was to own our own home. But our bellies have grown bigger than that – we now want to own multiple homes. Investment properties have become far more desirable than ever, and more and more people are making it their business to educate themselves about the property market and understand the skills a good agent possesses.
More importantly however, smart sellers understand the importance of obtaining the highest possible price for their most valuable asset, because it enables them to take another step along the ladder of their own property portfolio and that in order to achieve that they need an agent who knows the industry inside out.
5. They aren’t in the vendors best interest
Budget agencies may be cheap – but they’re certainly not in the vendor’s best interest. In fact, the only reason agencies like these have come this far is because they appeal to a customer’s sense of frugality.
This sort of agency will never attract the best agents, because they know it’s not best for the vendors nor is it best for themselves and their brand within the industry. Without a strong competitive edge, agents can never expect to achieve a great price for a property.
If an agent is well trained and on top of their game, they don’t need to fear industry disruptors – their skills, training and subsequent success will speak for itself. Ultimately, hiring a budget agency is only ever going to earn vendors a budget sales price, but the high quality agents will set themselves apart and continue to achieve ongoing success.
Adam Flynn is the CEO and Director of Biggin & Scott Knox, an Award winning Sales Agent, Auctioneer and Property Investor. Adam is recognised as one of Melbourne’s most successful Agents, having grown his franchise from one office to four in just 5 years after developing the $1M Agent System, an innovative methodology designed to take an Agent with limited experience to writing approximately $1M within 12 months by providing a system which helps them achieve a 90% listing conversion rate.
For further information, interviews or speaking engagements, please contact Chiquita Searle – p: 0423 686 380