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Creating a better way to sell property - need help!

Discussion in 'The Buying & Selling Process' started by Peter L, 11th Oct, 2015.

  1. Peter L

    Peter L Active Member

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    Hi guys,

    I have noticed the large sums of commissions vendors have been paying agents and I am trying to find a way to break down the costs involved - especially since most of the legwork can now be done online! I wanted to start a thread to work out what people's pain points are around selling property. Hopefully in doing so, we can build something useful for the community!

    Firstly for the property veterans - would you be interested in portal which lets you upload / manage your property listing on realestate.com.au and Domain for free? If so, what else would you want at costs which aren't marked-up by agents (e.g RPData reports, professional photography, vendor support, legal docs, expert auctioneers/negotiators etc.)?

    By way of background, I currently work in a finance & strategy role at an ASX10 company (in Melbourne). Prior to that, I worked in investment banking. I started my career working part time in residential real estate for (~6 years).

    I am keen on hearing people's thoughts! I will build a portal if people are keen.
     
  2. Greyghost

    Greyghost Well-Known Member

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    Are you here to help and add value to the PC community? Or looking to exploit members knowledge for your own business venture?
     
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  3. Peter L

    Peter L Active Member

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    Hoping to create a bit of a win-win situation here? Doing a bit of market research into whether or not this would work.

    From what I know, all an estate agent does is:
    1. Value your property (we all now have ways of doing this)
    2. Determine a marketing strategy (we can work this out pretty easily)
    3. Put up an ad on realestate.com.au (we can't do this on realestate.com.au unless you're an agent)
    4. Take some photos (which the agent doesn't do anyway)
    5. Take people through homes / answers enquiries (usually done by a junior agent)
    6. Negotiate / auction off the property at the end

    I'm struggling to work out whether paying $15k for a $1m home (1.5% commission) for this is making much sense to me.
     
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    t
    I face this a bunch in the businesses we run (or that run us), and businesses that many of my friends/ associates operate.

    What it looks like on the outside, vs the inside is often VERY different.

    Id suggest you get out there are and get your piece of paper so you can do some inside research .

    There are MANY cut price agencies out there already, and they do ok.

    ta
    rolf
     
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  5. Peter L

    Peter L Active Member

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    Definitely agree with your Rolf - there is a lot of work to be done on the back end, but I believe a lot of this can be automated. I have a law degree and an estate agent's licence - a cert IV earned over 12 months, as opposed to one of those dodgy 3 day courses!

    You also raise another fair point - there are plenty of cut price agencies out there. Unsure if they do ok though?
     
  6. E.T

    E.T Active Member

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    Do you have any of the gatecrasher albums?
     
  7. Peter L

    Peter L Active Member

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    When I picked my avatar, I had just re-watched season 5 of Game of Thrones...
     
  8. Big Will

    Big Will Well-Known Member

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    You assume a lot of people have this knowledge. I can give you countless examples of people with intelligence that couldn't do point 1.

    My uncle and aunt who are both high school teachers and one being head of a department were unable to determine the value of their property. I had no knowledge of the market and lived about 2,000km away yet I was able to get the price within 5k of their property ($330k and sold for $335k). However the agent told them $380-400k and they believed it.

    Point 5 - Most agents will run their own open houses. The ones that get palmed off will be a stale property or the owner of the business got the listing and is passing experience/leads onto a new sales person.

    Point 6 - Negotiate isn't this one of the main reasons why you pay a REA, plus other reasons like putting an extra person between you and the buyer.

    Also that 15k for 1M house, out of that the REA might get 20% for listing ($3,000) plus 20% for selling ($3,000). If they sold listed 10 houses in the year and sold 15 houses they would earn $75,000 for the year (less tax).

    I don't see them really killing it...

    There is that much competition in RE for agents that if it was sustainable to do it for 1/2 the rate they currently charge you think there would be agents charging that price?

    It is like a petrol station charging 60c litre do you think all the other stations would change their price to match it or just go nah we will leave ours at $1.2 L...
     
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  9. Peter L

    Peter L Active Member

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    Thanks - you raise a lot of fair points. Something needs to be done to the entire cost structure of an estate agency in order to reduce the cost of selling for a vendor.

    In relation to point 1, doesn't that go to show that if a person has the right tools, they can get an accurate enough valuation (e.g. your valuation vs. the agent valuation)
     
  10. Big Will

    Big Will Well-Known Member

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    Again if the agency was able to reduce their commission don't you feel they would of already? It isn't just an agent, a laptop and mobile that a REA office has.

    There are additional expenses like insurance, leases, cars, advertising (yes they pay for their own), admin staff, training, software systems (CRM etc), outsourced work (IT support, accountant etc etc), expansion plans (hire more staff, another office) and the reason why everyone should be in business profits.

    Dropping the commission rate means that the business will be unable to do one or more of the above and if they are not making a profit why would they do all this and have the risk?

    TLDR there is to much competition for a REA to be absolutely raking it in by charging over the top from a business prospective. You may feel $15k is to much for $1M sale however when you work the numbers backwards it doesn't look as pretty.

    RE having the right tools -
    My tools was re.com which is public information and free, however it isn't just the tool you also need the skill set to utilise the tool.

    So the two teachers have the same tool I used to get what I felt the price would be however they didn't do their DD.

    You assume that everyone is as interested in property like we all are on here we are a minority in the grand scheme of it.

    When I look at my extended family only my parents have multiple investment properties. I have a couple with 1 extra investment (including the two teachers) but most only have their PPOR, saving for a PPOR or not interested at all.
     
    Last edited: 13th Oct, 2015
  11. Azazel

    Azazel Well-Known Member

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  12. Jacque

    Jacque Buyers Agent and Bookworm, Sydney Business Member

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    Amen to that :D
    Walk and work in their shoes first before making assumptions at how easy or simple a service may appear to be. And, yes, then there's the costs of running a business.... even a simple portal is hardly basic these days with the technology that users demand and expect.

    There have been SO many startup companies who have gone down the whole "sell yourself" model of RE but it essentially comes down to a preference for outsourcing, for most vendors. Sure, there are always going to be a minority who choose to sell privately and utilize third parties to do so for a cheaper rate, but bringing it all together is ultimately what vendors pay selling agents for. Not everyone enjoys negotiating or communicating effectively with multiple interested parties to effect a result.
     
  13. Jacque

    Jacque Buyers Agent and Bookworm, Sydney Business Member

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  14. DaveM

    DaveM Adelaide Buyers Agent & KFC Strategist Business Member

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  15. Azazel

    Azazel Well-Known Member

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    Will be interesting to see if it takes off.

    Does that crossover to what you're proposing @Peter L ?
     
  16. Scott No Mates

    Scott No Mates Well-Known Member

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    I'm struggling with the concept of paying $1m for a home. To really add value, find a way to reduce the cost of government intervention ie reduction in stamp duty, developers costs in relation to the delivery of land to market (infrastructure, planning controls).
     
  17. MTR

    MTR Well-Known Member Premium Member

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    Looking at your list above, for me most important item is strategy, marketing and getting the list price right.

    What I find surprising is with regards to "market strategy" how clueless some re agents are? I like aggressive/pro active re agents and I am not necessarily talking about the person who says he/she can get me top $.

    They do not understand how to create competition in a slow/falling market.
    They don't understand how to keep the listing fresh
    They don't understand the need to provide feedback

    One example for strategizing to a potential investor who is buying would be to provide an example depreciation schedule which shows the cash flow, this simple strategy could potentially provide a sale. How many do this? zip. Just got my re agent to do this recently, perhaps now he will use this tool.

    I guess my point is all the items you mentioned are great but it wont necessarily come down to under cutting, it will come down to your PERFORMANCE and what you can deliver that will have the edge

    MTR:)
     
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  18. Peter L

    Peter L Active Member

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    Yes similar - I believe the DIY model is not useful unless you're a pro at selling property yourself. I also think that a flat fee of 10k also acts as a disincentive for high performing agents.

    I think I'll go away over the next few weeks and come up with some ideas and test them with you. Appreciate the candid feedback. Balancing agent incentives and maximising vendor value is definitely no easy task.
     
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  19. Azazel

    Azazel Well-Known Member

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    Go for it, seems like you can see something there.
    I'm sure you'll get some pretty robust feedback, but that's probably a good thing.
     
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  20. Peter L

    Peter L Active Member

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    Hey guys - I have quickly bashed together a first turn: Homepage · Edge Client Portal.

    It is in a woeful state right now (i.e. not for the public). Let me know what your thoughts are!

    Please be brutal.