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Archive for the ‘International’ Category


Boom Expected in New Zealand’s Commercial Property Market Due to Chinese Investment

Posted on: September 1st, 2015 | Filed in Commercial, Featured, International, Market News

The commercial property market in New Zealand has long been buoyant, but a huge boom is expected in the industry due to lucrative new investment from the Chinese market.  But why is this boom expected now? And what impact will it have on our already successful real estate markets?

A Release of Chinese Equity

The second phase of the Qualified Domestic Individual Investor (QDII2) programme implemented by the Chinese Government will come into effect this month. This programme removes certain restrictions that were placed on Chinese citizens and businesses from purchasing and investing in property overseas. As a result of this, it is expected that savvy Chinese individuals and businesses drawn to New Zealand will pour an incredible US$10.9 billion into the New Zealand commercial and residential real estate markets. Whilst this figure seems huge it is based on the wealthy Chinese individuals set to benefit from this programme investing just 10 per cent of their assets into international commercial and residential property. Whilst this 10 per cent investment will be shared across several countries, this forecast is based on New Zealand attracting approximately 3.3 per cent of that property-specific investment, as it has in the past when similar percentages of the Chinese affluent have chosen to invest in property abroad.

The Importance of Being Welcoming

With such potentially lucrative property investments set to be made in the country, those working with the commercial property and real estate sectors are being cautioned on the importance of being welcoming to potential Chinese investors. This welcome should be implemented on both the small and the large scale: from employing realtors who are able to communicate in Chinese, to lobbying government to make the country more appealing to Chinese investors. It has been recommended by experts in the field that, to ensure that US$10.9 billion floods into the New Zealand economy rather than being diverted and invested elsewhere, the government and big business should look to make relevant improvements to the national education system as well as increasing the number of direct flights to China available from many of the country’s most investible major cities. Other companies and business types related to the property market, such as those offering the protection of home insurance or lawyers specialising in commercial and residential property law may well also be wise to adapt their business models and practices to appeal to the impending influx of expected Chinese buyers and investors.

 It is important to remember that whilst this huge number of Chinese investment dollars is expected make its way into our economy, competition amongst other investible countries to secure the money freed up by the latest stage of the Qualified Domestic Individual Investor (QDII2) programme is fierce. New Zealand certainly isn’t the only country in the world whose economy could benefit from  a huge cash injection: but it is more than simply the revenue this investment will bring that is important. This will create new jobs, new construction, and as commercial, industrial, retail and residential properties are all forecast to be targeted by this new investment it will have massive and positive effects across all areas of the New Zealand property market.

The Other Side of The Coin

Not everyone is happy about this potentially huge influx of Chinese investment. Other commentators have suggested that New Zealand’s infrastructure simply isn’t set up for such huge property focus and development, nor is it in a position to change that in the immediate future. There is also concern about the impact that such a huge amount of property purchases from overseas investors will have on a property market that is already overstretched in some areas, and how this will impact New Zealand citizens and existing residents that are looking to find properties of their own. Both of these concerns are valid, but they are also concerns that can be overcome.                                            

What is clear is that this new Chinese investment is coming to New Zealand, and by being prepared for their arrival, now is the ideal time for commercial and residential property developers and realtors to benefit significantly from this influx. 


Lessons from Real Estate Connect

Posted on: August 16th, 2013 | Filed in International, Market News, Technology


Screen-Shot-2013-05-08-at-9.09.10-AMTime just sails away when you’re having fun – especially when you’re in the City of Sails!

It’s been almost two weeks since I got back from the Inman Real Estate Connect conference in San Francisco; timed to coincide was also the Property Portal Watch Workshop, which looked at specific issues facing property portals, like (as opposed to the wider topics covered during Connect).

Hearing what the big industry players around the world are doing is always inspiring. The challenge for us Kiwis is how we take what might work in a huge market, like the US, and apply it locally. is not alone in this; successful New Zealand based businesses know that it’s not enough to try to squeeze a square plug into a round hole. What we’re really good at doing is working out what (and how) works internationally and then shaping those ideas to fit our unique market.

property-portal-watch-logoOver the next little while I’ll be consolidating those key ideas, trends and the specific learning I took away from my time in San Francisco. I’ll expand on what does and will continue to do to make your property buying, selling and renting experience easier (and cooler) as our lives become not only busier, but also digitally easier. In the meantime, I’ve managed to narrow it down the 6 core topics I got the most out of. I look forward to exploring these more with you over the coming weeks.

1)    Content for the small screen and responsive site design. What are the crucial bits of information we need to convey to those browsing on their smart phone? How do real estate agents and property portals monetise premium mobile content?

2)    Content syndication for overseas markets.

3)    Social media. Yep, it’s part of everyday life now. We’re an e-commerce site, yes, but how can we use the platforms you use to nail a great and useful relationship?

4)    TV apps – taking the previously small screen to the big screen. Is a TV app on the cards?

5)    User customisable floor planner tools. Imagine if you could check out what the property you’re considering buying would look like if only you could move that wall…?

6)    What else can we do to make your property search or selling experience easier? Push notifications might be one way; standing outside an open home and you receive an information pop up on your phone letting you know what the local schools are like, for example. What next?

phillip.dunnI’m also going to wrap up what the big players are currently doing in this space and how their data insights can help to inform where NZ property portals head. Think Trulia,, Zillow, etc.

My head is still buzzing from my time away. I feel really lucky to have been able to connect with some inspiring people, and am now looking forward to planning and sharing the exciting stuff we have ahead! As I put together my presentations and future blog posts about these areas (and more) I’d love to know if you have any burning questions or thoughts you’d like me to cover off. Please comment below or get in contact with us.

On a side note – today marks seven years since the site launched, please join us in celebrating our 7th Birthday.

Phillip Dunn, Acting CEO,

Connect with me via twitter: @phillipnz


Real estate, revolution and robots

Posted on: July 9th, 2013 | Filed in International, Market News, social media, Technology, The lighter side’s Acting CEO, Phillip Dunn, is currently in San Francisco to attend Real Estate Connect.

The way we live has undergone massive transformation in recent years. I love using technology and digital tools to help with the simple stuff such as scheduling appointments and staying in touch with friends, to the previously impossible – such as using insights gained from the website to compile our monthly property report.

With how we live changing so much, it makes sense that the way we buy, sell, find and research property is also continuously evolving. The game of real estate is not static. As a web-based company, we’re acutely aware of the need to stay up-to-date with not only our core business, but also with how you want to connect with us, talk to us and what you’ll want to know down the track. Luckily, the future excites us.

San Francisco’s Real Estate Connect Event is the ideal opportunity to learn about, the “trends that will shape our world and business: robotics, crowdfunding, big data, and machine learning”. I, for one, am looking forward to learning more about the connection between robotics and real estate! I intend to connect with like-minded industry colleagues and bring key insights back to

The conference will run from 9 – 11 July. If you’re interested in following the conversation, you can use #ICSF  to stay up-to-date on Twitter. I’ll be posting from my own account  and on behalf of  Follow me now to get the inside view right from day one!

I look forward to keeping you updated during the conference.


Phillip Dunn

5 provides innovative solution for native speaking chinese property buyers

Posted on: April 19th, 2012 | Filed in Featured, International, Website news, Website searching

The appeal of NZ property is universal – we are lucky (some would say) to live in such a beautiful country, a place many people can only dream of living. Our property though is accessible and appealing to overseas investors and prospective new residents.

Just compare NZ to Australia, here there is no Capital Gains Tax or Stamp duty; additionally overseas investors are restricted in Australia to new builds as opposed to the far more limited restrictions here.

These circumstances are driving an ever growing audience to listings on from overseas. Just last month over 110,000 unique visitors checked out property on the site from outside NZ, that represents over 1 in 4 of all of our visitors each month.

The most active viewers are those in the English speaking countries of Australia, UK, US and Canada, but Asia is assuming a greater and greater presence among this audience growing at 3 times the rate of growth of other countries. This certainly reflects the economic relations NZ is building with its Asia Pacific partners.

This audience though is not as well catered for as English language speakers. This is somethingthat we have focused on over the past year. The main issue facing us has been the ability for us to provide a Chinese language version of the site which can rank highly when Chinese based property seekers are searching for NZ property – especially as the major search engine in China is Baidu. As a company we have always invested heavily in Search Engine Optimistion (SEO) to drive our site and brand given the credibility this brings to our site, however optimising in English for Google is a very different issue from optimising for Chinese language search on Baidu.

This challenge has been solved through a partnership which has established with a NZ/Chinese company The company combines the domestic Chinese technology team with the best of SEO capabilities in the Chinese market. Based in Auckland and Beijing, Hougarden has built a website that provides a rich information source for property seekers combining the full listings from translated into Chinese with translated news stories covering the broad NZ economy and property news.

It was decided that translated listings in Chinese would be best presented on a separate website and domain name, rather than on a sub domain of and that is the rationale for the partnership with Hougarden.

So how does it work?

Hougarden uses the API of listings to populate their website, all the content of listings including photos, description as well as agent contact details are provided on the HouGarden site in Chinese. By using the API the listings on HouGarden are synchronised with so new listings and withdrawn listings are updated at the same time.

The site provides the great functionality and usability as and the deliberate similarity in look and feel is a deliberate decision to reflect the true partnership relationship.

Property seekers making an enquiry through the HouGarden website by email can choose to respond in Chinese or in English. These email pass through with a human translations service provided by HouGarden. The agent will receive the enquiry in English with a clear message detailing that the enquiry has come via HouGarden website from a Chinese enquirer and whether the original enquiry was written in English or Chinese.

We recommend that agents receiving these enquiries develop a relationship with a Chinese speaking colleague to assist in managing these requests, although clearly an enquiry written originally in English can be directly responded to. It is the plan for the future for Hougarden to potentially provide a return translation service.

The launch of Hougarden was marked this week by a presentation and official signing ceremony in Auckland. Pictured below is Sam Yin the Managing Director of with myself after the signing ceremony.

We are very excited by this development as a further means for to provide increased profile and advertising for our customers’ listings – reaching out to the massive audience of 1.3 billion Chinese both in NZ and in China.


Mobile usage for finding property reaches a new milestone

Posted on: December 14th, 2011 | Filed in Featured, International, mobile

All of us here at are delighted to see the mobile apps for both iPhone and Android blast through the 50,000 download mark this week.

It was just over a year ago when we launched the iPhone app – the first in NZ and the only app with GPS location based property search. A year later and we continue to be surprised and delighted by the uptake and usage which now approaches 14% of all visitor traffic to our listings from the mobile platform.

The appeal of this method of property discovery has been turbocharged in the past couple of months as the summer peak property season has arrived. The month of October saw the highest ever level of downloads with over 6,000 in the month, greatly assisted by the new Android version of the app (another first) in late September. The level of downloads continues with over 200 new downloads per day providing the users with the experience of discovering the convenience and addictive appeal of this app.

Not only are people downloading the app in ever increasing numbers but they are engaging with it more often. Over 2,000 visitors a day check out property for sale and rent whilst on the go – at the cafe, in front of the TV, at open homes.

The app is so comprehensive and so appealing. With the largest selection of listings by licensed agents, usage appeals to the serious property hunter keen to be better informed and in control of the property searching process. Over 90% of users are returning users and unlike the web which is very heavily focused to casual image based browsing the mobile app is all about property information and insight in the palm of your hand.

We have been interested to see just how keen kiwi’s are relative to other countries in regard to uptake and usage of property apps on the the smartphone. Instead of comparing downloads by country (which is tricky as not many other websites publish their data) we chose to use the ranking of the various apps in their respective iTunes app store. Clearly this just seeks to identify the iPhone platform, but this has been the consistent largest platform across all international markets for property apps.

We chose six countries to compare against NZ from Australia and the US / Canada as well as Europe. What we found was very interesting. The property app is the 16th most popular free lifestyle app in NZ, and the 209th most popular free app. Out of interest if you exclude the free “gaming” apps from the rankings the property app jumps up to be the 41st most popular free iPhone app in NZ.

By comparison to NZ; Sweden appears to have the most popular iPhone property app from Hemnet coming in as the 8th most popular free lifestyle app in Sweden, and the 104th most popular free app overall.

Next comes Australia where the app comes in as the 11th most popular free lifestyle app and the 127th most popular free app. That then places NZ in third slot amongst these 7 countries. Next comes Canada almost equal to NZ with their Realtor app ranked as the 16th most popular free lifestyle apps and 239th place overall for free apps in Canada. After these four come the the French app from Seloger, the US app from Zillow, and the UK app from Rightmove.


A New Zealand housing bubble?

Posted on: December 6th, 2011 | Filed in Featured, International, Money Matters

The question has been posed today in the media that NZ properties are overvalued by 25% – according to a report from the Economist entitled “House of Horrors“. It should be pointed out that this report was reported by a couple of weeks ago.

The Ecomomist’s report is certainly worth reading, as well is the data which lies behind the report for it shows that the headline of a 25% overvaluation for NZ property is hard to identify. The full table of data is presented here. It should be noted that The Economist cites Statistics NZ as the source of the data for the report.

The report states that “Based on the average of the two measures (analysis of value to rents & value to income), home prices are overvalued by about 25% or more in Australia, Belgium, Canada, France, New Zealand, Britain, the Netherlands, Spain and Sweden“.

The specific data for NZ shows that when assessed on the value to rents NZ is 66% overvalued, whilst when assessed on value to income NZ property is just 4% overvalued. Australia by comparison is 38% overvalued when assessed to income and 53% overvalued to rents.

The UK is judged to be 20% overvalued when assessed to income and 28% overvalued to rents, with the US 22% undervalued when assessed to income and 8% undervalued to rents.

The chart also highlights that NZ property is showing a 0.1% increase in price as compared to last year and a 4% fall since 2007. Whilst the countries cited in the headline such as Belgium, Canada and France have seen year on year increases of over 3% up to 7.7% and increases since 2007 of between 6% and 22%.

The Economist provides as part of the data report an excellent interactive chart. This has given me the opportunity to analysing some great comparatives of both property prices and value comparatives which I have detailed below.

Comparing property prices on an index basis since 2000 shows the relative position for NZ matched to Australia and the US. All three countries enjoyed rapid growth through the first 6 years of the decade before the US started its spiral down, over the past 4 years NZ has flatlined whilst Australia has forged ahead.

The analysis of property prices based on real terms rather than actual price as in the index chart is very illuminating – this chart which shows NZ and Australia highlights the fact that the current property prices in real terms are back to where they were in the Q2 of 2005 – over 6 years ago – such is the inflation impact on property prices.  By comparison Australian property prices in real terms are 20% up as compared to Q2 of 2005.



The Economist report made comparison of valuation to both income and rental and these next 2 charts present the data for NZ and Australia against these two measures. Based on income NZ Property prices are now around 17% overvalued compared to the status in 2000, by comparison Australia is 42% overvalued. NZ and Australia were tracking on a comparable basis up until the last 2 years when NZ has fallen as a ratio of price to income.




The comparison of property prices to rents for NZ and Australia shows a chart where the two markets are exactly aligned comparing Q1 2000 with the current data – both are showing a 60% appreciation of prices to rents over the period, with both markets tracking in line through the period.



As a final analysis it is interesting to compare NZ with two markets that has fared the worst in the property crash of the last decade – the US and Ireland. In this chart showing property prices in real terms the NZ property prices in real terms are up just over 50% in the 11 years, by comparison both Ireland and the US have seen the bubble followed by the crash which in both cases shows that property prices in real terms are back to 2000 levels – a lost decade for these property markets.





Real estate online proves appealing to investors

Posted on: July 21st, 2011 | Filed in International, Technology

The business of online real estate marketing as presented in this country by and Trade Me Property is not only appealing to buyers and sellers of property (and their appointed real estate agents), it appeals globally as an investment option – one that garners high valuations.

This morning (July 20th EST) Zillow floated 20% of the shares in the company. The company was launched in 2006 and unlike other traditional real estate portals it started life as a property valuation website using publicly accessible data to place a valuation estimate on every house in America. This appealing data set generated massive consumer traffic and interest which over the years has morphed into a complete listings portal for property for sale, for rent as well as a unique mortgage marketplace. The US has a complicated middle layer for property listings unlike almost any other country in the world and as such challenges real estate websites to access the complete set of listings data.

Today Zillow is in the top 3 real estate websites in terms of website traffic. It has a valuation based on its listed shares on the NASDQ – currently at this moment of US$671m – that is based on a share price of $38.50. The shares launched at $20 hit a high of $60 and seem to be settling at this level at the close of the first day. A pretty impressive result for a company which has had around US57m invested in it through venture investment funds and has yet to turn a profit – reporting an operating loss of US$6.8m in 2010.

Zillow certainly has a long road ahead to demonstrate that its business can justify that valuation and show a return to the investors – the IPO has added close to US$80m to its bank balance to drive the business forward.

By contrast to Zillow in the US, in other major developed countries the market value of online real estate companies has been long established. The UK website of and the Australian website of have both been listed on their respective stock markets for over 7 years.

The table below shows the relative financial performance of these key sites across these key markets.

When placed against these powerhouse real estate website Zillow looks quite small in comparison especially when judged by the scale of the US market – simply based on revenue the Zillow latest full year shows just NZ$0.11 of revenue per person a staggering 100 fold less than the powerhouse of Australian site with $NZ$10.70 per person. The results for maybe be slightly inflated as they do have a couple of international businesses, however Australia represents over 90% of the revenue and more than 100% of the profit (the Italian business currently makes a loss).

So Zillow has a major upside if it can continue to grow traffic and industry advertising dollars. It is not without competitors in the form of, Yahoo Real estate, and Trulia to name but a few of what is a very cluttered / competitive marketplace. However it is very clear from this IPO for Zillow and the current financials and investor demand – online real estate certainly holds strong appeal for investors.


Australian real estate industry lines up to challenge web leader

Posted on: June 27th, 2011 | Filed in Featured, International, Real Estate Industry, Real Estate Industry News

NZ’ers are always interested to see what is going on in Australia and when it comes to online real estate we here at are always interested to see what is happening on the other side of the ditch. At the moment it seems quite a lot judging by the front page headline from the Australian Financial Review.

Real Estate Agents ready to “revolt” reads the headline. It appears that after more than a decade of benefiting from the online transition of property buyers from print to the web,  with the consequential financial savings; the industry is now revolting from what they see as exorbitant charges from the online market leader (just for clarity there is no connection between our site and the Australian site of the same domain name). (REA Group) has been a stellar success of web marketing, founded before the dotcom crash of 2000 it has grown from nothing to now be valued at in excess of A$1.6bn as an ASX listed company (the majority shareholder is News Corporation). The site holds the lion’s share of web visitors and around 95% of all listings. The chart below tracks the leadership in web traffic by to its nearest competitor (Fairfax owned

With this powerful position of dominance of the collective eyeballs of property buyers and the dominance of content, the company has over the past decade grown revenue from a couple of million dollars to well over A$160m. On average each real estate office in Australia pays over A$1,000 a month and this scale of fee combined with the regularity with which they increase this fee now has the industry up in arms in a very public manner. The industry as reported in the article is looking to band together under what they are calling “Project Rebellion” to power an alternative website with which they hope to secure a competitive threat to submit into reducing fees or potentially remove it from the market.

Could this happen? – the rich and comprehensive content of real estate listing is what property buyers seek, in theory they will go to the site that has the most content. That content is totally in the control of the agents, so in theory this is possible. However consumers are creatures of habit and have no idea what constitutes comprehensive content. A new website would have to spend a lot of money promoting itself to create awareness to say it was the “new home” of property listings online. At the same time the agents would all in unison have to stop using, something many in the industry might be wary of doing as it is a very powerful and effective advertising medium for their clients listings with over 7 million monthly unique visitors.

The whole challenging conundrum is very well detailed in an article by Simon Baker in the Property Observer – his summation is that there is very little chance of this initiative having any legs. As a point of note Simon Baker is the former CEO of and still remains a shareholder. As he states in his article, the publication of this story in the Fin Review last week knocked 5% off the market value of REA amounting to a paper depreciation of the company’s value of some A$80m – that personally impacts Simon.

New Zealand

What implications might this initiative in Australia have for the NZ industry?

In NZ there are really two key online real estate websites. Trade me Property has the highest level of website visitors. In the past month it received over 1.4 million unique browsers as measured by Nielsen online, by comparison received just over 400,000 unique browsers (as a point of reference there were just 5,766 properties sold in the month, which just goes to show the casual browsing appeal of property to kiwis). In terms of content holds the most comprehensive selection of listings from licensed agents – around 95% of all such listings. Trade me property has more listings in total on their site, however their licensed real estate listings are supplemented by a significant number of private sale listings.

Trade me Property is owned by Fairfax media whereas is owned by two shareholders – the Real Estate Institute holds 50% and the balance is held by 6 of the larger real estate companies (Harcourts, Harveys, Ray White, Bayleys, Barfoot & Thompson and LJ Hooker).

In NZ there is a disparity of what each website charges for its services to its agent. has a two tier subscription based on office size. Large offices (more than 6 active salespeople) are charged $300 per month with small offices $225 per month. The charges for Trade me are higher at $799 per month. Certainly the real estate companies in NZ do not pay as much as their counterparts in Australia, however when seen in perspective of the relevance of online marketing and how much it has made print media so redundant for property marketing, it is somewhat surprising that this reaction is happening at all.


Global property price analysis places NZ at the median spot on the podium

Posted on: October 29th, 2010 | Filed in Buying / Selling a home, Featured, International, Money Matters

Digital GlobeWe seem to be a nation that loves to benchmark ourselves to the global market and so it was naturally of interest to see the latest analysis by The Economist of the trends in global house prices.

The analysis is very timely as there has been some very interesting articles recently on both the NZ and Australian property market and the speculation as to the emergence (in the case of Australia) of a property bubble and in the case of NZ the continuance of a bubble.

The data utilised in the Economist article provides insight across 22 countries, across all continents and highlights recent price trends as well as long term trends and an insight into their evaluation of whether property prices are overvalued or undervalued and by how much. Certainly the picture of NZ is not certain as to future trends, but measured against other developed western economies our position is not out of line.

Recent price movement

The past year based on Q3 data for 2010 vs Q3 data for 2009 shows that from the chart below a large number of countries have seen property price appreciation. NZ has seen a 3.4% appreciation (QV data). The comparable REINZ stratified price data shows just a 0.47% appreciation based on actual sales price.

Economist global house price analysis Oct 2010 - Q3 py

The comparable position of Singapore, Hong Kong and Australia is significantly different with appreciation over the past year of over 15%. At the the other end of the spectrum the woes of the Irish property market continue to be felt with a 17% year on year decline.

Long term property appreciation

Taking the period of 1997 to 2010 shows in the chart below a consistent global appreciation with the majority of countries seeing around a doubling of value. Clearly the performance of the past 2 years will have depressed some of these performance numbers. NZ sits again firmly at the median point with a period appreciation of 108%. Again using the REINZ stratified house price analysis this appreciation was 109.6%.

Economist global house price analysis Oct 2010 - 97 to 2010 appreciation

Relative pricing

The most interesting analysis is undoubtedly the evaluation as to how over priced (or under priced) each countries properties are. New Zealand is judged to have property prices over priced by 20% as shown in the chart below.

Economist global house price analysis Oct 2010 - over under priced

This places NZ bang on the median spot on the podium with Australia taking its usual gold medal with property prices accessed as 63.2% over priced. It is interesting also to see our often comparatively benchmarked country of Ireland being judged as 13.2% overpriced – that after seeing a year on year negative appreciation of 17%. Just shows the extent to which that country’s property market had bubbled up in the past decade.


New real estate business model emerging for 2011

Posted on: October 11th, 2010 | Filed in Buying / Selling a home, International, Real Estate Industry

Any business needs to adapt to survive – real estate is no different, and as such it should not be surprising to see new business models emerge to challenge established practice. Just such a new model is planning to launch across the Tasman in the early part of next year, and may in time enter NZ at some stage given the similarity of markets.

Refund Real Estate - Refund Real Estate

Refund Real Estate is currently advertising to attract new franchisee to provide a platform for a national launch. The business is a springboard extension from the company’s foundation of mortgage broking which began in 2004.

The business model for the mortgage broking service is to provide a ‘refund’ of part of the commission from brokering the loan with a bank or lending institution back to the person who has applied for and ultimately takes on the mortgage. This model is what has been called “less than free*” – given the fact that all mortgage brokers do not charge clients as they earn fees from the lenders, offering a refund or rebate is a legitimate means of establishing a point of difference. The lending institution is not overly concerned that its commission is being split with the broker, the broker has the marketing advantage and the client gets a discount.

The advertising on the new real estate website indicates that this will be the model for the real estate business. They state that “For the first time Australian customers, both buyers and sellers, will received a cash refund when they buy and sell property with us!”

In the USA there are business models in real estate that provide a cash back incentive for buyers to use a particular agency. This model works because the US brokerage model has both buyers agents and sellers agents. Each agent operates exclusively for their specific client and acts in their best interest. In the US it would be seen as a conflict of interest for an agent to represent both the seller and the buyer or at least broker the deal between them directly.

Both agents to a deal are paid through a split in the commission (in the US the commissions – paid by the seller, are considerably higher at around 4.5% to 6%). In this way a buyers agency can offer a cash back to the buyer by splitting their commission and thereby offering a “less than free service” as the seller is paying for the overall service of the two agents.

It will be very interesting to see the success and reaction to this business model in Australia when it launches. Certainly a buyer may well be attracted to contact an office of Refund Real Estate so as to ensure they get a cash refund for buying the house through them. However certainly in the beginning without a large portfolio of listings it may be hard for them to convince established agents and offices that they hold value in this buyer, given the fact that buyers can talk to any agent.

Another interesting point highlighted to me when discussing this model with an agent was the fact that the service of real estate in NZ (and similarly in Australia) is solely  a service provided to the seller who pays the agent to act entirely in their best interest. Given this, how would a seller feel to see that their fees go to not only pay for an agent representing a buyer who will be motivated to negotiate directly against the seller, but then for some of that fee go to the buyer?

At this stage there is not yet a clear detail surrounding this new ‘refund’ model – when it launches to the public it will be interesting to see how it works and the reaction it generates in the media and the industry across the ditch.

* “Less than free” was a term I first came across when reading Chris Anderson’s book ‘Free’. The concept is that many businesses these days (particularly online) seek to attract audiences with free offerings – in many cases to then in time to upsell to premium charged services – this is called Freemium. The concept of Less than free comes from the idea of where do you go to compete with free? – well less than free is where you actually pay the consumer to use your product or service in the belief that the experience will be rewarding and ultimately profitable in the long run. In this case for real estate the value will not come in the long run as there is not likely to be repeat purchase so “less than free” has to be funded from another party paying enough to allow for this incentive.
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