It is often said that the best time to launch a new company is in the depths of a recession. To survive in the midst of such adversity should surely provide a proof of the potential when and if the recovery comes, and the economy begins again to fire on all cylinders.
Well, we are from all accounts climbing; albeit slow out of recession across the general economy. The real estate market though is still not as yet firing on all cylinders. Sales in 2010 were barely above the all time low of 56,071 in 2008 at just 56,303.
When compared to the 5 year period of 2003 to 2007 when the average total year sales were just under 107,000 it is very clear to see how slow the property market has become in recent years. Even during the recession of the Asian Crisis of 1997/8 the average sales volumes during those years was over 80,000.
So despite this slow market it is therefore not surprising to see some new companies emerging in the real estate market. With these new companies comes some new approaches which clearly are trying to define a new business model to attract what is still a significant business.
The real estate industry in the residential sector alone accounted for total transacted sales of just under $25 billion in the last year. With an average commission of around 3.5% that adds us to close to $850 million in fees earned by the industry per annum in the depth of the property market recession. In the height of the market the figure reached over $1.4 billion.
Such revenue opportunity supports a large industry of over 11,000 sales agents working out of a total of close to 1,100 offices around the country.
These new entrants to the market that have emerged over the past couple of months share a two key things in common:
1. They focus on online marketing
2. They offer a lower fee for selling a property
The two most recent companies to highlight are 200Square and The Property Market. Additionally it has recently been speculated that Mike Pero may be looking to enter the property market. It is interesting but not surprising that the proposed concepts is also a solution based on a lower fee structure combined with a focus on online marketing.
Late last year details emerged of an Australian company Refund Real Estate looking to enter the market with a rebate scheme of fees and a focus towards online marketing.
This focus online is logical. As has been detailed in the blog previously the focus of property buyers and sellers is to use the web first and foremost for searching and researching property. This focus online in the home or the office is now fast being complemented by the evolution of the mobile real estate applications. At this stage with the Realestate.co.nz iPhone app which is gaining significant traction and usage, with over 14,000 downloads and well over 1,500 daily users. So for smart new companies to advocate the priority to online marketing is both logical and appealing as in so doing they not only save their clients significant amounts of money compared to print advertising, but also provide great analysis of lead generation.
The other aspect of these new companies, being the low fee offering as compared to the established operators. Certainly the consumer appeal of paying a flat fee or a lower percentage is undoubtedly strong, the key question will be as to the ability of these companies to make the business model work. There have been those who have tried and succeeded with a low fee structure, uniquely in the Christchurch market with Diane Astle and Premier Real Estate both offering a 1% fee service. Equally there have been those who have tried and failed, most notably The Jones.
What is certain is that the web marketing advocated by these new companies is pointing the way to the future for this industry, with it comes cost savings for vendors as compared to print media. As for the fees for professional services of real estate agents – the judgment will ultimately be made by the consumer who will trust in agents that deliver true value whether that will be in a low fee, or a full fee structure will be interesting to see and well worth watching as the year progresses.
The first week with the app has been a blast! – we are delighted and so it seems are our audience, which feels great.
With the iPhone app we wanted to go further than just a calculator. The app has the ability to let the user call the real estate agent or email the agent from the phone when reviewing property from right across the street. So why not allow people to contact someone to discuss the mortgage? Westpac have mobile mortgage managers out and about in most areas of the country and these can be contacted through the virtual bank branch on the app. Just locate the closest branch on the map and dial up the mobile mortgage manager based there.
I was recently asked to do an online interview (they asked questions and I wrote a response!) for 
To be more specific the critical importance of the first photo for a listing cannot be underestimated. It is the hero shot and has to work hard to really sell the appeal of the listing. As with poor quality photos, insufficient photos or no photos, choosing the wrong photo for the 1st place can be, and is often the case is the criminal mistake agents all too often make.
Another appalling error (which I am glad to see declining in incidence) is the tactic of posting a new listing with a heading “Just listed – too new to photograph”, often accompanied with insufficient or no information. The logic for this behaviour from those agents is the desire to “get the listing online” as fast as possible – of course not appreciating that no content means no value to the target audience and going back to an earlier comment – blows the credibility of the agent. Added to the negative impact on the searcher online is the fact that all new listings are featured in the daily email to hot prospects – this one time medium is so powerful to target the listing to the right audience. As I say to agents, miss that first day and you have almost blow the campaign.
From the US we have invited Joel Burslem. Joel is a respected expert within the real estate industry. He is a blogger, real estate marketer and consultant. He founded the 
From closer to home we have Nicholas O’Flaherty who is MD of 
Addressing the ever present question in relation to the web – that of search we are very pleased to have 
Our final keynote speaker is