The Unconditional Blog

The impartial voice of the industry

 
19

Converting viewers into enquiries and into buyers

Posted on: October 2nd, 2009 | Filed in Online marketing

istock_000009805936xsmallThere is a simple statement I have always made in regard to this website from day 1. “We do not sell property“!

No property website sells property! – websites are a powerful – in fact the most effective and  powerful marketing tool for anyone wanting to sell property. However at the end of the day property transactions at this time are still undertaken through face-to-face negotiation.

It is therefore often asked of us as to how we can help improve the conversion of viewers into enquiries and then into buyers. The question was again prompted last week by this comment on a post on this blog by a real estate agent – he wrote:

Traffic growth is great but what I am really interested in is conversion rates. Do you have any data across your site in terms of average conversion rates (listing view to agent contact by email)? I would be interested in the property with the most hits, the property with the best conversion rate etc – like a roll of honour.

In general, our office sees the most hits from trademe but the best response from open2view, with realestate.co.nz somewhere in between.
We talk about a “trademe mentality” as a way of trying to describe such a high hit rate with such a low response from real buyers. We think that trademe browsers either have a mindset that is counter productive to selling homes or simply, have an auction open on some product they are bidding on which they are waiting to close and while they wait they flick open trademe property and waste a little time there.


Nowhere is this more noticeable than in our rentals department. Our letting agents were receiving so many low grade emails from people enquiring about listed rental accommodation that they hardly had time to do anything else. A break of about half an hour to have lunch sometimes allowed the buildup of 40 or 50 emails in the inbox. The vast majority of these emails didn’t go anywhere. They were contacted back by the letting agent with the required info and were never heard from again. One letting agent got so exasperated that she took all of her rental listings off trademe and as a result she let twice as many properties in the following months because she wasn’t spending time replying to time wasters.
Fascinating aye!

I promised David that I would share some observations and thoughts in regard to his comments. Hopefully in doing so I could elicit some input from property buyers and sellers as well as other real estate agents.

My view is that the response rate / conversion rate from viewers into enquiries can be seen as a function of information, and to help explain my answer I have constructed this chart.

email-enquiry-vs-respect-vs-information

So it is my contention that the more information that an agent provides on a listing – the kind of rich accessible information that helps buyers better understand the property and the location then the less likely the buyer is going to need to bother the agent with frivolous / time wasting questions allowing the agent to get on with professional advice and guidance for buyers and sellers.

Equally and far more importantly the more information that an agent provides on a listing (the type of information that the buyer would expect an agent to provide, the kind of information that is readily available on the web of contextual value) then the more that agent will be respected and referred – the more likely that that agent will be called upon to market the buyers property.

We live in a far more transparent world thanks to the web – real estate is very much based on reputation. The more people respect you for sharing valuable information the more you will be respected. It is however unfortunately the fact that the heritage of this industry was that it taught the principle of “share only scant information with buyers to hook them in and get them to call you!”

So my premise is it is far more likely that email enquiries will not grow – however higher quality leads will predominate. I am sure the real estate industry will recognise that 10 good leads is far better than 100 frivolous emails.

1

NZ Property Report – September 2009

Posted on: October 1st, 2009 | Filed in NZ Property Report

Click here to download the full report (1.1MB pdf)The anticipated seasonal lift in new listings coming onto the market as measured by the website occurred in September at a level ahead of expectations. The year on year growth of 6% represents the first month since April 2008 when inventory coming onto the market has been ahead of the prior year – such has been the subdued state of the market. Accompanying this increase of new listings has been a rise in the asking price expectations – up 6% on the month of August and up 5% on the prior 3 month average. This spike now takes the asking price expectation back to within 2% of the peak of the market in late 2007. A large component in this rise in listings can be attributable to 3 main north island centers – Auckland, Northland and Bay of Plenty – these accounted for 55% of the overall increase of 2,030 in new listings in the month. Coincidentally they were also areas showing strong rises in asking price expectation. This data supports the view that the property marketing is most active in the major metropolitan areas whereas the provincial parts of the country are yet to witness this pick up.

Asking Price

Asking price expectations for new listings - Sep 09 Realestate.co.nzThe vendor’s expectation of asking price for properties coming onto the market in September took a significant leap. The truncated mean price for the 12,674 listings added in the month was $419,851. This represents a 5.2% increase in asking price when compared to the moving average of the past 3 months (Jun/Jul/Aug). The asking price of new listings in September last year was $398,659.

New Listings

Total new listings - Sep 09 Realestate.co.nzThe number of new listings coming onto the market rose significantly to 12,674, from the August total of 10,644. Despite the uplift in listings during September the level of new listings over the past 12 months shows a 21% fall with 134,873 new listings in the recent 12 months as compared to 172,711 in the prior 12 months spanning 2007/8.

Inventory

Inventory of residential property - Sep 09 Realestate.co.nzWith new listings coming onto the market slightly exceeding sales the inventory level role nationally for the fourth straight month; sitting now at 33.7 weeks stock of unsold properties. The level of inventory though is down 40% from the peak of the market back in February of this year when the level reached 57 weeks.

Regional Summary – Asking price expectations

Regional map of asking price expectation of new listings - Sep 09 Realestate.co.nzIncreases in the asking price expectation of vendors were prevalent across almost all centers of the country, with the exception of Gisborne and Nelson. The biggest single rise was seen in Northland which also showed the largest rise in new listings. The most significant trend seen in the measure of asking price movements as compared to a 3 month average is that most of the activity is seen in these main centers. Auckland witnessed 5.9%, Canterbury 5.5%, Wellington 4.4%, Bay of Plenty 4.3%, Otago (Dunedin) 7.4%, Northland (Whangarei) 20.6% and Central North Island (Taupo) 6.3%

Regional Summary of listings

Regional summary of new listings - Sep 09 Realestate.co.nzOnly one of the 19 regions of the country showed a significant decline in listings when comparing year on year. Gisborne added just 80 new listings representing a 14% decline from September last year. Most significant increase in new listings was seen in Northland where listings almost doubled in a month from 422 in August to 823 in September. It should be remembered that new listing levels of this order were more the norm in 2007 and heading into 2008.

Regional Summary – Inventory

Regional map of inventory levels of property for sale -  Sep 09 Realestate.co.nzWhilst the level of new listings increased inventory across most regions, a number still show below long term average levels of inventory. Wellington continues to see a tight market with 16 weeks of inventory down 41% on the levels of a year ago. At the other extreme, areas such as the West Coast and Gisborne both showed increasing inventory as compared to long term averages tipping them more into a buyer’s market territory. For the vast majority of the 19 regions the perspective is of a balanced market where the recent rise in new listings should match well to any upturn in demand as a function of seasonal lift and the emerging wave of economic optimism

Lifestyle

New lifestyle listings - Sep 09 Realestate.co.nzLifestyle property saw a significant lift in the month of September with 1,157 new listings being added to the website, an increase of 271 from August. The total is the highest since October of last year and represents an 18% increase on the same month last year. A significant portion (nearly a third) of this increase was seen in new listings in the Northland region. An equally large increase was seen in the year on year increases in the Bay of Plenty up 63% and the Central North Island up 53%. Auckland whilst not showing a high year on year increase did see an incremental 67 listings as compared to August. The asking price expectation of these listings was up 8% on August at $599,073 and 6% up on the 3 month moving average.

Apartments

New listings for apartments - Sep 09 Realestate.co.nzThe apartment market showed comparable levels of new listings to August with 603 added in the month. This represented a gain of just 1% over August, but a 12% increase over the same month last year. Auckland as ever represents the largest concentration of apartment listings – 349 new listing in September, down slightly from August but up 14% on the same month last year. The asking price of apartments nationally in September increased by 8% from the prior 3 month period average to a level of $418,376. In Auckland the asking price was $368,319 which represents a 5% increase on the prior 3 month average and a 10% increase on the August figure. The full report can be downloaded here (1.1MB pdf document). Additionally the raw data is accessible here as an Excel spreadsheet enabling anyone to analyse the raw data and establish any trends or observations. Usage rights are governed by attribution to the source of the data being Realestate.co.nz. The next NZ Property Report for October 2009 will be published on this blog on Sunday 1st November at 10am.

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1 in 20 mortgagee sales may be wide of the mark

Posted on: September 27th, 2009 | Filed in Media commmentary

Sunday Star Times - headline Sunday 27th Sep 09Dramatic headlines leap from the cover of today’s Sunday Star Times ” Mortgagee home sales now 1 in 20″!

I fear I will begin to sound like a broken record, but are the facts really as presented in this headline? – the fact is that in July there were 321 registered title transactions in which the terms of the sale, as registered with the land transfer office, involved the liquidation of the title by the mortgagor of the title.

In the same month the Real Estate Institute members, who comprise all licensed real estate agents in NZ reported that the number of unconditional sales amounted to 6,014 properties.

Notice anything about these two sets of statistics? – whilst there is no exact breakdown to the mortgagee sales stats, there is no clear correlation that says all 321 sales were of residential properties, which is what the REINZ statistics measure.

The article does comment that just 18% (58) of the properties sold as mortgagee sales were classified as homes at which the property owner owned no other properties. This is the traditional perception of a repossession, with the consequential eviction of a family forced to relinquish their home in a mortgagee sale.

The fact is, that within the 321 sales registered as mortgagee are many types of properties or titles. These comprise development projects of apartments, non residential properties, investment properties and commercial properties.

So whilst there is no clear and truly accurate ratio, it would appear to be a tall ask to say that 1 in 20 homes sold in July were mortgagee sales – probably somewhat less.

By way of comparison, the number of mortgagee properties listed on this website has been monitored and reported regularly – the chart below shows the data right up until this weekend and clearly showing that inventory levels have fallen since the start of the year, equally as shown by the red line the level of keyword searching for mortgagee property on the site has been falling over the same period.

Mortgagee listings and search queries - Sep 2009 Realestate.co.nz

Returning to the newspaper article – the comment that “The effects of the recession are going to be felt by many for years to come” is true; for just as unemployment is a lagging indicator as it continues to rise as the economy starts to come out of recession, so it will likely be for mortgagee properties of all types.

5

Vendor paid marketing – the impact of the new Real Estate Agents Act 2008

Posted on: September 26th, 2009 | Filed in Online marketing, Real Estate Industry

istock_000004577428xsmallThe NZ Herald today provides an insight into the new Act that will apply to all in the real estate industry from 17th November. All that is except Property Managers who were excluded from the Act – a matter that will be debated extensively in the coming months as may facets of their role in providing services to landlords and tenants are very much akin to that of a selling agent.

The new Act is extensive and much needed – nobody in the industry would disagree with that statement as the previous Act of 1976 which this Act replaces was instigated in a very different world and without amendments it had failed to keep up to date with the changing nature of business and appropriate controls.

The area that I am interest to highlight as the NZ Herald has done is the rules as they apply to the disclosure of discounts and rebates on the expenses incurred by agents in the process of selling a property.

The exact wording from the Act is as follows:

Section 128 : Agency agreement must disclose rebates, discounts, and commissions

(1) An agent is not entitled to any expenses from a client for or in connection with any real estate agency work carried out by the agent for the client in connection with a transaction unless the agency agreement under which the agent performs that work contains a statement that-

(a) identifies the source of all rebates, discounts, or commissions that the agent will or is eligible to receive in respect of those expenses; and

(b) specifies the estimated amount of those rebates, discounts, or commissions (to the extent that the amount can reasonably be estimated).

(2) This section does not limit the liability of any person under the Secret Commissions Act 1910.

The Herald article quoted some real estate companies view of the interpretation of the Act – I am not a lawyer and would not wish to make interpretation as to this section of the Act. However it is clear what the intent of the law in the drafting of this section.

The view was that in principle the role of real estate agents was not as transparent as some would judge it needed to be – whether that was a small minority that created that perception or whether it was a wider held view is again not something I would wish to speculate on.

The key issue I feel is the appropriateness and application of the disclosure of rebates and discounts on advertising in the media which is clearly what this section covers.

Let’s look at real situations as they occur in this industry – A real estate agent when putting forward a marketing proposal will quote the cost of a premium featured listing on a website or an advert in the newspaper. From my experience the majority of real estate agents charge clients the cost that the publication or website charges them (ie. charged at cost with no margin added).

In the case of our website a featured listings is currently $250 (inc GST) – in the case of the NZ Herald the cost of an advert is clear in the rate card.

The real question is how much information does the public want or need to know in regard to the costs of advertising; as long as the cost is the competitively challenged market rate.

For example if the newspaper or website is aggressively fighting with a competitor and decides to reward loyalty or incentivise a real estate company through some form of annual rebate – should that be disclosed? – could that be disclosed?

If for example it was an annual volume based rebate. If that rebate was disclosed to the property owner and the owner felt that the rebate should be deducted from the marketing costs. If subsequently the real estate company fell short of the annual volume target set by the media company and therefore failed to receive the rebate – what happens then? Does the property owner have to refund the rebate?

The fact is most businesses – whether they be restaurants, bars, supermarkets, plumbers, painters, carpet layers etc etc operate on the basis that the costs of the raw materials supplied by them to a client may not be what they paid – there may be a volume rebate. What is so different about real estate?

Real estate is a competitive business. If a property owner does not like the service or fees from one company they can cross the road to another company.

2

New perspective on the NZ property market

Posted on: September 25th, 2009 | Filed in Buying / Selling a home

I am a firm believer that a picture or chart is far better at explaining trends and activity than any spreadsheet of data. It was this thinking that lead me to put together this unusual pictorial representation of the NZ property market shown below:

NZ residential property market 1993 - 2009 sales & median pricing

The chart tracks annualised residential property sales along the horizontal axis matched to median house prices on the vertical axis. The data points represents the track of monthly intersection of these two metrics to produce this interesting snake!

The chart very clearly shows the distinct difference between the NZ residential market during the 1990’s as compared to this decade – the volatility of sales volumes and median prices is so significant to see. Equally the scale of volume decline between 2007 and 2009 represents more than twice the movement than anytime prior to 2002.

Of equal note is the current head of the “snake” as it heads upwards indicating recent price strengthening as volume sales gradually pull back from the lows at the start of this year, however they currently represent a sales level still on a 12 month moving average basis below the start of the data in 1993 and the lowest point of the fall in the first few years of this decade.

By way of a comparison the same chart of median price to volume sales for the US is seen here below. I am grateful to the research division of the National Association of Realtors in the US who presented this data and in so doing prompted me to create just such a chart for the NZ market.

US residential property market - 1993 to 2009 average price & sales volumes

12

Mortgagee sales – far from dark clouds on the NZ property market

Posted on: September 23rd, 2009 | Filed in Buying / Selling a home

Whilst the statistic released by Terralink on mortgagee sales is bleak news for those at the sharp end of loosing their homes, the NZ picture is a far different picture from that experienced in the US – the home of foreclosures!

Terralink reported that in the month of June; 289 registered sales of land and property were as a result of a finance company or bank selling the property following the borrower defaulting on the loan agreement. This is the highest single month ever and now represents just under 5% of all homes sold in the month. However when compared to the the US where the proportion of all homes sold that have been foreclosed (mortgagee sales) over the past year have been over 40%, NZ is suffering nothing like the same fall out.

In the US the foreclosure problem has been the catalyst of the collapse of property prices which is still running at close to 20% year on year decline, and currently around 30% lower than the peak of the market over 2 years ago. Compare that to NZ where the current national property price is now less than 3% below below the peak of October 2007.

In the US the property market has got trapped over the past 2 years in a doom loop scenario, a situation that they are only just getting out of.

foreclosure-doom-loop-usa

The flood of foreclosed houses coming onto the market as prices have fallen leaving homeowners financially underwater had in itself further depressed prices leading to more homeowners defaulting.

Compare this to NZ where firstly the scale of mortgagee sales is far lower and therefore consequentially has less impact on the overall market stock of properties for sale. Additionally there have been enough bargain hunters to ensure mortgagee sales have moved through the market efficiently without flooding the market and consequentially further depressing prices.

nz-mortgagee-cycle

This “natural clearing” of the mortgagee market can be well represented in the chart below which tracks mortgagee property listings on the website over the past 33 months and reflects the rise in early 2008 with a tailing off through 2009 to date.

NZ mortgagee property listings to Sep 2009 - realestate.co.nz

7

Where is the NZ Property Market heading in 2010?

Posted on: September 21st, 2009 | Filed in Buying / Selling a home, Other interesting reads:

I was invited to participate in the American Chamber of Commerce presentation event on “How to ensure business success in 2010” today with co-presenters Shamubeel Eaqub from the NZIER, Lindy Shuttleworth from M&C Saatchi Retail and Grant Osborne from First Rate.

The title for the session on property was “Where is the NZ property market heading; commercial and residential – lessons from lead indicators”. The presentation slide show is viewable below:

The key pointers from the presentation would be best be summarised as follows:

Historically the key indicators as to the property market lag market activity anywhere up to 4 months after decision making has occured – the web now provides far more equivalent “real time” information – supply and demand data is within 30 days

  1. Property prices as measured by median price have seen recent rebounds – currently 5% up on a year ago (August)
  2. Based on inflation adjusted prices the current median price represents at worst a 7% decline from mid 2007 prices
  3. Sales volumes are returning, however they still represent historical lows especially when assessed against the total number of dwellings
  4. Current sales volumes would have to increase by a further 50% to return to the long term (20 yr) average of sales based on the % of all dwellings being sold per year (6.2%)
  5. The supply side of the market is beginning to respond to the increased market activity – early indication for September show a significant rise from August (in line with seasonal pick up)
  6. Inventory levels still weak in major metropolitan areas – nationally 33 weeks of inventory
  7. Property searching at all time high – the demand indicator of property website traffic is recording unseasonal highs as buyers actively analyse the market
  8. New property listings show as yet no inflated expectations of price increases

Taking all of these indicators into account and then add some more macro economic indicators and trends and you have some idea of the future of the property market.

A very key issue of the shortage of new properties being built; added to which is the constraints on building contractors as tighter regulations pervades the industry. A further issue is another potential exodus of builders to Australia as that country begins to address an equally large housing shortage. All of these factors point to property prices edging upwards over the next year or two – not a bubble, but enough demand exceeding supply to drive up prices as the economy gets into gear.

I am indebted to Tony Alexander for his insight this week into the very real impact of new build market and the potential trade shortage.

4

Ultimate lifestyle resort in the Bay of Islands

Posted on: September 20th, 2009 | Filed in Architecture & Construction, Buying / Selling a home

eagles-nestThis has to be one of New Zealand’s premier private resort retreats – Eagles Nest; and it’s for sale!

I try to avoid using the blog to showcase property, but sometime I feel that a property deserves the attention. This is just such a property. A property that can without question be called “one in a million”. A property NZ can be proud of – a great export earner as the majority of guest I suspect would be from overseas, many experiencing NZ for the first time – what an experience!

You will need more than a lotto win to secure this resort which comprises 5 separate villas. The property is nestled high above Russell and has some of the most spectacular views across the beautiful bays and inlets that make up the Bay of Islands.

There are not many times a property like this comes up for sale and to have it featured on the website is kind of special. The task of selling it will not be easy for the team at Browns Sotheby’s but with the significant international traffic to the website from the US, UK and Australia the property is sure to recieve extensive coverage.

7

Australian housing market boosted by incentive scheme

Posted on: September 19th, 2009 | Filed in Buying / Selling a home, International

australian-homes-for-saleAustralian homebuyers – specifically first time home buyers have leapt on the incentive to get into their first home.

In the 10 months to the end of July more than 137,000 houses were purchased aided by the combintaion of both state and feral support with an incentive of between A$14,000 and A$21,000 – that would equate to a Federal funding of in excess of A$2.4bn.

There is no doubt that this incentive has underpinned the property market on the other side of the Tasman where sales were reported last week as being up 32% in a year. The June quarter saw 130,000 sales.

What is really interesting is the Australian perspective on this bouyant property market stimulated by this government stimulus package – this is the quote from the Housing Minister Tanya Plibersek:

“A strong housing market is critical for underpinning confidence and supporting jobs in the Australian economy as we battle the worst global recession in 75 years.”

A somewhat different perspective from that expressed by the Reserve Bank Governor here in NZ.

2

The lines between the web and print continue to blur

Posted on: September 15th, 2009 | Filed in Website searching

Google in its inimitable style quietly released what for me was a very smart tool today.

Titled “fast flip” this application from the technical labs at Google is at its heart a reading tool to allow multiple topic-driven articles from news sites to be easily browsed.

Google fast flip

Adopting a “lean-back” posture to browse these pages is as close an experience to the age-old experience of spreading out the newspaper on the kitchen table and scanning pages for relevant article. The difference here is that the article are arranged to suit and reflect your search or topic interest.

The key is the way the layout resembles a series of printed pages which are web pages, this in someways feels an entirely intuitive sensation – one where as I say there is a sense that the experience of scanning a series of print pages and web pages is now completely blurred. When this happens that is when you know, or at least have a sense that the web has now reached a sense of it being an entirely natural way of consuming information.

So what relevance for real estate?

I guess at its heart the experience of leaning-back and browsing real estate listings is akin to this experience and is something that at realestate.co.nz we are working on (stay tuned). What our site has to do is provide this kind of rich experience so property seekers don’t have to rely on Google to aggregate the listings and display them.

I think the benefit for real estate is the aggregation of new stories around the subject matter. As of today the only contextual experience I could create on fast flip was this real estate news layout – nothing as yet as a news story layout for NZ real estate.

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