South African estate agents are calling for an industry owned portal
Estate agents in South Africa are calling for a majority industry owned property portal. The time to set up something like this, has probably never been better as agents feel they are taken advantage of by greedy corporate structures and an industry that doesn’t really exude transparency.
Who owns my listing data?
Case in point is the FNB & Private Property listing data saga. A bank launched a competing private sale service by (ironically) piggybacking on the very same listing data agents supplied to get extra traction. This angered agents, and requests to remove their own listings from the bank app, was met with a public press release from industry to keep calm. Agents vented on social media, and mainstream media used the opportunity to vilify agents as overpaid sales people in the wake of ‘disruption’. (The FSBO model launched by FNB is hardly disruptive and agents felt no one stood up for them).
I can only assume big contracts and money was the stumbling block that prompted a bus full of industry representatives (ironically most also shareholders) to negotiate the removal of almost all of SA’s listings behind closed doors. The decision was apparently left to FNB on whether they want to remove agent listings or keep their private sale feature. Agent listing data was held ransom by a few who had the idea that they had ownership of it and could decide on their terms whether and when they want to remove it. That backfired.
Trust was broken due to poor decisions that failed to acknowledge that the industry is really about the people on the ground. Industry is the agents doing the hard work of making sales happen seven days a week. Most agents have their own struggle of making ends meet, and to me, it also boils down to showing respect to the very people who supply you with that data, your pay check, and helped build your business. Instead, the long term relationship with a bank was put first and basic data opt out requests was given the middle finger.
As a result, agents once again started calling for an industry owned portal to take back control of their data. High portal prices is one problem, but as you will see in the survey feedback there are deeper lingering problems. Is the SA real estate industry stuck? I couldn’t have worded it better than this message I received via LinkedIn:
I think that the aggregation of ownership & control of the real estate supply chain has become a self deprecating goal evident by what is seemingly looking like an own goal.
Data is the new oil
More agents are realizing just how valuable their listings, local area knowledge and sales data can be as a collective. (and how valuable this can be to external companies wanting to launch new products/services). From social media discussions, this would form the basis of any potential industry owned portal. Agents want a platform they can trust, protocols to be put in place to protect their IP (listings), equal ownership and a solution to the ever increasing portal subscription fees.
There is some frustration with current government and industry structures that are super slow to adapt to change and doesn’t lead with innovative new ideas to take the industry forward. In many cases they struggle with streamlining the day-to-day lives of agents and removing the barriers of entry that can help to transform the industry.
So in a recent survey I asked agents on whether they think it is time for an industry owned portal to be set. Here are the results from about 150 agents from all over SA, representing both franchise and independents. I’ve also compared it with a previous survey I did 2 years ago.:
Do you think there is value for agents to create a 100% industry owned portal?
This is not a surprise, but what is a surprise is that the confidence levels seems to have dropped from 2 years ago where 71% of agents voted in favor of an industry owned portal. Feedback from agents are that the leading portal Property24, seem to have widened the gap to the number 2 and 3 portals so it is starting to feel more like a monopoly. One needs to ask how valuable the idea of industry buying a minority share into Private Property was 2 years ago and what impact it had thus far? The advantage Property24 has as leading portal (without agent shareholding), is that it can increase its fees and subsequently push more into marketing to open a gap to the rest of the portals. It is also free of complex shareholding structures.
What would you be willing to contribute every month as an individual agent for such a portal?
What is clear here is that agents would be willing to spend a bit more for a more aggressive marketing budget to push such an industry owned portal.
With about 40,000 estate agents in SA (+- 20,000 interns), you are looking at a potential R3 million per month member subscription income. I’m sure many financial institutions would also be willing to contribute via advertising fees. This would be enough income to cover operational costs (including ongoing development) and leave a substantial marketing budget to compete with the top portals.
I know some would not agree, and figures of ‘several hundreds of millions’ was thrown around by industry organisations which is crazy. We live in a new age of on-demand cloud services and access to new technologies that allows systems to be set up quicker and more cost effective than ever before. Fewer smart people are needed to launch clever products. It’s probably best explained for now in the following quote:
“Actually we have been able to move incredibly fast,” he says. “These days you don’t need thousands of people to start a bank.”
You also don’t need insane amounts of infrastructure capital either. “There is a massive amount of software that is available for free. And the hardware costs much less than the existing banks pay to maintain their legacy systems. Our technology costs will be 1% of 1% of the usual tech budgets. This is the challenge that start-ups — not just banks — pose to big established businesses.” ~ Michael Jordaan, Bank Zero
How do you perceive the pricing models offered by property portals?
Unsurprisingly 88% of agents voted that portals are overpriced, obviously pointing to the top portals who currently charge several thousands of Rands every month. 2 years ago 61% of agents voted that portal prices were overpriced. Steep price increases the last 2 years didn’t help here either as it puts estate agency budgets under pressure. The main problem here for agents, is that the money spent is mostly on unqualified leads and no real effort is made to enhance the critical role of agents in the home buying & selling process.
Do you feel the real estate industry is transparent enough when it comes to ownership of portals and service providers?
This is a sensitive topic but I’m of the firm believe that more transparency can promote better competition and bring portal prices down. There are so many shareholding agreements, organisational structures and people wearing multiple hats, it is difficult to keep up on what is happening and who owns who. It seems to be a case of one hand washes the other and an industry eating itself.
The other important point is for the average agent to understand who they might inadvertently support through their portal subscription fees. The same applies to bond applications, as many financial institutions and originators own shares in agency groups or startups. I’ve asked some questions so hopefully we can get a better view soon and level the playing field to promote fair competition.
Thoughts and Ideas from agents
The following is some further extracts from feedback received from the survey:
- A portal that promotes the role of the agent and stands with industry. One that doesn’t try to compete with them through For Sale By Ownerand other options.
- A portal that only advertise registered estate agents.
- Only display mandated properties and a focus on removing outdated stock.
- The current scenario of open mandates with several prices listed multiple times should be solved. A suggestion was made on displaying one listing with multiple agents.
- Many feel current top portals are outdated with the same basic suburb search offered and they are not innovative enough.
- Paying for your listings to appear on the first page is wrong.
- Industry owned portal can only worked if equal shareholding by all members and not majority controlled.
- The problem is this portal would have to get up to steam on its own, no agency is going to give up leads while we are waiting for an untried untested portal to get on its feet. We are all very suspicious of peoples intentions in this because of what has gone on in the past. Checks and balances would have to be put in place to balance out domination by individual agencies.
- Competing Agents will never ever ever work together enough to make a difference nor support a portal enough; no matter the threat. Game over ; portals win!
- CREA Canadian Real Estate Association has it’s own portal called REALTOR. Consumers use the app or website www.realtor.ca because they know they will be working with registered agents that are regulated by CREA, and that CREA owns the portal. We need the same.
- An independent contractor should be appointed by the EAAB (the contractor will be the web master and the EAAB will only pay the money collected from the agents-so it is not run by the EAAB) with no agencies having ownership and no extra adverts and ideas to encourage more money like premium and featured and grouped ads. The payments should be done by listings and fines if not removed when sold. Further if you advertise an unlicensed or intern agent without supporting information you get fined. Search engine optimization needs to be included when calculating the cost of the website. Web manager contract must have clause not allowing the webmaster to take ownership if he is no longer needed or a new web master is contracted.
- The quicker we get an industry portal the better
- The portal should be more user friendly and enable the agents to engineer their listings the way they see fit. Not the way the portal insists it should be done. Within reason of course.
- Happy with what the current portals provide it is just to expensive.
- Portals should have better ways of qualifying the leads. Perhaps FICA verification should happen before a buyer can enquire. Get rid of the rubbish and time wasters.
- I think data and even lead from other agencies are passed from private property and perhaps p24 to the agencies that own private property like ‘‘Franchise Name Removed’’. I will support an industry owned portal.
- Main concern is that who ever gets the power will monopolize again; A new portal would have to be heavily supported by agencies, mass support and all leaving to known portals for it to work.
- We have the listings – let’s Control our destiny
- Many, and way to many to be written here 🙂
In my opinion, an agent owned/operated property portal should essentially only be a counter balance to what is currently available in the market with the prospect of growing to becoming market leader and ultimately setting the standard other portals should follows.
The idea should be to offer volume and value to compete with other portals and balance out the market and influence it positively. My feeling would be to have a portal running on the same principal as Facebook ads for example, where it’s a pay per use model but a basic free upload to begin with. The key should be to offer full integration between social media feeds and the portal as this will likely be the first step in the change that is coming to industry.
Ownership in the portal is important because the small companies pay the same fee to P24 and Private Property but get no stake like the big franchises.
The real estate industry should change their position and rather offer more specialized services to clients and giving them the option of different selling options like the higher commission personalised service or low fee technology service or just service for an evaluation or to negotiate on their behalf for a fee etc. rather then creating another portal to compete with the other large ones.
Challenges of an industry owned portal
The feedback above illustrates some of the main pain points agents have with current portals, but also presents an opportunity for current portals to address these concerns and realign themselves closer to the needs of agents. This can be challenge though, as shareholders in top portals expected a ROI. New avenues are continuously created to allow agents to spend more.
The main challenges are then:
- You need a great platform and a brilliant team with vision to drive it.
- You need buy-in from all agents (100% listing representation) plus subscription fees to support a large marketing budget.
- The above can only work if service providers open their (agent) listing data to such an industry platform, which is currently not happening.
This is also echoed by industry experts in my social media discussions:
…the fact is a portal can only exist and offer value for agents and business owners if it has a compelling and significant appeal to consumers. To create this platform takes great tech skills and resources matched to significant marketing budget… ~ Alistair Helm, former founding CEO of industry owned Realestate.co.nz
On the bright side another industry owned portal, On The Market in the UK, is experiencing growth and have even floated on the London stock exchange. In just 2 years they’ve managed to position themselves as the 3rd biggest portal in terms of traffic, competing with the duopoly of RightMove and Zoopla. It is important to keep an eye on what is happening around the world, and do a bit of research so if you do decide to launch something like this, you don’t do so completely blind. It is also important to realize that the top portals have a head start, and anything new won’t be an instant success. Perseverance is required. At the same time you also have to realize that portals themselves are ripe for disruption.
Great businesses are build by taking calculated risks and challenging the status quo. You never know till you try.
As a final thought, every company wants to rule the world, but sometimes we need to learn to share and focus on building sustainable businesses that promotes job creation so desperately needed in South Africa. I believe we can achieve this through more transparency and opening up real estate data to create more competition that will lower prices. Agents are sitting with a pot of gold as a collective and it is an opportunity to challenge the status quo. (more about a possible solution in a next post).