Archive for the ‘Reports’ Category

Greg Vincent

What’s The Future For Real Estate Agent’s Commissions in 2011?

What’s happening with real estate agent commissions?

Are you interested in gaining an insight into how other agents are dealing with the constant pressure that’s being exerted on real estate agents and their commissions?

Well! Last year, I was able to gain an amazing insight into what was happening out there in the front line with real estate agent’s commissions via a quick online survey that I conducted and shared through this Real Estate Mentors site.

Once the survey was finished my team and I compiled a detailed report called ‘The Future of Agent’s Commission 2010 Report’.

The statistical data, opinions, insights and feedback that we received from this initiative was really eye-opening.

But before I share the link to the previous report with you, I wondered if you may be able to help us gain an insight into what you are currently experiencing within your market place?

You see, over the next few weeks, we’ve opened up a similar study for agents in 2011 and we’d love to hear your side of the story.

Could you please take a couple of minutes (it’s really brief) to answer this year’s ‘The Future of Agents Commission – 2011 Questionnaire’?

From some of the data that we’ve already received, this years report looks like being even more comprehensive.

Plus this years online questionnaire is being promoted more broadly via Kevin Turner’s REUNCUT radio show PLUS other real estate trainers/coaches have also joined in to share it with their agents.

We anticipate that the report will provide an insight into where real estate commissions are heading and help us to provide real answers to what agents can do to ensure that they can not only secure more business but also retain a healthy professional fee for their service both now and into the future.

Please join in and have your say by clicking here now.

NOTE: Those agents who contribute to the Questionnaire will receive ‘Exclusive’ access to the full report prior to its official release.

Please take a few moments and help with this important real estate industry initiative by Clicking Here Now.

Thanking You in Advance.

Warm regards

Greg Vincent

www.GregVincent.com.au

PS: Here’s the link to last year’s Future of Agent’s Commission – 2010 Report.

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Petra Sprekos

Survey Reveals Lengths Buyers Will Go To, to Purchase Property in 2010

A recent national survey of 1100 users, conducted by Real Estate View aimed to gather data on potential home buyers in 2010 and their feeling about the year ahead, as well as the sacrifices they would be willing to make to purchase a property.

While rising interest rates and house prices are concerns echoed by many home buyers, people still seem to be optimistic about successfully purchasing a home in 2010, although it may not be exactly what they had in mind when they originally started their property search.

Buying-A-Home-3

How market demand and price increases are changing buyer decisions

With the market showing record growth over the 4th quarter of 2009, there was no surprise that buyers were reviewing their budget to buy in 2010.   In fact a whopping 2 out of 3 people expected to have to increase their budget in order to find a suitable property in a suitable location in 2010, with 72% of these individuals expecting to raise their original budget by over $20,000.  Showing that potential buyers are at least prepared for what the year ahead may bring.

However it seems that increasing their budget is not the only consideration buyers are making.  When asked about what compromises buyers are making it seems many of them are considering other alternatives to their find a suitable home.  62% of those surveyed thought they may need to look ‘further out’ than they originally planned, whilst 55% of people would look for a property of smaller size and 51% would look for a home of lower quality than originally planned.

So while prices are still rising it seems potential buyers out there are prepared to make some sacrifices to get onto the property ladder.

Overall market data such as that provided by Realestateview Property Data seems to point to the fact that the prime inner suburban properties will continue to be snapped up, but more humble buyers as shown from the realestateVIEW.com.au survey are willing to move ‘out’ to find something that suits.  They may not be getting a house that is as nice as they originally planned or the house as large as they might first have thought, but they know that there are ways to make this work.  It seems that demand may not slow; it may just change a little.

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Greg Vincent

‘New’ Australian Real Estate Widgets Launched

Yesterday, I was speaking at the Brisbane session of ‘A Morning with Australia and New Zealand’s Top Agents’ when it was announced that PriceFinder have just launched a new offering to agents.

Taking inspiration from the success of Zillow and Trulia’s ‘cool’ web site widgets, PriceFinder has released its own range of agent website tools for Australia.

Widgets are an easy way to enhance your own website, increasing traffic and generating leads.

According to Kent Lardner, Chief Operating Officer of PriceFinder;

“Your web site visitors can now search for recent sales that match their property as well as view sales and growth charts for free. We have several new widgets now available as well as banners to enhance both the look and the functionality of a real estate agency website”

Click Here to see these new widgets.

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Greg Vincent

Future Of Agents Commission 2010 – The Results

People from all sectors of the real estate industry have been following the Future Of Agents Commission 2010 very closely and their has been a lot of interest surrounding the results of this important survey.

The survey was closed at midnight Fri 19th February 2010 (Sydney Time) and results have now been collated.  Overall we had over 900 people who viewed the survey and 198 participants complete it in full. None of the questions were compulsory and not every question was answered by everybody.

“Future Of Agents Commission 2010 survey has successfully pin pointed some major issues that are impacting the real estate industry.”

There are some things that really need to be addressed by agents if they want to prosper throughout 2010 and beyond.

Future-Of-Agents-Commission-2010-Report

Competitors Cutting Fees

Importantly, a large percentage of respondents said that the greatest threat to their commission rate is that their competitors’ are cutting their fees.

The greatest problem with fee cutting is that even though every agent feels that they offer clients something different from their competitors, unfortunately many potential sellers don’t actually see it that way.

They see that most agents are now offering very similar marketing plans (realestate.com.au, domain.com.au, signboard, virtual tours, brochure & print media advertising) which means sellers struggle to see any significant value in paying any extra fees to the more expensive agent compared to the cheaper agents.

Vendor Paid Advertising (VPA)

The debate between Print Media v’s Internet is having a huge impact out at the listing presentations, with most agents finding that the sellers are becoming more reluctant to pay for Print Media campaigns. Make sure you check out the responses from agents to this question.  It provides an interesting  insight.

The Internet

Less than 2% of agents surveyed thought that ‘The Web” would have the greatest impact on their commission rate in 2010. Quite an amazing statistic, when you consider how much research is currently being done by potential clients over the internet.

Hours Worked

Agents are working some really long hours, with many respondents saying that they are working over 60 hours a week, which doesn’t leave much time for much else in their life. Work/Life Balance is going to become an interesting juggling act for a number of agents throughout 2010.

Future Of Agents Commission 2010 Report

Future-Of-Agents-Commission-2010-Q1

1. How many years have you worked in real estate?

It’s interesting to see that overall 79.7% of agents who completed the survey have been working within the industry for more than 5 years.

Whilst the newer agents seem to have been experiencing similar issues, having such a large percentage of experienced agents completing the survey should dispel any concerns about the level of ability or experience amongst the participants of the survey.

Whilst, some agents will always be better than others at negotiating their rates of commission, it’s unlikely that the 79.7% of experienced agents surveyed would still be working within the industry (for more than 5 years) unless they had a certain level of skills to negotiate a reasonable fee for their service.

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Future-Of-Agents-Commission-2010-Q2

2. What is your average weekly work hours in real estate?

Real estate agents are working really long hours, with 15.4% saying that they are working over 60 hours and overall 49.8% of those surveyed are spending in excess of 50 average weekly work hours in real estate.

These long hours can cause unnecessary stress & doesn’t leave a lot of recreation/family time.

Work/Life Balance is going to become an interesting juggling act for a number of agents throughout 2010 & could have some ramifications going forward under the new National Award that took effect on the 1st January 2010.

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Future-Of-Agents-Commission-2010-Q3

3.In 2009, did you find more sellers wanted to negotiate commissions with you than in 2008?

Throughout 2009, even though commission rates are regulated in some states & deregulated in others, many agents found the discount agents were having an impact on their commission rates, while others have been able to overcome the discounters.

In response to this question, there were 120 brief explanations, here’s just a few…

“This was never discussed my clients are very happy with the service they receive for the % they pay.”

“The number of listing were down considerably on 2008, secondly my competitors were going in and dropping their rate of commission even before the vendors asked the question. This , I believe was as a means of making sure they did “get” the business. And thirdly , generally vendors were hurting (financially) and they were trying to minimise their expenses / costs/losses,etc.”

“Competition to get listings & clients are now more informed due to a lot of media programs on real estate. In many cases they are misinformed as to the amount of work we do and the stressful & uncertainty of our vocation.”

“They think agents don’t do much for the money. No one really sees the actual work involved in listing and selling a property.”

“Other agents offers and discount/budget agencies”

“Always a constant, each and every year sellers always want to negotiate commissions.”

“Too many agents in the same area and not too many experienced ones. Selling themselves too cheap. Not good listers.”

“Agents have become more desperate in their attempts to gain business. People can see this and word soon gets out agents are all negotiable on their fees even despite good results and happy clients.”

“People finding it harder to cope and generally had less money.”

“Some may have received a lower price than they wanted or sold quickly and didn’t feel we deserved full commission etc..”

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Future-Of-Agents-Commission-2010-Q4

4. In 2010, do you anticipate sellers will be more likely to negotiate commissions with you than in 2009?

In response to this question, there were 118 brief explanations, here’s some of them…

“Market has started to improve therefore the pressure is on to gain listings hence some agents are prepared to discount fees.”

“I don’t negotiate on commission.”

“All sellers want to negotiate the cheapest possible commission and marketing.”

“Rising costs (e.g. stamp duty, conveyancing , changeover costs ) for property purchasing and selling.”

“It’s important to represent great value compared to others, a real point of difference. Fees then are easily justified.”

“More agents discounting and more discount/budget agencies.”

“The market is strong and we are achieving good results for our vendors so they have no reason to negotiate our fees. If we can prove good results we can prove we are worth our fees.”

“It is a trend that is becoming more prevalent in the area that I work in.”

“At this stage our market share is increasing & we are getting less objection to fees.”

“Until stock levels rise considerably, agents will keep offering their services at discounted rates until they realise it’s not the answer.”

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Future-Of-Agents-Commission-2010-Q5

5. In 2009, what factor has had the most impact on your commission rate?

With over 68%, it seems obvious that many agents have felt a significant impact from agents discounting their fees last year.

I know discounting has always been an issue, but it seems to be more prevalent & may stem from the shortage of stock or the survival strategies that agents were adopting back in 2008 to keep the doors open.

Some of the agents surveyed have commented that the regulation of fees is still a major issue for them.

In years gone by when every state in Australia had fees regulated, the fees were always able to be negotiated, but only one way – down.

Real Estate must be one of the last industries where antiquated, fee regulation still exists.

Deregulation appears to have worked well throughout the other states & with the announcement of a new National Award & recognizing National Licensing, maybe it’s time fees were deregulated throughout the whole of Australia too.

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Future-Of-Agents-Commission-2010-Q6

6. In 2010, which factor do you feel will have the most impact on your commission rate?

Because discounting had such a big impact on agents in 2009, I can understand why it is still a large percentage (65.8%) in response to this question.

But, I was quite surprised to see that only 1.6% thought that ‘The Web’ would have the greatest impact to commissions in 2010, yet so many people do most of their research about properties & agents over the web already & this will only increase throughout 2010 and beyond.

By using online marketing strategies more effectively, agents can actually increase their commissions or at the very minimum, maintain their regular commission rates because they can provide a significant, unique selling proposition within their marketplace.

This 1.6% response to ‘The Web’, pin points a hidden opportunity for agents to embrace ‘new’ real estate technology, Social Media, etc & accelerate away from their competitors very quickly.

As John Chambers said, “Nothing changes behavior like survival. It’s no longer the big that beats the small, but the fast that beats the slow.”

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Future-Of-Agents-Commission-2010-Q7

7. How does your transaction volume in 2009 compare to 2008?

It’s really encouraging to see that 60.2% said that their transaction volume has increased in 2009.

This isn’t just good for agents, but more importantly, it’s great for our customers and the feeling of confidence amongst the real estate market.

2007 and 2008 were some tough times for real estate, with thousands of people leaving the industry due to the slowing of the market, GFC, increased interest rates, etc.

Unfortunately, there is 17.3% who didn’t see a growth in their transaction volume. Whether their decrease is due to personal circumstances, increased number of agents servicing their area, drought or GFC, it’s hard to pin point.

Listing and selling real estate is different in every area.

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Future-Of-Agents-Commission-2010-Q8

8. On average how much do you spend to market/advertise a listing?

With 55.2% spending more than $1000 to market/advertise a listing, it would appear that many agents are now getting Vendor Paid Advertising to enhance their marketing campaigns.

Or if they aren’t getting VPA, then they’re taking a big punt on their commission, plus reducing their profitability dramatically.

From other feedback within the survey, there appears to be a lot of competitors who include the marketing within their fee because, in answer to Question 12, many are finding sellers are becoming more reluctant to pay (VPA) for print media advertisements.

It looks like the print media v’s internet debate is going to be something that agents will have to debate over with their clients for quite some time to come.

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Future-Of-Agents-Commission-2010-Q9

9. How long is your initial agency agreement period with a seller?

Legislation restrictions within Qld & SA have had an impact on the results relating to this question because the agents within these states have maximum agency period restrictions of 60 days & 90 days respectively.

Also, one agent stated that in their agency agreement “either party can give 1 months notice to terminate agreement”.

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Future-Of-Agents-Commission-2010-Q10

10. What is your average number of days on market for your listings?

It’s great to see that 69.2% of agents surveyed have an average number of days on market for their listings of 60 days or less. This is great news for sellers throughout Australia, when compared the slowness of sales happening overseas.

Most of this success can be attributed to the improvement in the marketplace, improved auction clearance rates, etc.

A large percentage of the improvement to an agencies success rate is also due to more and more buyers using the internet to find properties and the use of email alerts/notifications via the major portals or agency CRM’s.

The whole buyer/property match-up process is now less time consuming & a whole lot more effective than in the past.

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Future-Of-Agents-Commission-2010-Q11

11. How much do you pay per year on real estate training?

If you want to earn good commission then you need to be well trained. The specialists in any field are generally the best paid.(eg. doctor v’s specialist)

Agents who want to be able to maintain or increase their commission rates going forward really need to make sure that they are constantly on the look out for ways to improve their skills.

A few hundred dollars worth of training can often make so much difference to your skills & marketing strategies.

It’s important that you fine tune your skills & ensure that you are looking to be innovative if you want to jump ahead and stay ahead of your competitors.

A lot of agents are now providing a very similar stencil within their marketing programs and they are also listening & training to a lot of the same scripts & dialogues too.

For instance, I had a lot of agents who completed this survey saying, “If I can’t negotiate my selling fee, then how am I going to be at negotiating the sale of their home.” It’s an old chestnut, but already clients demands have increased and statements like that aren’t enough.

You need to be able to provide evidence, recommendations, etc. Plus, most of your clients are now checking you out online before they even meet you, so you better look like you know what you’re doing on the web too, or they’ll simply mouse click away from you. And when that happens, you don’t even get a chance to present to them. You’re out!!!

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Future-Of-Agents-Commission-2010-Q12

12. Have sellers in your area become more reluctant to pay (VPA)for print media advertisements?

The response to this question has been very interesting. And I believe that the debate about Print Media v’s Internet is going to be one of the things that will have the biggest impact on an agent’s commission throughout 2010 and beyond…

For instance, here are some of the responses…

“Expense of print media verses internet”

“Most people look on the internet”

“They believe that realestate.com brings in the buyers”

“Because no other agent chargers VPA, if we try to obtain VPA, they simply choose the agent that doesn’t charge or ASK`s for VPA”

“They feel we charge enough and that we should pay all expenses ourselves”

“Many sellers feel the internet is the only way and the most modern way to market a property. Many feel the cost of say one paper ad for one day is very cost ineffective when compared for an internet ad which is on display 24/7.”

“Why pay for print media if so many buyers come from the internet. We use the internet”.

“Happy to pay for internet rather than print”

“Most vendors believe the internet is the biggest selling tool and no-one reads the newspaper to find a home anymore.”

“It’s the agent’s job to advertise at their cost and if they sell it then they can deduct it from their commission.”

“A new agency in town is giving away free advertising, free internet and the chance to win a car!”

“Vendors are requesting agents carry a larger share of advertising but realise the impact of the internet”

“Most buyers find properties on the net and local paper advertising too expensive.”

“Cost v inquiry rate”

“Too many agents not offering or explaining that it is not needed”

“It should be included in the commission. Most enquiries are coming from the internet so do we really need print media?”

“They want no sale no charge and other agents are willing to give it to them”

“They see print media as a waste of money”

So, where to now with (VPA) and Print Media Advertising?

Within any field of selling, a salesperson must believe in their product and as real estate salespeople keep getting more & more enquiry through the internet they will find it harder & harder to believe in the value of Print Media within a marketing campaign.

You see, the difficulty with Print Media is that the real response from an advertisement is normally extremely hard to track.

Most people who see a property that they like in the paper don’t tend to call the agent straight away, they go online to see more photos of the property, virtual tours, read more about the property, etc, etc. And because realestate.com.au is the most popular real estate portal within Australia, most people will go looking for that information on realestate.com.au or domain.com.au, etc.

Then when the client calls the agency, the receptionist may ask, “Where did you see the property?” and most times the client will say “realestate.com.au”. The real question that should be asked is “Where did you first see the property?” and you may get quite a surprise about what leads are actually being generated through your Print Media.

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Future-Of-Agents-Commission-2010-Q13

13. Would you be open to learning some simple internet marketing strategies that will help you earn more commission in 2010?

Almost every respondent said that they would be open to learning some simple internet marketing strategies that will help them earn more commission in 2010.

Throughout 2010, the year where Gen Y outnumber the Baby Boomers for the first time in history, it’s going to be very important for agents to be become more open to changes in technology.

Success in maintaining the commission levels you want throughout 2010 and beyond will ultimately depend upon your ability to adapt to change quickly.

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14. Optional: We value your opinion. Please provide any other comments concerning the issues affecting your commission?

There were 31 opinions shared at this point within the survey. Here’s just a few…

“Train agents to sell properties on their abilities not on discounting their fees.”

“Most agents are crying out for strategies – yet hesitate to invest money in educating themselves or acting on that information!”

“Agents are their own worst enemies – one greedy agent tries to obtain a listing advantage by discounting – eventually, all agents will be earning 10 or 20% less. Why can’t they see this?”

“I have found most of the agents in my area are doing flat $ commissions of less than $5000 per listing.”

Where To From Here?

If you really do want to increase or maintain your commission levels in 2010 and beyond, the most important thing you can do is create a real, significant point of difference within your marketplace.

And one of the best ways to do this is by providing an effective online marketing strategy that allows you to display real, tangible benefits & reasons why a potential client should choose you over your cheaper competitors.

In addition, customer service is the High Ground for real estate agents. If you can implement effective systems to provide superior service which involve harnessing the power of the internet, Social Media and providing your customers with a personal touch then commission won’t be too much of an issue.

It’s no longer enough to simply say that you will get sellers a higher price than the other agents. You have to provide a significant enough point of difference and social proof or recommendations from their peers to help them substantiate their choice of you as their agent.

If you can get this right, then the future for your real estate commissions looks bright.

A Final Word Of Warning…

I can’t stress this enough!!! If agents ignore the effective use of technology & don’t embrace social media, then discount agencies aren’t the thing that will have the greatest impact on agents commission in 2010. The loss of potential business over the internet will be the greatest cost to an agencies commission throughout 2010 and beyond.

I sincerely hope that agents can gain a lot from the insights within this report and I’d like to publicly thank all of the real estate agents who participated.

Please feel welcome to share your thoughts in the comments section below…

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