Here’s why sellers will negotiate lower commissions following #PGPbuysEazi
Since HomeTimes first announced that Pam Golding Property group had bought online, fixed-fee estate agency, Eazi.com, there have been mixed opinions from industry players: Some have said it is a sign of the times and that PGP was doing well to cover all its bases, while others have taken offence and “announced” to the industry that if there were any unhappy PGP agents out there, that there were agencies that would be happy to have them.
HomeTimes has extended an invitation to PGP CE, Andrew Golding, to join us for a Facebook Live interview where he can answer the industry’s many questions, but we have been told that he still needs to field his franchisees’ questions. Watch this space! – ed
While the industry waits for further clarity on the motives (there are some floating around which go something like this: PGP only bought Eazi.com to buy it, destroy it, and buy the next online or low-commission player until all of them are gone) – what has come out of the woodwork in our search for answers is that not all traditional, commission-earning estate agents are singing from the same hymn sheet in their dislike for the new entrants.
In fact, HomeTimes has documented proof that at least two traditional estate agents, representing well-known traditional franchise brands, have used low-commission player, HomeBid to sell their personal homes.
In each case, the reviews were very positive and complimentary of the entire experience. A recent poll on a property practitioners Facebook group revealed that the majority of respondents said they would never use a low-commission, online or fixed-fee estate agency to sell their own homes – though some were not so vehemently opposed to the idea (one said, “If the point is to sell my home, why not?”).
There really is an “us” vs “them” narrative when one speaks to either side of the commission conundrum, but what no one should ever forget is that regardless of your chosen business model, if each agency and its agents hold valid Fidelity Fund Certificates, and operate within the laws of the country and municipality, it should be of little consequence that both can and should co-exist.
If what the purchasing of Eazi.com by a much-loved and respected traditional franchise group has taught us, is that times are changing and consumers are starting to ask questions about the value proposition of every business – including those in real estate.
The big, regional mall that moves into a township community and kills the business of a spaza shop owner has little to do with the mall; it has more to do with the consumer: If the consumer can get a better deal on a daily, essential purchase, or has to pay more to buy from the spaza shop owner who believed he owned the local market and could therefore charge what he wanted to, his consumers would choose with their pockets if the choice existed. Had the spaza shop owner adapted, or offered something the mall couldn’t, he may still be in business and, dare we say it, flourishing.
Uber vs meter taxi owners is another example of a service that was neither appealing nor chosen as a public transport option en-masse other than because of a lack of choice. Uber’s current clientele were never the clientele of meter taxis anyway! What Uber did was to create a whole new market of vehicle-owning consumers who opted instead to make use of its transport services. Why? Because it is relatively affordable, convenient and offers a generally positive experience.
As we wait for more clarity to come out in the wash, maybe it’s time for every real estate agency to adapt to changing consumer wants and needs by not only offering a quality and competent experience to home buyers and sellers, but to also make the value proposition so enticing that consumers see only you and your brand. Once you have achieved this, you then have to let your consumer know. But how?
Upskill yourself and your team, or partner with other companies, to help you effectively market your value proposition. Many low-commission and fixed-fee estate agencies have two arrows in their arsenal: they are price competitive and they a social media savvy – so much so that consumers are more likely to see one of their adverts, than yours!
Think about that. Of the more than 5,000 traditional estate agencies, less than 20 boasting no-, low- or fixed-commission are making the most noise. Consumers will partner with these brands because of the cost savings and because they either only see them online, or really like their fresh and professional marketing approach.
But here’s the rub: The real thorn in the side of the traditional agent is not the mandates going to the new operators – as insignificant as the number is – but that today’s seller is able to negotiate a lower commission due to choice. It is the power of bargaining that has not up until very recently been at the fore of the South African real estate market. Now that it is, all agents (traditional and the “disruptors”) need to prove their value over and above their cost. Whether a seller pays a fixed fee of R29,500 or 7.5% of the final selling price, all a seller wants is a pain-free and professional service. And if this can be achieved at a fixed fee, it’s not hard to see consumers opting for the more affordable option.
Whether a home is successfully sold by an online agency or a traditional agency shouldn’t matter. What should matter is that a seller successfully concluded the sale of their biggest asset – an experience that props up the image and perception of the real estate profession.
Not every online or low-commission agency is able to sell a home it has been mandated to sell; much the same as not every traditional estate agent is able to sell every home they are mandated to.
If agents from traditional agencies are prepared to use low-commission operators to sell their own homes, is it really so surprising that a traditional agency has bought an online, fixed-fee player?