by Grant Wakelin
I am suffering internal conflict.
On the one hand I see the change in pricing regime from Trade Me as a good thing - forcing the unbundling of real estate fees, reducing the reliance on print media and so forth, as outlined here. On the other I think Trade Me have handed the situation poorly, even appearing high handed and arrogant.
The change is significant - an average price increase of 4 times (400%) and on short notice. You cannot increase the cost to any client, in any business, by a factor of 4 and not expect some push back!
That's where client relationship management comes to the fore. Smooth the feathers, explain the benefits, work behind the scenes. Keeps things calm and restrained. That doesn’t seem to be in Trade Me playbook at the moment.
The Trade Me response to the short notice? "We gave you 6 weeks our terms say we can do it in 30 days".
Some agencies have pulled out. That is to be expected, some will have a knee jerk reaction. The Trade Me response as highlighted in this interest.co.nz article however has been to bypass the agencies and go to their client base - they wrote to all the real estate customers directly. That’s an aggressive escalation.
The message from Trade me is strong - “Do something we don’t like and we will bypass you, going direct to your customers”.
Wow!
Ouch!
There will be a response from the industry to that of course. The agencies that continue to use Trade Me will stop using addresses on their listings. They can keep their clients satisfied they are using Trade Me, but by removing the addresses Trade Me can’t cut them out by going direct. But it affects Trade Me search making it even less effective compared to www.realestate.co.nz. It looks a pretty short sighted move by Trade Me really.
The Trade Me attitude is clear - here is a tweet from the founder and current Board Member Sam Morgan:
Calling your customers turkeys is not out of the client relationship management manual I would use.
The implication of this goes beyond property and should be of concern to all users. Trade Me is a retail site - if you consolidate customers in any way using Trade Me as a channel, they will cut you out. If you don't do what Trade Me wants you to do they will go direct to your customer base.
Trade Me have hired a new head of Property - the previous CEO of PropertyIQ. Not a company renowned for being easy to do business with. In their Commerce Commission filing for the acquisition of Terralink - most of their customers were listed as competitors (or potential competitors). Nigel is a good guy, but will the Trade Me attitude change?
Harcourts and Lugtons have changed the dynamic of online search in Hamilton in one swoop - you have to use www.realestate.co.nz there. Trade Me needs to be careful. The real estate industry has not lost control of its client base (yet) and when they have a common enemy they can be vicious.
Trade Me is a retail (direct to consumer) business. To me a gap in their corporate account management skills is showing. It will not take much more momentum for this to get ugly.
Or maybe I just don't get it and Trade Me have decided that the time is right - they can take on traditional real estate and break it...
Allan Moyle said:
Nobody cares about what TM has done to RE Agents except RE Agents. While RE Agents continue to harbor practices that resist negotiation on fees etc for example, they may think they have control, but they will never be in a position to have the the "hearts and minds" of their customers.
Posted 21 st February, 2014For example I was pitched a 90 day sole agency offer, I say fine, but my deal is if you sell in 30 days I'll pay the full fee (in this case $ 400 + 4%; if it takes you 31-60 days to sell I'll pay $400 and 3% and if it take 61-90 days, $ 400 and 2%.
I want a quick sale, RE Agent says he is the best around and confident of quick sale.
Told me what I offered was illegal.
So went private spent $ 569 on TM +signs + advertising, S&P agreement signed 16 days after listing.
Grant Wakelin (Author) said:
Hi Allan
Firstly, there is nothing illegal about having some sort of structured incentive plan. You are the owner - you can pretty much set the plan up how you like - the agent can choose to accept or not of course.
The whole structure of commission is wrong in our view - its why we have a fixed fee basis. With traditional commissions you pay the same rate whether the agent is in their first year or whether they have 20 years experience, whether they sell 100 a year or 1, whether it takes 10 days to sell or 10 months. We spent some time talking about commissions in this blog:
http://200square.co.nz/articles-and-tips/a-commission-conundrum
and here
http://200square.co.nz/articles-and-tips/why-agent-commissions-are-so-high
Congratulations on getting your house sold. We still think the agent adds real value (just not 4% plus other fees - which is why we exist). Here are some thoughts on why using a real estate agent still matters:
http://200square.co.nz/articles-and-tips/3-reasons-the-real-estate-agent-matters
Posted 21 st February, 2014