Embracing the ecosystem

In a world where technology has dramatically changed the way we live, communicate and work it’s impossible to ignore the way individuals, businesses and entire industries are inextricably connected. So is it time for the real estate industry to rethink how it operates in this new commercial ecosystem?

By Tina Liptai

In an age where start-ups, disruptors, and innovators leverage online connectivity to establish new offerings across all industries, it has never been more important for agents to understand, and rethink, how the industry as a whole should operate successfully in this interconnected world.

REINSW President John Cunningham has called on agents and businesses alike to recognise that they are part of a commercial ecosystem that has grown around the real estate industry. But instead of focusing on how real or perceived competitors are ‘encroaching’ on business, Mr Cunningham urges agents to look at ways to collaborate and leverage the power the industry has as a whole – warning that any agent who refuses to adapt, does so at their peril.

“We need progressive agents who are ready to innovate and look outside their own self-interest and see the bigger picture,” Mr Cunningham said. “We need a change of attitude in our industry, when it comes to agents and suppliers. It’s not ‘us’ and ‘them’. Suppliers are not the enemy; we are all in this together. They rely on us for their business to survive and we rely on them to provide services and products that enable us to do our jobs well.

“To ensure our survival as an industry, we need to refocus on consumer service and look at how we can deliver a great experience and results for our clients. We can’t simply keep doing what we have always done simply because we have always done it. Those who are not willing or able to adapt will not survive in this changing world.”

How the industry has changed

Like all industries, real estate has undergone significant changes over the past three decades with the growth of the industry, expansion of franchises and emergence of online technology. But in many ways, the real estate industry has been slow to embrace the changing environment.

“If you look back before the big push of franchises in the 80s and 90s, when growth was significant, we had a marketplace primarily built around real estate agents and newspapers. There were no data portals or other sources of information or marketing like we know them today,” Mr Cunningham explained.

“There was a huge shift in the 90s, with franchises starting to expand and independent agencies opening more offices. During this time there was also a shift in suppliers who were getting bigger in their own right. All of a sudden the sector was more than just agents and newspapers. We certainly noticed things were changing in our industry, but there was no coordinated approach.”

The 10 years to 2010 saw one of the most significant industry changes with online platforms realestate.com.au and domain.com.au solidifying their position in the market.

“At the same time, our industry was becoming fragmented. Previously, agents used to physically meet to get industry updates, and discuss challenges and innovation. But these meetings became less necessary with information being distributed online – which in some ways contributed to the disconnect between agents and the industry,” Mr Cunningham added.

Operating in a commercial ecosystem

Rather than looking at suppliers and new players in the industry as competitors or threats, Mr Cunningham believes it’s time to recognise the power of working collaboratively so everyone benefits – similar to the way in which a biological ecosystem works.

“These days you see commentary about the market from agents, but also from economists and key representatives from suppliers to the industry. There are a lot of voices. We are effectively already working in an ecosystem. And yes, that does mean survival of the fittest and a race to be the quickest to adapt. But there are competitive advantages to working with stakeholders and suppliers. We need to embrace a new perspective about how the real estate industry operates,” he said.

The key to adapting, according to Mr Cunningham, is to improve professional standards. This will lead to better communication and unity within the industry.

“A lot of things have to change, but starting with education leads to the industry building consistency and unity,” Mr Cunningham said. “Many agents don’t fully recognise the responsibility they take on when they get their licence or open an agency. There is a massive disconnect across the industry, which comes from a lack of foundation knowledge, including ethics and professional responsibilities.

“We need to be focusing on our strengths as an industry and essential to that is providing even better value for consumers – personalised service, and giving professional and expert advice and guidance. In order to ensure our survival as an industry, professional standards need to go up.

“Consumers look to us for expertise around a very complex transaction. If we can’t give that expert advice then we do not deserve their business. As an industry, we need to move past the sense of entitlement some agents seem to have developed.

“Once we have addressed this, then we can look at other aspects like strengthening our position as a service industry and building consumer awareness of our offering. Our industry needs a very clear voice; REINSW needs to be leading that charge for the sector with one, united voice.

“We can’t be complacent. The sector needs to communicate and work together to adapt to the changing environment. As an industry, we have to be influencing what is happening in our immediate environment. If we aren’t engaged and influencing the changes, they will happen without us.”

A real estate ecosystem In nature, an ecosystem is a biological community of interacting organisms and their physical environment. It involves a complex set of relationships and interconnection between the community and their surroundings. Everything in an ecosystem has an important role. Typically, a healthy ecosystem has a diversity of inhabitants. Every inhabitant has a niche in the ecosystem that helps to ensure it remains healthy. All the individual parts work together to make a balanced system. If one part of the ecosystem suffers, it affects all other parts of the system. For example, if there isn’t enough water in the soil, then plants die, animals that rely on those plants for food also die and other animals that rely on those animals also suffer. A commercial ecosystem works on similar principles of symbiosis, where businesses – real estate agencies, suppliers and stakeholders – depend on each other for certain things and work together to ensure survival. Ultimately, all the players in the ecosystem are interconnected and each contributes to a healthy industry and business environment. Like a rainforest ecosystem, the wider real estate industry – including not only agents and agencies, but also data and technology suppliers, regulatory bodies and other suppliers – come together as a complex web of closely interconnected stakeholders, all relying on each other to not only survive but to thrive. Benefits Changing perspectives to view the real estate industry as an ecosystem has a number of benefits including: - The real estate industry will be in a better position to influence outcomes, rather than being reactive to change. By embracing the changing environment and being part of the conversation, the industry can be proactive about change – particularly regulatory change –with a strong, united voice. - Improved education, ethics and professional conduct of agents will raise the standard of service to consumers. - Working with technology partners will improve the service offering to customers and ultimately achieve better outcomes for consumers. - It will create a more collaborative environment where all parties contribute to the conversation about best practice, implementing new technology and developing new tactics for the success of the wider industry. - Working together to innovate will give the entire industry a competitive advantage. Rather than seeing suppliers and other stakeholders as a threat, agents can look for new opportunities.

Technology

By Alister Maple-Brown – CEO at Rockend

For suppliers in any industry, it’s essential to have a healthy symbiotic relationship for the benefit of customers and business success.

None of us are silos. Our reason for existing is to enable our customers to be better at what they do. Our success as a business depends on us being able to help our customers be successful in their business. We want to help our customers work better, faster and more efficiently so they can give their customers even better service.

There are lots of changes going on, but in an ideal world I think everyone would like to see more collaboration between suppliers and the industry to develop and implement solutions to give customers the outcome they want. Technology is playing a central part in this changing environment. We recognise the world is constantly changing and we need to keep our customers at the forefront of that; we need to lead the industry in providing those services. 

We are ultimately here to facilitate our customers’ success, we do that by helping them to engage with and embrace new technology that has been created.

Everyone benefits from working in a commercial ecosystem. We spend a lot of time thinking, innovating and planning for the long-term success of our customers, by ensuring our customers have the right tools to then provide better service to their customers.

Portals

By Andrew Rechtman – Executive General Manager – Residential at REA Group

Most successful technology solutions are ecosystems that benefit from a so-called ‘network effect’. For example, if you look at Uber or TripAdvisor, these are network businesses – if you only had one driver on Uber it simply wouldn’t work.

There is value to an ecosystem, and for the real estate industry this means having agents, agencies and industry partners working together to improve the overall user experience.

Our aim is to help make buying and selling property as stress free as possible. We do this by making it easier for agents to do their job in advertising properties for sale and rent, and by creating a better experience for consumers at every stage of the property cycle. We also provide online tools that enable agents to market themselves to prospective vendors and landlords in the most effective and efficient way possible.

The way people research and look for properties has changed dramatically in the past 10 years, with more and more people going online and to mobile devices, and the rate of change is continuing to increase with new technologies like 3D and virtual reality coming of age.

There is massive opportunity to work together with agents, and agencies, to create digital solutions that will drive growth for all of our businesses together.

At REA Group we are committed to the success of agents and agencies, and we believe in the value that agents add to the sales process. By partnering with the industry and sharing our digital know-how, we hope agents can utilise our digital tools to benefit their own businesses, and will in turn create an even better consumer experience.

Property data

By Kylie Davis – Head of Marketing – Property Services at CoreLogic RP Data

For us, the benefits of working in an ecosystem stems from the idea of core capabilities, playing to your strengths and allowing others to contribute their strengths.

At CoreLogic, our strength and expertise is property data. The value we bring is helping our partners understand data, and use the data in new ways to improve their business. We provide that service while real estate agents concentrate on what they are good at – dealing with customers, selling property, property management and running a business.

Property data is part of a much bigger ecosystem than what real estate agents use it for – banking, valuation, legal and a range of other industries benefit from property data. For example, the finance industry can use that data to make financing easier for people looking to buy a home, which has an obvious positive influence on the real estate industry.

The value of collaboration and working in an ecosystem is that as a real estate agent or principal you don’t need to feel the burden of ‘having all the answers’. If you are working in an ecosystem where everyone is playing to their strengths, then you just need to know which expert to call on and the right questions to ask and you have access to that information.

Government

By Victor Dominello – Minister for Innovation & Better Regulation

We need a strong and dynamic real estate industry to create jobs and generate activity in the wider economy. Recent reports suggest that as many as two-thirds of Australian students are currently training for jobs that, as a result of digital disruption, won’t exist or will look completely different within two decades. No industry is immune from this reality. That is why it important that industry groups take a leadership role in preparing for the future.

Most Australians will engage and interact with the real estate profession on multiple occasions throughout their adult life when renting, buying and/or selling property. Real estate agents often deal with customers at a time of great excitement, expectation and anticipation. For many people, buying or selling a property represents the largest financial transaction of their life. The real estate industry is built on the need for trusted professionals to support buyers and sellers throughout the decision-making process and to facilitate the transaction and exchange of contracts.

The industry cannot be considered through a single lens, but must be considered holistically. Purchasing a property is one of the most significant financial decisions a person or couple will make in their lifetime, and every change or reform made to the sector not only impacts agents, but a range of stakeholders.

Fair Trading have established a Real Estate and Property Division with its own dedicated Assistant Commissioner. The Division has a clear focus on consultation and collaboration with industry stakeholders to develop reforms and increase accountability within the industry. To this end we are working closely with the industry on a range of real estate reforms.

The NSW Government is committed to working with the industry to deliver important real estate reforms which benefit both agents and consumers. Whether its strengthening underquoting laws or reviewing entry level standards for agents, the reforms increase professionalism in the industry. Improved professional standards provide agents with greater certainty and clarity. It also empowers consumers and provides them with greater confidence to operate in the marketplace.

Operating in silos results in few benefits. Collaboration between industry and government with regard to delivering key real estate reforms will ensure the best outcomes are achieved for agents and consumers.
Fair Trading continues to work collaboratively with REINSW and other industry stakeholders in developing reforms that empower agents, strengthen the real estate sector in NSW, and protect consumers.