Fee reliance – a thing of the past?
According to the panel, as an industry we need to accept that, in the future, the fee to do what we’re currently doing will be substantially less.
Ewan Morton, Managing Director at Morton Real Estate, observed that fees have been trending down for some time. “I think we’re putting up a good fight in terms of holding onto them, but what do we do if the trend continues,” he asked. “What will we do if sales fees are one per cent? How will we make money? I think it’s a question that everyone in the industry needs to ask.”
But there is good news, according to Ewan. “We hold the client relationships,” he said. “The long-term trend is that people are holding onto their homes for longer, so if we nurture our clients correctly we can hold a relationship for 20 years or more. The real question is: what is it that we’re offering to those clients? What else can we do for that client over that 20 years, with the end game potentially being the sale of their home?”
Shannan Whitney, Director at BresicWhitney, agreed. “We have to reset what we’re doing now – and also what we’re not doing,’ he said. “We need to do more. We need to add value.”
Providing value – but to who?
Shannan Whitney feels that many agents – and indeed many real estate businesses – misunderstand where much of their value lies.
“We’re holding on to the belief that the seller is the person we need to provide value to,” he said. “But what we’re not understanding is that if we can’t deliver value to the buyer and really recognise what the buyer’s needs are, then it’s indirectly affecting the value we’re delivering to the seller.
“We’ve completely forgotten about the buyer, yet they’re the most important person in the transaction. We can provide real value to the seller through our ability to connect with the buyer – but we don’t do it very well at all.”
For Shannan, the fact that agents continue to remove the buyer from their thinking, strategy and behaviour lies at the core of consumer discontent with agents. “We aren’t acting in line with their expectations of what the role of a real estate agent is in this day and age – and that directly impacts the service we provide.
“If we change that thinking and understand the opportunity we have because of the role we play in the transaction, then a whole new level of service opens up – one that has real value.”
To provide value, Head of Real Estate at LJ Hooker Chris Mourd believes agents need to stop treating every sale merely as a transaction.
“As an industry, for the most part, our interactions with clients are all transaction based,” he said. “We’ve forgotten that we’re dealing with people’s assets. We’re also dealing with their potential wealth and their hopes and dreams. Whether they’re selling or buying, it’s not just a transaction to them.
“Understanding our clients and their journey – and making the most of them – is critical. If we do this, we’re in a better position to add value.”
What does value look like?
The lifetime value of a client is the key concept in the equation, according to Laing+Simmons Managing Director Leanne Pilkington.
“Society has changed. Expectations have changed. Everything has changed, except the way we deal with the transaction,” Leanne said. “We need to look at the services we’re providing and the value those services afford to our clients – not just in the short term, but over a much longer period. We need to look beyond the immediate transaction and focus on lifetime value.”
Ewan Morton agrees. “We need to start looking at the relationship we’re building and the benefits we can provide at all stages throughout that relationship,” he said. “Beyond buying, selling and leasing, there are so many opportunities. Utility connections, interior design, renovations, finance – the options are endless. We need to be able to deal with all our clients’ property-related needs. Selling their property is only one thing you do for them.”
Do we really need to change?
Absolutely. “Our current model of service is fundamentally flawed,” CEO of Starr Partners, Douglas Driscoll, said. “If we’re complacent, lazy and naïve, then we’ll be disrupted – and once we’re disrupted, we’ll become redundant. Anyone who doesn’t see the threat of disruption as real is, quite frankly, mistaken.
“As leaders, we have the responsibility and the obligation to show the rest of the industry the way.”
John Cunningham said that the Summit will undoubtedly prove to be a significant event for the future of real estate, both in NSW and across Australia, as it marks the start of our journey from being an industry to recognition as a profession.
“The outcomes that we’ll achieve following this Summit will be groundbreaking for the industry and we’re looking forward to sharing the journey with our members,” he said. “Exciting times are ahead.”