Realestate.com.au have changed the playing field with a radical shakeup of how they charge agents and for the most part agents are not liking it. Reactions have been pretty one sided in condemnation of the change and I would hate to be a realestate.com.au rep these days as they will be taking the brunt of managements decision. Instead of the buffet all you can eat style subscription that we have had for years the realestate.com.au management have come up with a great new concept that is more closely modelled on a Nightclub.
You have a high entry price just to be in the room with the cool kids, and once you are in you then subjected to over inflated fees for anything and everything. You pay extra for every drink property you want. Feel like a top shelf spirit feature property or maybe even a cocktail premier property and you pay absolutely ridiculous and insane prices that you would never pay anywhere else.
The new subscription model will have a base price that they are boasting has dropped significantly PLUS a price per listing. Realestate.com.au would have you believe that this has all been at the customers request. Thats just PR spin for we are blaming you for it. They will also have you believe that some agencies total spend will drop under this sort of model. Technically that may be true but its probably only hiding the fact that 10% of offices drop slightly… and 90% of offices will increase sharply. If a lot of offices actually reduced in total cost I am sure they would be touting that percentage all over town.
At Business 2 we have commented on Realestate.com.au price rises quite a few times now and they have always been some of the most hotly discussed topics. Here are few to take you down memory lane :-
- http://www.proptechnow.com.au/2010/06/they-are-at-it-again-realestate-com-au-price-rises-01082010/
- http://www.proptechnow.com.au/2009/01/realestatecomau-kick-agents-in-the-guts-with-45-pa-increase/
- http://www.proptechnow.com.au/2009/12/price-freeze-over-can-realestate-com-au-justify-a-price-rise/
- http://www.proptechnow.com.au/2009/02/rea-price-freeze-on-subscriptions/
Now with such a radical change to the to the base subscription you would think they would have been satisfied with that. But no… the prices for upgrades per property has skyrocketed. This is the change for our offices (you may vary depending upon state) :
- Casual Feature Property – $360 from $254 – an increase of 41.7%
- Casual Highlight 30 day – $780 from $563 – an increase of 38.5%
- Casual Highlight 45 days- $900 from $648 – an increase of 38.8%
- Casual Premiere Property – $2790 from $2057 – an increase of 35.6%
Surprised… ?? I know I wasn’t. Their share price has been skyrocketing for a reason and essentially it boiled down to dramatically increased revenue. Agents were always going to take the brunt of it. They have increased prices by as much as 45% in previous years and they have been talking about a price per listing model for quite sometime.
So Why This Model…and Why Now?
Realestate.com.au has been banging on about increasing their share of wallet for quite some time now and I think they realise that they were hitting the limits of just want an agent would or probably could pay. They have tried to educate agents about on charging vendors for advertising and even though some agents charged for the internet most agents around the country did not pass on the direct cost to the seller. Add on products were on charged to the seller as vpa but base listings were not. They absorbed the all you can eat subscription based fee themselves which is one reason why price rises in the past have hurt agents so much.
Realestate.com.au account managers attempted to train sales teams to sell the base listing as well as addons. So this is a big stick type motivation. The model now makes it imperative that agents recoup the fee from an owner before listing. If you do not recover this cost then as realestate.com.au increases the financial pressure on your business will be immense.
Could This All Backfire?
One of realestate.com.au’s strength in the market place is that they have every listing available. Other portals, even niche portals are for the most part just subsets of realestate.com.au. As a buyer it was just easier to go to realestate.com.au because of that reason. Now if some agents stop dropping subscriptions altogether and others only list a percentage of their listings that advantage could be lost.
It is quite possible that some of the free portals that currently exist may be the only place to ensure you don’t miss out on seeing every listing. Despite what they think buyers will drop them as their first choice portal in a heart beat if they only have some of the listings. As agents we know that the majority of buyers have no loyalty and if the buyers change their viewing habits any value proposition gets thrown out the window.
All of this begs a few questions:-
- How will the amount your agency spends with realestate.com.au be effected ?
- Will you continue with a realestate.com.au subscription?
- Will you list all of your listings on Realestate.com.au?
- Will you take better advantage of free to list portals?
Please share your thoughts…
35 Comments
Ryan O'Grady
Glenn, great to see you are back at it ( Ibet REA aren’t).
A B2 reader raised this concern with myself a few weeks ago and I hadn’t time to put together an article. But his major gripe was that regional agents would be affected the most, as unlike their city counterparts they really struggle with convincing vendors to undertake in vpa.
Glenn Batten
Thanks Ryan.. Lucky I am a customer of theirs and not the other way around hey 🙂
Natalie Watson
I’m not a real estate agent but what I am assuming is that it wouldn’t matter what they increased their fees to, most brokers would be prepared to pay.
Here are the options. Pay higher fees to have your properties listed on the #1 real estate website in the country, or pay less to be advertised other sites.
It’s a no brainer.
John Russell
Consumers that are serious will search for the best property on any easy to find site proven by the fact REA does not have the highest traffic in every area but rather nationally. Allhomes & REIWA are perfect examples but would be ineffective in my area. If you cop it on the chin and pay up well thats your choice, as you have a choice.
Dan Tarasenko
Without naming names, the subject was raised by another prominent real estate news site twice in the last 2 weeks. Agents unhappy with fee increases and calling for free to list portals. On both occasions, comments by myself and at least two other free to list portal owners that I know of were either unapproved or removed shortly after posting.
When this kind of thing happens, and you have an industry voice controlling, stifling and directing the conversation the way they want, it’s any wonder that the alternatives still don’t have the support of agents.
Upstream and downstream visits to major portal sites show that property seekers already know they need to search multiple portals to cover all bases. The alternative sites are gaining more traction than the current duopoly would like you to know.
Glenn Batten
No moderating of comments here unless they get defamatory or are abusive. Over the years Peter Ricci has deleted very few comments. There is a couple of people in the past who I prayed he would change his rules for but he doesnt.
Russell Robertson
This pricing information is all about residential, are News Ltd going to do the same for commercial listings?
Peter Ricci
Well, it comes down to this. Are domain.com.au or another major portal prepared to come to the party with a simple fee based system, with promises of simple increases? If they are, will real estate agents go en masse to them?
The way I see it – unless real estarte agents in all areas are willing to band together, let’s say all Nerang agents band together and negotiate together – then nothing will change. Has to happen locally and expand nationally for it to have an impact!
Glenn Batten
It cant be too local though.. If all Nerang agents boycotted realestate.com.au then agents in neighbouring suburbs would have a field day targetting listings in the area.
As I wrote in the article I think the biggest danger for them is agents with 200 listings might upload them all to say homehound and the homepage but they might only do 70 on realestate.com.au because of the pay per listing fee.
Today I have asked 5 people why they use realestate.com.au. The answer in every single case is because they have everything. I think its a risk for them and I am sure they have considered it and will be monitoring the situation but its probably the biggest chink in their armour that somebody could take advantage of. I dont think its domain that could take advantage because they dont have everything.
If I was in charge of the national free portals or the state based ones I would be doing anything to make sure we got a total coverage and start hammering that if it comes to pass that agents stop listing 100% of their properties.
Ben Stockdale
“If I was in charge of the national free portals or the state based ones I would be doing anything to make sure we got a total coverage and start hammering that if it comes to pass that agents stop listing 100% of their properties.”
Great point Glenn – It’s amazing how hard it is to get to 100% as a free portal because of the damage some portals have done in the past with turning the ‘free’ into free for now and the way data was handled. Agents rightly are nervous about free because a free listing that costs you money to get fixed and pisses of the vendor isn’t free to you.
The interesting thing is that perception is everything.
Paid portals ‘priority ‘ listings effectively stop many listings from ever being seen, portals that don’t allow priority and show the most recent stock are often seen by the public as having ‘more’ listings. Odd but true.
Glenn Batten
Just received an interesting email. Today at 1:36pm I got an official email confirming the price changes to feature properties I wrote about. The reason offered for the price rise…. “to align with the value delivered.”
Ahh. its not a 40+% price rise after all.. its just an alignment 🙂
But I just got another email to advise “Earlier today we sent you an email containing incorrect pricing information.
We apologise for any confusion this may have caused and will email you tomorrow with the correct information.”
Maybe the price is going up even more ?
Geoff Brand
At 5:11 today REA sent this email to its customers:
Dear valued customer,
Earlier today we sent you an email containing incorrect pricing information.
We apologise for any confusion this may have caused and will email you tomorrow with the correct information.
Please disregard the ‘Important pricing and product announcement’ email that you received earlier today.
Thanks for your understanding and patience. We’ll be in contact again soon.
Kind regards,
Steve Carroll
Head of Sales – Residential North
I would suggest that every agent immediately closes their account with REA – without agent’s data REA will cease to exist. REA should be paying agents to use their data, not the other way around.
We have cancelled our account. If each agent invested $1,300 per month in SEO/web development & stopped dealing with REA, REA would go out of business very quickly. Which they should.
We have also filed a complaint with the ACCC, as should each and every one of you. REA allows our competitors to advertise properties with incorrect suburbs & addresses, but does not allow us to do the same, instead, threatening us with account closure. Therefore our vendors are severely disadvantaged.
Real Estate agents should realize they do not need REA, but that REA needs them. Smaller agencies are especially disadvantaged, because REA charges large agencies the same flat fee. Work it out on a per property basis. In case you hadn’t noticed, several states are already in recession and many agencies are going out of business. Now is not the time to be screwed by REA. It’s time for agents to stand up and close their accounts with REA. See how quickly their rankings fall with no content!
Why is real estate the only industry that pays to give someone else their content? Does anyone actually track the enquiry they are getting from REA?
andrew
We would love to close our accounts. Unfortunately REA is the main advertising agent. Domain are a very pale second.
REA should employ more people monitoring as you are correct, many agents advertise properties falsely under other suburbs, or leave advertisements after properties have fully sold.
George Savva
Dear Peter,
Thank you again for bringing forward REA’s complete disregard for their customers (us agents)
However, we cant be critical of this company they are simply maximizing revenue.
REA is a public company whose mission is to wherever possible maximize profit, so on a personal plane when our subscription expires we plan not to renew our contract.
Neil
Hi Glenn, great post, I’m an agent in rural qld with first national and we stopped our rea subscription 6 months ago. We’ve stuck it’s domain and upload to probably 6 or 7 free portals like homesales. We seem to be keeping leads and sales going without rea and with our rural audience print still seems to work well. We’re now also a Farmbuy subscriber (paid but alot less than rea!) – I suppose in summary with a mix of other media we are making progress . Regards
Paul
Agents need to take the stand and sack them. Without us they will be just another FSBO site.
Seriously everyone is complaining, however continue to support them. The buyers will find the properties and the other portals rankings will increase as rea loses its rankings.
Domain comes up pretty well first page and there are another popular portals.
Maybe the REI in each state need to circulate something to members in alternative methods and a petition.
Agents could also so we want to go month by month. Agents at the end of the day have the power
Glenn Batten
Actually, the amount of agents who have either stopped their subscription or have claimed they will stop their subscription is probably the highest I have ever seen.
Glenn
That may account for the large fee rise, but if it is it will only exacerbate the problem for them.
Vic
A pay per listing regime was always on the cards to bring more equity to their system for all agents. However to do it in conjunction with a base subscription fee is the height of arrogance on REA’s part.
I have no problems with a system that charges to highlight an ad or bring it to greater prominence within the site. This is the way advertising has been done ever since man began commerce. But to also say that you have to be a “member” to do so is, in essence, discriminatory.
Hard to tell just yet, but is REA opening up the avenue for taking on private sellers?
Ben Stockdale
Just thought I’d comment on the clever way they’ve implemented the new pricing.
– Subscriptions go down (good news story – but only down by the price of about 1 listing upgrade)
– Priority upgrade pricing varies wildly depending on how much you participate
– Hilight/Feature all your properties or buy packs of upgrades and save considerable amounts so your VPA is more attractive to your vendors than your competitors upgrading the odd property
– All your competitors start using some form of upgrade – no problem – there’s another more expensive upgrade
And by the way no one looks past page 1 anyway so your ‘upgraded’ listing in a busy area can start you off on page 5+ anyway. Even the $2,000+ upgrades end up on page 2-3 in some areas. I wouldn’t want to be having that conversation with the vendor a few weeks into the campaign.
Martin Crampton
Apparently Realestate.com.au is valued about $4Billion which is about the value of ALL of the US’s top 4 real estate portals! Obviously REA doesn’t think they have the type of competition needed to limit their sales claims.
Peter S
I have not seen any pricing as yet because my subscription renewal is in October. I am one of the small real estate offices that pays exactly the same as the big boys. I have been complaining to REA for the past few years in relation to the fact that I have a dozen or so listings and yet I pay the same as the office that has 50, 100 or more. It has been an inequitable system for far too long. Besides, most offices recoup costs from the vendors. In fact 2 or 3 listings with VPA per month pays for the monthly subscription – the rest are just cream. I, for one, am glad they have finally gone to a user pay system. The only reservation I would have is that they probably haven’t reduced the base subscription low enough – but I wont know that until my renewal comes up.
I would rather not advertise on REA at all if I knew I would get enquiries elsewhere. Sadly, it doesn’t happen. In fact, I cancelled my REA subscription about 18 months ago for 3 months and I suffered for it. I re-subscribed and then cancelled my domain.com.au subscription instead.
A user pays system is the most equitable system.
Tony Keenan
I agree, we to have to try and protect our vendors from the free range listings that the Industry Big Boys’ have at their disposal. Far to often are listings gazumped and vendors suffer as their property is pushed down the ranks. This seems to have become the norm and described as being competitive but in all fairness it is an unethical practice and in effect hurts all vendors.
REA is obviously way to expensive but a pay per listing system seems to be a step in the direction to protect a properties marketing campaign, if they want to push you off the page they should pay.
There also needs to be a tighter reign on the agencies that use false, expired and investor listings to manipulate the market.
I would be open to suggestions on what could be done.
andrew
Guess what! they have just increased prices AGAIN !!! below price for 30 day ‘enhanced’ listings for each property.
• Feature Property listing – $360.00
• Highlight Property listing – $980.00
• Premiere Property listing – $3,490.00
Jason D
Very happy shareholder. Stop complaining.
Martin Crampton
Agents should be building their own website brands. They brand well everywhere else but give it all away online to large portals who then gouging them! Read why this leading US millionaire entrepreneur said no thanks to Youtube’s offer to partner with him – They wanted 45% of his revenue. http://blog.launch.co/blog/i-aint-gonna-work-on-youtubes-farm-no-more.html
Laughable
Here are the sad but truthful facts, REA will continue to move forward with these price increases with pure arrogance which has not been seen since the height of the Yellow Pages era..Agents will complain and continue to use it as its what the public use, YET there are other portals including an industry owned portal who keep pricing at a minimum, deliver leads, admittedly not as many as REA but in saying this if you pay a premium you expect a premium.
I hear and read on a regular occassion agents complaints regarding REA yet nearly all bite the bullet, drop other portals like domain and realestateview to compensate YET continue to complain about REA’s greed. Its a viscious circle to which there is a solution.
Glenn
Yes this is a conversation had here many times before.
It’s like Homer Simpson hitting his head against the wall, it hurts but he keeps doing it …DOH !!!
Vic
There are sufficient low cost or free and or niche real estate portals in this country that should be used by RE agents and are not.
In general, and I qualify this by saying,it is my observation, RE agents have not been good at developing their marketing strategies. Sure they are good at their sales role, they have great tactics to gain listings, but they simply seem to follow the herd when it comes to using the most effective medium for promoting their listings.
A one cap fits all aproach has all too commonly been the approach and in doing so RE agents have created this REA monster.
I have been spruiking the benefits of niche marketing for yonks. Niche as in a geographic area, niche as in a demographic and niche in a property type.
Examples of the lack of thought given to marketing listings are seen by my staff every day. We are a niche for properties on or near the water or with waterviews, Yet, the bulk uploaders are sending an agent’s total listings to us rather than only those relating to our niche. We do take them all then sort them using our categorizer algorithm and try to give the visitor the experience they want when finding our site.
If agents genuinely and critically look at their marketing strategies cost effectively, they would research what is available in niche portals and direct their listings accordingly. Just don’t take the easy less cost effective way of accepting that your bulk uploader will do your marketing for you.
Niche sites optimize to give the visitor what they are looking for and thus must, as a rule, be more effective over time for the diversity of an agents listings. Until agents click into this mentality, REA will continue to absolutely dominate agents’ cheque books.
Jhai Mitchell
We are adding this latest fee hike to general expenses as Internet to the new owners we sign up. It seems to be working at the moment and more and more venders are realising there is an expense to online advertising.
This is a great thing for us real estate online marketers. I think the demand for our skills is only going to get higher!
Roger Newcombe
Couldn’t agree more !!
Out with the old and in with the new!
Jens
Hmmm real estate agents moaning about prices. Now where have I heard that before….
This is essentially what you’re arguing:
– It’s ok for a glorified middle-man to make 1-2% in commission on an overvalued property in an inflated housing market and drive home in his/her brand-new BMW 3-series.
– It’s ok for third-parties (like REA) to provide creative solutions and tools that allow you to capture enquiries and sell more.
– Should such third-parties attempt to make money themselves (heaven forbid!), that’s not ok.
In my opinion, REA’s prices are not high enough – I say double or even triple current prices. That way, they can get rid of all the customers that want everything for nothing.
Sal Espro
Realestate.com.au co-founder Jason D stated, “Very happy shareholder. Stop complaining”. Rip-off smart arses aren’t welcome where I come from, mate. (He’s the same Tom S chuckling about the tricky circumventing of .com.au naming laws). Wake-up Australia! Google gets more direct real estate enquiries than REA. Use SEO to get more of those to go directly to your own websites!
Keep punchin’.
Vic
BTW- has anyone here paid for a casual premier property and not been satisfied with the outcome ?
Kent
I would have no problem with the pay per listing if it was not a requirement that you have a set number per month you have to pay for; having this set number pretty much means its not a pay per listing it is just a large increase to the minimum you have to pay.
At this point I would suggest that the large franchises need to revamp homehound (i think its still owned by the industry) change the name of it and then put out to all there members that they are to advertise on this for the first week before any other sites and they should advertise this at all there open homes. I dont think it would take place for the market to take note. They should then do a mega social media advertising campaign to make the site well known which will be much more cost effective in getting the name out there. Biggest set back to this in the past has been the franchise owners on the board or getting paid from rea and the like. Franchisees also need to make this clear to there franchisors that it is a major issue to them.
Just my thoughts..