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…