It is around this time of year that the team at Realestate.com.au deliver their new rates for the upcoming period and then over coming weeks agents complain about those increases.
Price rises announcements have always been announced either just before the financial year or just before the calendar year. In the past we have been subjected to annual prices rises as high as 45% but 2016 is going to be very different.
Back in 2013 the price rise that year upset agents right around the country which had these sort of typical prices rises :
- 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%
This resulted in agents venting their outrage on social media and forums and account reps returned home with battle scars after they visited agencies all day. Calls to rise up on real estate based Facebook groups and and online petitions became commonplace but in the end provided no real traction.
Typically the agent backlash from a realestate.com.au prices rises in the past can normally be measured in weeks but in 2013 the industry voiced its outrage for several months. But everything comes to an end and eventually the roar gave way way to a whimper and finally silence.
With no desire to revisit the 2013 client backlash last year in May agencies were changed to the Market Based Pricing. This change placed more emphasis on the add on products when agencies had to commit to a package whose prices depended on how many feature or highlight properties they would take every month. This change of pricing model along with a matrix of different options meant it was difficult for agencies to really determine what sort of price rises they were seeing.
Since then realestate.com.au has rolled out new Highlight All and Premier All options which has resulted in a major boost to REA’s earnings from agents by around 30%.
So with a rumoured increase again on the cards it was looking like it might be 2013 all over again but in a complete change of direction REA has decided to put a hold on all prices till at at least the middle of 2016 and press releases will be issued tomorrow to the usual sources.
This is not the first time that they have done this with their price freeze back in 2009 but the difference this year is the general market condition with better sales conditions finally, especially in Queensland, New South Wales and Victoria.
So whats behind this sudden generosity? Lets not kid ourselves… prices per item may not be heading northwards but most agents are paying realestate.com.au more today than they have in previous years.
Market based pricing and additional product offerings as well as a focus on the feature, highlight and premier listings has got REA the earnings boost they need to keep the shareholders and the market happy without having to force the technicality of a price rise.
Realestate.com.au has also been opening up new income streams with new services and alliances including their utility connection service, OneForm and InspectRealEstate.
5 Comments
andy
agencies have themselves to blame getting PREMIER ALL thinking it’s a bargain. you all really are stupid.
We only use standard listing, costing us hardly anything and no drop in sales listings. Just use and update your existing buyer database people!!
Glenn Batten
The funny thing I have noticed with the Highlight All and the Premier All that maybe Realestate.com.au has not considered is that some agencies are not listing all their stock on Realestate.com.au.
So if you have a seller that refuses to pay the discounted price of a Premier listing the agency then has to decide if they want to cover the $1,000 or so required to list that property on realestate.com.au. In most cases I have seen the agency has chosen not to put it on realestate.com.au at all. If they did not have a “Premier All” option then they could put it through as a standard listing.
For one agency in particular I know that the Premier All option has cost them two listings because the owner refused to pay the $1,000 or so to list their property online with realestate.com.au.
This means the property is still listed on other portals like Domain but they are not listed on Realestate.com.au. What impact that has in the long term we still have to see but if buyers start noticing that 5 or 10% are not listed on Realestate.com.au but they are on Domain.com.au. This probably applies more in the higher ranges in suburbs where they have been able to sell the Highlight and Premier all products to leading offices so its not going to be everywhere.
Peter
REA is falling apart and Domain is eating them alive. This is a desperate move from a company backed into a corner. Squeeze them back on prices and see how they respond. Trust me, they can’t afford to lose a single agent.
Richard
Peter,
Are you kidding? REA may be a lot of things in agents eyes but they are definitely not backed into a corner. Last time I checked they were a $6B plus, $50 a share business that are the prevailing player in Australia by a margin of two to one with extensive growth markets and ownership of portals in SE Asia, Europe and the USA. I reckon they could afford to lose an agent or two.
I think your comment is either made out of stupidity or plain ignorance.
David King
Great article thanks Glen