The battle lines are being drawn
The battle lines are increasingly being drawn in the South African real estate industry, and estate agents are discovering whether or not their companies are fighting for them, against them, or not even fighting at all.
As property industry insider, Brad Inman, remarked in his column after the most recent Inman Connect (a week-long event bringing together more than 4,000 estate agents and brokers), there are two legitimate views of the future of the property industry:
- “Some are crazed about preserving the best elements of what works in real estate: hard working representation by qualified, ethical and capable real estate agents who help millions of consumers each year realize their dream of owning a home. (Gary Keller, the co-founder of Keller Williams, calls them the tech-enabled agents)
- “Equally passionate are entrepreneurs who see and want to change a broken system of inefficiencies, poor customer service and a protracted and expensive process that millions of consumers suffer through each year.” (Gary Keller, the co-founder of Keller Williams, calls it the agent-enabled tech)
Make no mistake, there are very smart people in South Africa currently hard at work trying to build technology-driven services that will either minimise the role played by estate agents in property transactions, or to commoditize the services provided by estate agents to a point where price becomes the prevailing focal point or to disintermediate estate agents completely from the home selling and purchasing process. If you're not aware of this, read this and this for two examples (there are more).
To a certain extent, one can certainly appreciate the need to shake up an industry that is too often often plagued by unprofessional conduct by some agents. Like many other service industries, the property industry also has its share of problems, including lack of training, accountability, support and illegal operators, which do nothing to foster consumer confidence. On the other hand, there are still many honest, hard-working and professional estate agents who play an irreplaceable role in assisting sellers to get their properties sold in the shortest time and at the highest possible price in the prevailing market with the least amount of hassle. Property professionals are market and area specialists. This is borne out by the telling statistic that a full 87% of home buyers eventually buy their dream property with the assistance of an estate agent.
Where does your real estate company stand?
If you're a real estate professional, the question you have to ask yourself is this, “Where does my real estate company/brand stand on this issue? Is it fighting for me, against me or not taking a stand at all?
This is where the battle lines will be drawn. Case in point: In a surprising move, and as reported by HomeTimes, Pam Golding Properties recently announced that it had bought online, fixed-fee agency, Eazi.com.
Admitting that the real estate industry is in a period of major change, Chief Executive of Pam Golding Property Group, Dr. Andrew Golding, says, “Naturally, we keep a close watch on global real estate industry trends and it seems that internationally, residential real estate sales industries and businesses are being reorganised across at least two different and separate types of business models and customer offerings in specific market segments.”
He goes on, “The first of these is the traditional high ‘touch’, high service, agent/client relationship model which is the cornerstone of the Pam Golding Property group and which will continue to be our core offering; but secondly, over the past two years, we have been following the advance of the online ‘hybrid’ estate agency model, which is a digital offering plus minimal agent ‘handholding’.”
Interestingly enough, Golding states, “This is not a disintermediation or cannibalisation play but rather a recognition that in specific market segments it is possible to give consumers a choice between a low-cost, fixed-fee, low agent involvement, technology-enabled online service or a traditional agent-enabled, high touch, personal service with all its inherent advantages.”
How does this benefit estate agents?
Adriaan Grové, CEO of Entegral.net, asks the question on his blog, “So they are saying the high-volume segment (R500k-R2m) is the opportunity here. Their agents are safe. Or are they? What if it backfires and their own R2m+ clients decide to go the Eazi route?”
An important question indeed.
According to Grové's calculations, about 42% of the listings of Leadhome (the leading low-fee, online agency in South Africa) are priced above R2m. Looking at the current active listings of Eazi, about 60% of their mandates are priced over R2m.
It seems that the low-cost, online model is finding some traction in the higher price brackets.
So the question remains, how are property groups that are making a move like the one Pam Golding made benefiting their estate agents?
For agents, by agents
At Keller Williams we have always been and will always be unapologetically for agents and by agents.
At the recent Inman Connect, our co-founder and Chairman of the Board, Gary Keller took to the stage for the first time in a decade to make a stand for you, the estate agent.
Keller made a distinction between agent-enable tech and the tech-enabled agent saying, “You can either be an agent who is enabled by tech or you’re going to be the agent who is enabling tech. This is a battle over who will be the fiduciary.”
Keller Williams is taking a stand for its agents
We are in the midst of what Gary Keller calls the “fourth industrial revolution,” or “data powered by artificial intelligence.”
To ensure agents succeed in what Gary Keller calls the fourth industrial revolution and beyond – Keller Williams has made several moves; the most pivotal being the firm’s shift into a technology company and investing heavily into technology to ensure that you remain in control of your own data and, more importantly, your own fate. In doing this, Keller Williams is taking a bold step to ensure KW agents remain relevant, important and in front.
To be clear, Keller Williams believes that real estate is essentially a local business driven by individual estate agents and their presence within their communities. We provide the technology platform that estate agents and their buyers and sellers prefer. Our agents own their data, are area specialists and have access to the best technology to provide better service and support to their clients.
One more question
Now that you know what's happening in real estate, who are you going to support? The real estate game is changing. No estate agent or agency will be able to stand on the sidelines any longer. Eventually everybody will be forced to make a decision: will they become agents enabled by tech or a mere cog in the machine of a tech company that acts like an agent (and needs agents, at least initially…).
At Keller Williams we've already made our choice.
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