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The Perfect Storm – Real Estate Style…

The Perfect Storm – Real Estate Style…


And it’s centred over New Zealand…

The Big One – It’s arrived, it’s here, and looking for Landfall…

So what is “The perfect real estate storm“ – well, simply put, it’s arriving at a time when a set of changed conditions enable Real Estate transactions to be conducted in the same professional way, with no reduction in service to the consumer, but with far less overheads incurred by the Agent, and therefore a considerably reduced and far more transparent fee structure can be passed on to the consumer, the sellers of property.

So how did we get here?

There are two, yes just two, major contributing factors which have now evolved to the present situation of storm ready.

To understand the first, we need to travel back to the 70s for a glimpse of how Real Estate was conducted then and to understand how it has evolved to the present time.

In the early 1970s, all property listings were General Agencies – anyone could sell anything. If you knew a house was for sale it was just a case of approaching the owner, asking if we could list it along with all their other agents and working on it. The Agent who sold it got paid, and only them.

It was normal practice if we saw another agents car at a house (with only about 60 salespeople in Hamilton we all knew each others cars), to drive around the block, wait til they’d gone, then go in and list it.

Because of this, there were no signs on homes, and we were very careful in our written Waikato Times adds not to give any hints of where the property was, just vague areas.

The buyers had to ring us up to make an appointment, or come into the office. No one gave addresses out, it was all appointments and taking buyers to the properties.

Around the early 80s, some smart Agent came up with the idea of ‘ Sole Agent ‘, or ‘Exclusive ‘ contract with home sellers.

This of course meant that no other Agent could list and sell the property, and a buyer couldn’t just walk in and cut the agent out – His Agency was contractually protected, and so, with this protection, signs on properties became the norm.

This of course led to the thinking of ‘Open Homes ‘ – Why make appointments and spend all Saturday (it was illegal to work Sundays then ) driving buyers and their families around looking at houses, Hey, we’ll just have an ‘ Open Home ‘, and any buyers can come through at a specific time and I’ll meet them there – Good one.

Once buyers got used to this, it worked very well, and has now evolved to a stage where it is the preferred method of viewing homes by buyers.

So the first of the two factors is, and has been firmly in place for some time – there is now no need for High exposure, expensive flashy offices, buyers simply don’t go there anymore… They’re all at Open Homes.

And we, the Agents, drove this change.

And now for the second, the World wide web – The Internet.

Until now, start up Agencies have not been able to compete with the large Franchises in local newsprint publications, where with their collective might they have multi page contracts at very favorable rates, and they have been able to shut most new players out and therefore many new Real Estate businesses have not survived.

Any change takes time, but the internet is now clearly the most efficient, cost effective, and most used method of searching for property, with some 97% of all buyers finding their property on line.

This development and the refining of the internet now provides a level playing field for agents where new Agencies can now operate with less overheads than the traditional models and provide a more cost effective service to home owners.

So expensive high profile offices are now obsolete and redundant, and expensive newspaper advertisements are playing second fiddle to the internet, and so now, also not needed – and so the storm prowls, ready to make landfall.

But there is a third factor now in play with consumers consistently being fed the line by the franchises that they need two hundred or so Salespeople to sell their house, and only they can do the job, blah, blah, blah… of course that’s a natural reaction to change, they’re trying to preserve the status quo, and their exorbitant commissions and add on charges, at all cost.

And at whose ‘ all cost ‘, well the consumers of course, and sooner or later the consumer, the vendors, the sellers of property, will decide they’ve had enough of paying more than half the average annual income to sell a house, and the storm will take hold and one of the more efficient, new model Real Estate Agents will get traction….

The result of this storm will be a change for the better in the world of Real Estate across New Zealand.

Art Rolfe AREINZ


Netzone Real Estate Ltd.