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Agents to boycott Trade Me - I don't think so

The headline from the NZ Herald, "Agents shun Trade Me after listings fee surge," is an engaging headline but largely incorrect and unlikely to come true. As yet, real estate agents have not shunned Trade Me Property and I suspect that by February when it proposes to recharge for these fees, this story will be history.

The fact is this resentment by real estate agents to accept a new fee structure from Trade Me Property is totally out of context to the true value of the service that Trade Me deliver.

The context is this: To sell a house in New Zealand using one of the many name brand franchise real estate companies costs, for an average house, $17,000. The advertising budget for that house has to include online and has to include Trade Me. An agent may tell you that you need to spend upward of $5000 for a comprehensive marketing budget and it should include this advert and that full page and this flyer and that insert.

The fact is you don't. There is Trade Me and that's it (add in professional photos and a sign board as well). The cost of that advert, which promotes that property to an audience in excess of 120,000 visitors a day to New Zealanders and a global audience, is just $399. Just $399 to sell a $500,000 property for which an agent charges close to $20,000. Oh, and by the way, an agent can get this $399 advert for just $159 + GST.

Now agents are up in arms because they used to be charged up to $1000 a month to list all their properties, which for an average office that had 10 listings of property for sale a month was $100 per listing. Now they are being charged $159 plus GST per listing. Now for a larger office which, say, lists 50 properties a month, the cost will rise more significantly but you could argue the larger offices were paying far too little for the value of the service.

Trade Me Property has been explicit in their communication of this increase, which it foreshadowed back in September to recommend that agents pass on the cost to the sellers as sellers are well aware of the value of Trade Me Property and also well aware of what it costs to advertise on Trade Me.

So agents are up in arms - revolting at what they see as "astronomical" increases. 

Harcourts New Zealand chief executive Hayden Duncan stated the increases at Trade Me "unreasonable" and "nothing short of price gouging." He said if Harcourts' 181 branches absorbed the new fees it would cost tens of millions of dollars each year.

This statement is very interesting - Harcourts has about 21% share of the NZ property market and is the market leading company. Each year it would list about 28,000 properties for sale based on the Trade me fee of $159 that totals $4.4 million, hardly "tens of millions of dollars" and set against around $235 million in commission fees the $4.4 million pales into insignificance.

The Bayleys Waikato regional manager Stephen Shale quoted in the article predicted Trade Me listings in Hamilton would be "decimated" by February.

"Trade Me will have virtually no stock in Hamilton," Mr Shale said. "And the viewings will diminish if the stock isn't there to look at. If there's nothing to compare your property to, the private seller is the one who'll pay because you're not going to have the eyeballs on the site and the industry site won't allow private sellers."

What he fails to appreciate is that even if his agents tell vendors that they personally and his office do not support Trade Me, the vendors will simply go onto Trade Me and list their property themselves. Added to which it is hardly professional for an agent to state that they are boycotting the leading marketing platform over $159!

Real estate agents seem to have short memories. Back in 2007 the industry believed it could hold out and stem the rise of Trade Me. At the time Barfoot & Thompson as well as Harcourts refused to allow their listings on Trade Me - they supported and believed their own industry owned website was the best place for listings.

However, gradually, one by one, office by office, the industry crumbled, as vendors listed their property on Trade Me themselves or switched to an agent who would list on Trade Me. Six years later Trade Me has only strengthened its position as the de-facto marketing for all property in NZ and now the industry believe that they can boycott Trade Me Property - I don't think so!

As was posted on Twitter - maybe vendors should boycott agents that won't advertise on Trade Me Property

@alistairnz @nzherald Maybe sellers should boycott agents like Harcourts who say the Trademe listing fee isn't cost effective for clients?

— Paul Spain (@PaulSpain) November 28, 2013

If the real estate industry believe that their future lies in an industry owned property portal rather than a well established specialist marketing service that attracts the lion's share of viewers then they should know they are in good company - their colleagues in the UK and Australia share their views and frustration over what they see as a gorilla like site they have helped establish now charging heavy fees. The problem is their aspiration to divert traffic and boycott the leading site is a pipe dream. Have a read of an article I wrote earlier this year on Property Portal Watch titled "Industry Owned Portals - the Aspiration"

Former CEO Alistair Helm is founder of Properazzi.

Comments and questions

I have sold two houses over the past 2 years on Trade Me with no agent. In both cases, I spoke to agents who told me what I should list for and in both cases, I got more than what they said with Trade Me. NZ is unique as almost everyone uses Trade Me. The agents only basis for existence is their former control of information. Without that, they are just an unnecessary added cost. Eventually, everyone will realise that they add little value!

Trademe is just another marketing communications channel that currently holds a dominant position as did the Herald before the internet.
As far as Agentscam report that he had been advised by agents to put his property on the market at a price in the last two years, I find that extremely hard to believe as all the agents I know have been pushing Auction for the last two years and I know hundreds of them.

The was the major real estate website in NZ until the launch of the trademe website. Unfortunately at the time website was not well promoted as the website to go to for NZ real estate. from memory I believe Ray White was the 1st of the major franchises to defect to trademe because of a great deal they had been offered. Eventually others defected and now trademe are the dominant player for the local market.

There new fee structure is actually reasonable fair as is a pay per use basis which levels the playing field for the smaller operators.

a massive advertising campaign by realestate would enable them to become the 1st stop shop when looking on line in NZ. I believe they are actually a better search site especially for off shore buyer

The reality is if a line in the sand isn't drawn now then next year the fee will be $400, then $800 the rival the 2 odd thousand a listing they pay in Australia. I sense you are letting your personal failing when in charge of in letting Trademe take a dominant position somewhat influence your comments, just because you were unable do anything but sit idly by and watch while collecting your ceo's salary, doesn't mean it isn't possible. has a better site, more fictional, more refined with apps that are vastly superior to trademes......"

Dont worry Bob - there is plenty of scope in the commission to soak up a few more TM fee increases.

and even at $1000 it is still cheap compared to the old print listings and marketing packages they used to sell you - recruitment used to pay $10K for a quarter page and now there isn't even a print advert worth mentioning any longer in any publication

Of course agents aren't going to stop using Trademe.

Any rising costs they can just pass onto the client.

To think otherwise in my view is just dreaming. will play a part but never be the dominant force in the foreseeable future.

You have hit the nail on the head Alistair with your comments in regards to trademe costs in relation to agents fees.

Bit rich when you have leading franchise agents moaning about Trademe fees!!!

$17,000 to $20,000 fee on a average home sale in Auckland and maybe that is being conservative.

No trouble if vendors want to pay that sort of money and agents can get it ,go for it. But please spare me the tears and crap when someone else in the profession raises their fees.

After all said and done agents have been getting a pay rise every month as property prices increase and as they are quick to inform the public.

Why not you whingers who are agents gives a break down of your business costs so you can justify your rationale for a boycott and then maybe you may get some public sympathy.

And as for your comments Bob in regards to Alistair I can only think you must be a agent. I find your remarks such as " but sit idly by and watch while collecting your ceo's salary..." not only untrue but offensive.

If you are going to attack someone personally at least have the guts to expose your full name and give some supporting evidence.

The cost will all come back to the person selling their home .
The agents will just on charge the fee
No way will they absorb the cost

Totally agree with your comments Alistair. As an agent, I can't imagine telling a vendor we wouldn't list their property on TradeMe. They'd think we'd gone nuts! Luckily The Property Market has always charged vendors for their TradeMe listings so it's business as usual for us.

But Andrea you are not in my book the typical agent.

You come from a very successful advertising background is my understanding and not afraid to try new innovative ideas.

You are also not tainted by old fashion thinking which I really believe still exists in many agency businesses all be it disappearing.

Read the article on line in the NBR on Mr Graham Evans ex Warehouse Group and you will fully appreciate wher I am coming from.

Good comments.

Mark obviously you know the intimate details of the cost structures of a real estate office very well and know that an additional several thousand dollars a month will make little difference to an agency. Wish you all the best with your business.
It is extremely short sighted to imagine this increase won't lead to similar increases to those seen in Australia and around the world. Yes Alastair people may list privately as a result best of luck when the advertising costs run amok. As for a personal attack I suggest the widespread slating of the industry is vastly more offensive than the acknowledgement that the writer of the article was the CEO of during the shift in power to Trademe , the new CEO who starts in the new year has vision and a genuine knowledge
Of the industry, something that seems to be sadly lacking from the author of this column........

Real estate is just another industry that is going to be "evolutionised" by technology. There are many other industries that have been changed by advances in technology, and they have had to evolve or dwindle. TradeMe has its day in the sun, and price gouging may be a short term option for it, but what say a site was created that automatically had all the TradeMe listings (possible with technology), but you could list on for a smaller fee? You would start to see downward pressure on pricing again. It's not inconceivable that Real Estate Agents will need to shun the mass market approach and offer service as boutique supporters of specialised house hunters and specialised (read "difficult") sales, rather than the everything to everyone they currently do.

Any changes will be neither comfortable nor enjoyable, but they will happen regardless of what those in the industry think because of changing end users perceptions and technology.

Lincoln, your last paragraph pretty well sums it up for me. Well put.

Boycott any agent that boycott's Trade Me and reduces your chance of selling your house. Simple, they have no power as there are 10 other agents ready to take on the task!

From another unrelated industry view, Trade Me is expensive to advertise in. The available listings are 64,000 when I last looked for our industry. That’s a lot of listings and a lot of competition between sellers.

Makes benchmarking easy for both sellers and buyers, but takes no account of quality or location. For example the cheapest could be a ghost or in some far away location. In our industry, it results in low low margins and cut throat competition.

The cost of doing business with Trade Me as a business is far higher than the "high fees" , the real estate industry is likely realising this as I evidenced by the direct sellers above.

It is a pity Wheedle introduced up front fees as this Media market segment needs a competitor or two urgently.

I think people are looking at online from a traditional advertising point of view - which is a comparison that is so lopsided and unfair

Online works for you 24x7

When a new listing appears , it automatically emails every single person that has registered a search - so you may actually directly email thousands of people who are looking for something within the parameters you are selling within second

Online you can have hundreds of photo's and even a video if you want - pity the print edition that takes a bad photo and no one calls because of one photo

And the key reason Trademe will continue to go from strength to strengh - their audience - at any one time there are 20-30 000 people online , often over 200-300 000 , that you can access for $159

Any other online medium may be wonderful, but if no one is looking at it, who cares

Trade me created an audience and services it very well - ever used Ebay? Awful in comparison for usability and functionality

I would encoyrage some follow up articles on the agents who say Trademe listing will disappear and see what they say - not from a negative "told you so point of view" , just a more informative interview - online is here and it is good, but still not used or understood to its full potential.

The Trade Me medium encourages end users to become direct buyers and sellers. Thats one cost and the evidence is in the comments above. This factor could be significant for real estate agents in the slower times. .

I treat any marketing as an investment if it creates a profit for me or a good return on my investment.

Trademe is no different.

If it was costing me say $500 to create a $20,000 gross sales profit and a exceptional net profit as I believe agents are capable of and are achieving today, then that to me, is a very sound investment..

If you are not testing and measuring your marketing in any business then you are a fool.

Certainly online is essential in todays marketing and raises the question ,what part does media advertising have in todays real estate advertising?

For me very little, but will always have some part to play.