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Trade Me vs real estate agents: Five months on, could the boycott be growing?

Back in November last year when the news of an agent boycott over proposed fee increase by Trade Me hit the mainstream media, I was pretty sure sanity would prevail and, more importantly, sellers would not be used as "pawns" in this issue of internal costs of marketing.

LATEST: Trade Me: Agents that represent 80% of listings take up fee hike

It's now five months later and the issue is still not resolved and, as each week passes, I would judge that the balance of power is tipping significantly in favour of the agents.

Back in February I reported that the then two highlighted areas of the country where the initial boycott had begun – Hawke's Bay and Hamilton – still had a situation where Trade Me listings were significantly reduced and in some cases dominated by private sale listings. Revisiting the situation today shows a continuing gulf of listing stock sock between Realestate.co.nz and Trade Me Property in these areas.

Taking the Hawke's Bay region – as at this week Trade Me Property is displaying less than half of the property listings for sale of Realestate.co.nz (based on all house types as well as lifestyle property).

The data analysis of Hawke's Bay I have undertaken this time has broken down the listings by real estate company.

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As reported at the time, the regional players of Property Brokers and Tremains who between them represent close to 40% of all listings in the region continue to boycott Trade Me Property; they currently feature less than one in 20 of their active listings on Trade Me Property (most of which are listings added by the seller with the agent details). This means that from among the 1594 active property listings on the market at this time in Hawke's Bay, Tremains and Property Brokers between them are not displaying 583 of them on Trade Me – that is significant over 500 properties for sale from the two big players in the market not being displayed on Trade Me Property!

Given the extent of this boycott, it is clear that these companies are not facing any adverse reaction from sellers – properties are being listed and sold in Hawke's Bay without the exposure on Trade Me Property.

Widening boycott?

What is also significant from the Hawkes Bay data is the extent to which Harcourts are boycotting Trade Me Property, with less than half of its listings in the region displayed on Trade Me. That amounts to another 181, adding to the 583 from Property Brokers and Tremains not featured on Trade Me.

The extent of this boycott by Harcourts is dramatically seen when doing a search on Trade Me Property for Harcourts listings bylisted date – there have only been three new listings across the whole of the Hawke's Bay region in April from Harcourts whereas in fact from data on Realestate.co.nz shows the total number of new properties listed by Harcourts in the region in the month was 227.

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The national picture

Applying this analysis to the national picture, Trade Me Property is displaying 8% less listings of property than Realestate.co.nz (this total includes private sale listings).

The analysis below details the extent of the support or boycott by real estate company. Clearly Barfoot & Thompson and Ray White are at this time supporting the use of Trade Me (or as an alternative conclusion these companies' agreements with Trade Me have yet to reflect the new charging rate).

Harcourts is only featuring seven out of 10 of its active listings on Trade Me Property. Harcourts is the largest real estate company in the country with over 190 offices and currently 8315 listings of properties for sale.

Equally as significant is the analysis of listings from Bayleys and LJ Hooker who also appear to be boycotting Trade Me Property which, in the case of LJ Hooker, with 2664 active listings on the market results in only 1755 of them displayed on Trade Me Property.

Boycotts in Other Regions

Further investigation of the listings data shows that in addition to Hawkes Bay, the Manawatu/Wanganui region is also witnessing a boycott of some significance.

From among the 3223 active listings of properties for sale across the Manawatu/Wanganui region (using the boundary definition of Trade Me) as showcased on Realestate.co.nz, just 2567 of them are shown on Trade Me Property (actually somewhat less as this number includes private sale listings). The breakdown by company shows that it is only Ray White that has almost full support for Trade Me Property while Harcourts displays less than a third of its listings on Trade Me Property. Equally, other key players in the market such as Professionals and LJ Hooker, display less than 70%. 

The anomaly though is Property Brokers. This region is its heartland where it holds close to a 30% share of all listings on the market, yet it is displaying over 60% of its listings on Trade Me Property –  a very different situation from that in Hawke's Bay.

So, in conclusion, it looks as though the boycott of Trade Me remains and is growing, given the extent of the Harcourts representation (or rather lack of it!) on Trade Me Property. In my view, as each week passes without some action or decision or negotiation (which clearly will be going on behind closed doors), the market position of Trade Me Property weakens and the muscle flexing by agents appears to be working.

Former Realestate.co.nz CEO Alistair Helm is founder of Properazzi.

 

Comments and questions
12

TradeMe share price, it tells the same story down 26% while the rest of NZ Inc rocks on.

Trade Me is now ex-growth - its a yawning divvy play, nothing more

Trade Me overplayed its hand - a 20% or even 25% fee hike would have been tolerable. To force a 100% to 200% increase is simply commercial suicide, especially when there is a viable alternative.

Notice how Trade Me is advertising its services like crazy these days - did not have to in the past.

Signs of the time.

Put your price up by 100% and only loose 10% business is a well proven strategy for software co in a monopolistic position of power. TradeMe may find they have awoken the predator in Realestate.co.nz who will eat their lunch in the property vertical.

The boycott seems to have become very significant in Dunedin recently. TradeMe has 569 listings Realestate 932.

Firstly, what is the ownership structure of Realestate.co.nz and is there more at play here than the price rise? Are certain realestate companies using the price rise to support another business in which they have a vested interest?
Gven Auckland is by far the largest and most influenced property market in NZ what is happening there. More analysis there would be more intersting on the effects of the realestateco.nz campaign.

Better to put up prices and remain profitable than be price competitive and make a loss. I suspect that Trademe's low fees kept it a monopoly. Half the market at a premium rate is better than all the market at a low rate. However competition from Realestate.co.nz may drives fees slightly downward over time.

And Justice For All - I suspect that the cost of advertising is still small compared to the increased revenue.

Short term, agree with you re increased revenue vs cost of advertising.

The need to advertise though tells the story of the longer term impact which is likely to see Trade Me lose out.

Some real estate agents are already charging vendors for advertising in Trade Me while making it free on realestate.co.nz

The question that should be being asked is whose best interests are the Real Estate firms representing..... ??

By carrying out a pathetic & petulant child like boycot of a MAJOR player in the property marketing space they (yet again) demonstrate that they don't have their clients best interests at the formost of their thinking.

Even if Trade Me had trebbled its charges the fact remains that they are a significant player in the market and their fees, as a percentage of agents commission or the value of a property are miniscule!!!

If you were selling a $200,000 home or, if an agency receiving a $8-20,000 commission why would you worry about an advertsing fee of a few hundred dollars??

Agencies should be pleased for their clients to have the clients properties listed in as many places as possible to attract buyers....

I thought Trade Me was greedy and it looks as though they have suffered the consequences. Trade Me tried to be a big bully. I think the public have spoken.

Monopoly positions should be regulated anyway.

The additional unit cost to Trademe would be a fraction of what they are charging.

Surely cost must have some parallel to the amount charged, unless you have an government and politicians who get large kickbacks for allow rorts to continue.

National are starting to smell (badly), when continuing to advocate freemarket when all they do is the opposite.

Isnt it interesting how the agents make such a song and dance about Trademe charging $400 for an internet listing compared to $1200 for a print listing. Why do the agents care, doesnt it save the vendors money by reducing print spend using more effective mediums? Maybe its because they use some of that $1200 print budget to plaster their banners and brand all over the news papers? Yes thats right, vendor paid financing is limited on the internet.