“Death of Traditional Real Estate Franchises”
The “DEATH OF TRADITIONAL REAL ESTATE FRANCHISES“
As sure as Night follows day, the Decline and Death of the current Franchises will follow the Death of Newspapers.
The “DEATH OF NEWSPAPERS“ is well under way.
With the arrival of the Internet, around 2000, Newsprint Advertising as the preferred advertising medium for Consumer services has gone into free fall, see here
First, Motor Vehicles disappeared from the pages, then Jobs – Now… REAL ESTATE…
The Nielsen Real Estate Survey 2012, found that over 80% of Real Estate Purchasers first and primary source of Real Estate information is via the Internet, and this has now grown to what some are reporting as in excess of 92%.
Since 2008, over 180 Newspapers have closed and ceased printing across the USA – See here
And locally, 2012 saw Fairfax shed around 1,900 jobs in Australia.
Here at Home, the Giant Real Estate Franchisors, Franchisees, and Large Corporates, in their desperation to maintain and enforce the status quo, will fight and resist change, and dominate and block new competitors any way they can – to maintain their Dominant Market Positions, and, with the Franchisors, the clipping of the ticket of the 1.2 Billion, yes Billion, NZ$ Real Estate commissions per Annum….
The usual payment to the Franchisors from the Franchisee Company varies from around 6 to 8 percent of turnover – so if a franchise has, say 20 PC market share nationwide, that’s around 6 to 8 pc of $240 Million – around 14 to 18 Million Dollars – each and every year, to the Franchisor, and that’s just one Franchisor – all just creamed off the top – and who pays – well, the Consumer pays… and pays…
So why are they so desperate to preserve the status quo at all cost?
Because the Internet opens the Door to a Level Playing Field – which allows new entrants like Netzone to establish in the Real Estate market, depart from the accepted, outdated methods, and deliver real savings to consumers, and thereby take market share, at the expense of the Traditional Agencies.
Being more efficient models, not burdened with multiple expensive offices which buyers no longer visit, these companies are, in addition to consumer benefits, able to provide professional, experienced Real Estate Salespeople, and Teams, a variety of superior and fairer, fee sharing arrangements, while at the same time providing them with a powerful consumer friendly point of difference.
This point of difference will become increasingly more effective in securing business as the Franchisors “ Bums on Seats “ strategy continues to saturate the Real Estate Industry with new hopefuls, thereby delivering what can only be described as a disgrace in average Real Estate Salespersons earnings to their Salespeople.
When I commenced Real Estate Sales in Hamilton in the early 70s, the ratio of Salespeople to population numbers was around 1 Salesperson to every 1,300 people – the Franchises came to town around the mid 80s – and the ratio is now around 1 Salesperson to every 550 people, and reducing daily, as they all continue their recruiting drives, with no thought of their existing Teams welfare.
It is no coincidence that when Trademe Property increased their charges in 2014, the Dominant New Zealand Franchisors, Franchisees, and Large Corporate Agencies, seized the opportunity to try to eliminate Trademe Property as a competitive advertising media, and so perpetuate the status quo –
Realestate.co.nz, ( the Industry owned Portal ), and massive weekly Newsprint runs, where with their heavily reduced contract Rates for serious multiple pages, no new entrant has a chance of competing.
I attended the local Roadshow meeting at the Novatel in early 2014, organized by the REINZ, at which there was only one topic on the Agenda – Trademe Price Increases, and what to do about them.
We were repeatedly told by the speakers that they were in no way suggesting a Boycott of Trademe, nod nod, wink wink… and then treated to drinks and nibbles, where the only topic of conversation was – Boycott!
I was, at that stage, in the late planning and organisational phase of Hamilton’s new model Agency, and just 2 to 3 months away from launching the Netzone model, utilising On Line marketing only, with the most cost effective and far reaching On Line Property Portals – Trademe Property and Realestate.co.nz
I remember driving home, and thinking – now this is going to get rather interesting.
A couple of months after launching Netzone, I encountered many vendors who, when hearing of the Netzone approach, were keen to tell me that they had been “ Advised “ by salespeople with the big local companies, that a $285 Add with Trademe Property, On – Line 24/7 from when listed until Sold, is not value for money – but a $400 Add in their Waikato Times liftout, published on Saturday, and wrapping fish and chips by Monday, is value for money…
And then we laughed and laughed….
Which leads to interesting different reporting styles which were evident when the story broke on the 17th December concerning the BIG FRANCHISORS, and LOCAL CORPORATE REAL ESTATE AGENTS accused of Price Fixing and anti competitive behaviour
NZ HERALD – Online Headline – REAL ESTATE FIRMS accused of Price Fixing
STUFF – Online Headline – REAL ESTATE AGENCIES Prosecuted
RADIO LIVE – News Headline – REAL ESTATE AGENCIES accused of Price Fixing
WAIKATO TIMES – Online Headline – Tron Companies in ComCom Probe
Tron Companies in ComCom Probe – What?
If you didn’t click on the link, you’d never know it’s Real Estate – you could almost be excused for thinking, at least it’s not any local Agent…
But in fact, the FIVE Dominant Hamilton Companies, collectively holding around 95% Residential Market Share, and 2 individuals involved with them, are facing charges. See here
These same Hamilton Real Estate Companies collectively take around 50 Pages of Advertising, yes 50, – every Saturday Night – in the Waikato Times…
Is it just a case of selective journalist choices of Headlines by the Times, or is it a case of not wanting to bite the hand that feeds them.
At Netzone, we will never win “Biggest Agency, most offices, most people“
but we will take out “Best and Fairest“
“2016 – Let The Games Begin!“
