The seller is prepared to pay more commission not less. Why is that so?
Topic – Making technology work for you
Mentor – James Bell
- When sellers will pay more commission
- The pain when you do not know the consumer’s needs
- We all have the same tools – how to stand out
Kevin: G’day James. Good to be connected with you again and we’re coming from Inman Connect in New York. Your takeaways. We have chatted a little bit this week about AI, about technology, a customer relationship, and we touched in the last episode on commissions and how they’re likely to change. Is there much conversation you’re hearing here about protecting commission? Because this is an environment where agents do work much closer together than they do in Australia. Is that a fair comment?
James: It is. Well, I think the first session of the conference that I went to there was a discussion around fees and what are you doing and what value are you adding to protect your 3% and for those of us back in Australia who are thinking that there’s 3% on both sides, are probably quite jealous at the moment. But, the commission, I suppose the pressure on commission at the moment, it’s a universal thing. I think as there’s so many different types of models that are looking to come into our industry, realising how much value there is in our industry that could be potential as revenue. Yeah, we spoke yesterday about there’s companies here in America that are looking to do the buying and selling and combining it like the Australian model and doing it for 2% or 3% versus having 3% either side. So if you want to have 3% either side you’re gonna have to really look at what you’re doing when obviously the consumer is starting to drive towards that [potensive] 2% or 3% too.
Kevin: Interesting lesson here, and this is iBuyer. I don’t know if you caught up much on iBuyer. It’s the way the system works. I think the industry in America is trying to come to terms with the fact that why would a seller be willing to pay almost 12% commission on a resale. And the reason is that in most cases they’re looking one, for a sale, but they’re looking for a quick sale.
James: Quick sale.
Kevin: And that’s what the iBuyer model is. We’ll come in and we’ll buy your property for an agreed price, which is normally a fair market price and we’ll do it quickly. So they want a quick sale. So, that’s actually what the market’s looking for. So, the days on market needs to become a lot tighter. Market fully right now with what they are in the States. So, if that’s what the seller’s looking for, that’s how you protect your commission.
Kevin: Is by becoming a lot more efficient at turning your stock over quicker. There are some agencies in the States that are looking at taking on the iBuyer model as an alternative.
James: Yeah, well I mean, I was talking to [Charle] the other day and he was mentioning where we’ll buy it, we’ll do it quickly, we’ll settle it in a week, we’ll flip it, and you’ll get a percentage of the profit as well. Once again, a unique model but something that is gaining some traction. So, obviously the consumer, and I think we spoke about the consumer earlier on in the week and sometimes they get left out of the equation and we think as an industry, what’s best for us? But, there’s a chain. It goes from the product to the agent to the consumer and these businesses don’t come up unless there’s a need from the consumer. And companies like that, I mean, we’ve spoken about iBuyer and they’re growing but it’s what the consumer wants, speed, efficiency, and they don’t mind paying for it.
Kevin: And Purplebricks of course that are about to move into the States if they’re not here already and therein lies, there’s another model where they effectively market no commission when in fact it’s a listing fee so you pay to list with them but it’s a much lower fee. So, all of these things are in the mix and it’s really interesting to see what comes out as the final cake when it’s all put together and then put in the oven.
James: Exactly, well look-
Kevin: I wonder if we’ll ever see it.
James: Well, it’s funny ’cause there’s a traditional agency, Kevin. I think one of the points that was made yesterday, we go out and we do an appraisal, we’ve got all the same tools to market a property, we can all go on a, we’ll talk about America, we can all go on MLS, they can all put a for sale sign up, they can all do a brochure, so, what’s the differentiation? Why are you 3% and someone’s 2%? And the consumers are really starting to twig onto that. But, the encouraging point was they don’t mind paying the 3% as long as they see where the value add. And the big thing was talking about service and how you’re going to service the needs of the client. And looking back at iBuyer, it probably leaves a bit of a clue at the moment, speed and efficiency.
Kevin: It does. It does. Yeah. So, they’re the challenges. Any other icing on the cake you can give us from Inman? And baring in mind that by the time we are recording this segment, we’re really only halfway through, so it would be good to come back at the end and do another segment with you on what we picked up from the second part of Inman. But it certainly, you know what struck me is that this conference is just massive but then we’ve got to understand that this is just a huge market and we’ve got even when the conference is going on in different locations, we’ve still got hundreds of people streaming past us here in the display area.
James: It’s a great atmosphere, isn’t it?
Kevin: It’s a tremendous atmosphere. I’ve never experienced anything like it. I’ve been to conferences, [Arack] is the one where in the display area during a session there’s no one there. You can [crosstalk].
James: Yeah, exactly.
Kevin: But here, it’s just a constant flow of people seeking knowledge. I’m trying to understand what’s going on. And our broadcast point is all about property TV which is our new portal and that’s the next level of communication with consumers, so a lot of interest in that as well. Any final take aways from you?
James: I think one of the themes of Inman Connect 2019, New York has been execute and we can talk all we like, we can build every plan we want, we can get any tech product we want but unless you execute and use things correctly and we spoke earlier in the week about just picking up the phone. You’d be amazed in the results but I think the big theme here has been execute and it’s probably a good way to leave [inaudible] awake.
Kevin: I think it’s the perfect way because you know, and that’s, what a great thought. We started there. Let’s finish there. And James, could I just before we go, just congratulate Sarah, your wife, as well. It was just so good to see an Australian on stage here at Inman, talking about Rita. I can see the pride in you as well. It was just awesome to see but she did a great job.
James: Amazing. Amazing.
Kevin: She did a great job.
James: Yeah. Very, very proud.
Kevin: Good on you, mate. Okay, well that’s where we’re gonna leave you for this week from Inman Connect in New York. James Bell has been my guest all this week. It’s been a great time too. We’ll bring you a lot more content from Inman Connect over the next weeks and months as we roll it out. James, once again, thanks for your time, buddy.
James: Absolute pleasure, Kevin.