Technology is opening up more revenue stream opportunities but are they all good and should agents be seduced?
Topic – The industry from the inside out
Mentor – Veronica Morgan
- Diversify to get additional income streams
- These streams could replace commission as we know it
- What will it do to an already damaged reputation?
Developing your leadership style – Jacob Aldridge
Jacob explains why it is important to coach your team not ‘play with them’ and how to do it.
Kevin: There is no doubt that technology has certainly reshaped and is reshaping the way real estate is transacted, how we as agents work in the field, how we work with buyers, how we work with sellers, how much more information is available to us and how much more information is available to the consumer. But therein lies a bit of a problem also, because it has allowed the industry to diversify its income streams and get referral fees from networks of providers that they recommended to their clients. Is this a good step in terms of transparency for agents? Veronica Morgan joins me once again. Veronica is from Good Deeds Property Buyers and Elephant in the Room Property Podcast.
Kevin: We attempt this week to unpack the industry, look at it from the inside out as we strive toward this pathway to professionalism. A long introduction Veronica, but good morning.
Veronica: Hello, Kevin.
Kevin: Tell me about your concerns about the diversified income streams that are being created.
Veronica: Yeah. Look, you know, the property industry as a whole, well we’re bracing ourselves for disruption. We’re looking at technology, AI for instance, help in valuation models for argument’s sake, that take away the need for agents to appraise properties or the need for buyers to get valuations or even that gives confidence to buyers and then builds for argument’s sake at what their property might be worth. So there’s all these thoughts of technologies that are coming into play, and they are changing and I guess challenging agents to consider their remuneration models, to consider the future, to consider really the solidity or … what’s the word I’m trying to look for here … the continuation of business as usual, if you get my drift.
Kevin: Yeah, the norm.
Veronica: The norm, yeah, yeah. And I think perfect professionalism is one response to that, to say well we actually need to lift our game rather than drop in the race to the bottom. We have to actually raise the bar. But I was actually at a REI New South Wales summit recently, and I was quite alarmed at one of the signs that was put up by … it was a director’s presentation, based on findings from a conference in the US, I think it’s called the Inman Conference, where it’s all about real estate technology. There was sort of this network slide put up there showing all the different tentacles that a real estate agent would touch in the day-to-day job. As real estate agents, we recommend the services of so many other industries. There’s conveyancing, there’s cleaners, there’s property stylists, there’s landlord insurance.
Kevin: Building and pest inspectors, yeah.
Veronica: Yeah, all of that stuff, right? So-
Kevin: Valuers, yeah.
Veronica: There was this, there was this sort of question put up there that this might be the future, where people don’t actually pay commission when you sell property. Instead, it’s gonna be a clip the ticket mentality, or structure, where we refer all these people, and we’ll actually just collect commission form all these referrals along the way rather than actually charging for our advice and our service which alarms me greatly, quite frankly, if that’s where the industry is going to go soon, because, has no one been watching the royal commission. This clip the ticket mentality is dangerous. Very, very dangerous.
Kevin: Yeah, I don’t believe we’re in danger of that happening. I think more likely we’re gonna see disruption in that area, and we’ve already seen it in terms of organisations or companies, businesses being set up for comparison, as an example. Comparison sites. Finder, all of these sites that allow you to get on and look at a multitude of people, then make a choice, they take a clip of the ticket. So I see that more as the direction it’s going to go, but I certainly can see that there will be problems for the agent if they’re perceived to be taking a clip of the ticket along the way, cause we need more transparency. We don’t need more closed door, behind top and bottom drawer deals happening.
Veronica: Yeah, absolutely. Absolutely. Well, and on that sort of side, then you got this sort of, Rate My Agent, Open Agent, what are all those portals, and they’re interesting too because you got certain… they’re the sort of the find the sites of real estate agents effectively and so, you’ve got some where the real estate agent pays to be on there, and you got others where the real estate agent pay the premium for a better listing, or for better reporting or whatever. And once again, from a consumer’s point of view, how do they really clearly work out which one is which? And so, it seems good on the surface. This is great, I get this opportunity to choose the agent based on their performance. But even then, is the performance the right measure? It’s a bit like choosing the agent that sells the most. Are they really the best agent? Are they really the best agent for you?
Kevin: Yeah. Well, what metrics do you use? It certainly is a mine field. I think if you go right back, pre-internet days, when real estate agents did actually own all the information, they owned all of the information about the buyer, the seller, and then they freely gave that away to the portals, who now sell it back to them. It’s a mess. It really is a mess, and I don’t know that there’s any real easy solution. I think we just go with the disruption model and say well, let’s ride this bucking bronc for as long as we can.
Veronica: Well, we sort of have to don’t we? And you do have to laugh when you think whether they’ve been sold, we’ve been giving away information and then we start buying it back.
Kevin: Yeah, crazy.
Veronica: But, I think on that too, buyers have become used to being able to access information, but they’ve gotta also understand they’re are holes in that information, they gotta understand when they need to find to fill those gaps. And one very quick example, is in a slowing market, a lot of properties are listed, or the sale is recorded as price not disclosed. And, so therefore, we’re not getting access to the same depths of information that we would be in a hot market where everyone’s proud to post the price.
Kevin: Yeah, exactly. Tomorrow, we are going to really touch on a big subject to round this great week out we’ve had with Veronica Morgen and that is, the question of would you put the fox in charge of the hen house? In other words, should this industry become self regulated? Look forward to that conversation tomorrow morning with Veronica Morgen. Talk to you then Veronica. Brace yourself for it.
Veronica: See you tomorrow.