The two pieces of relationship management that great agents are super good at and what they concentrate on to combat FSBO.
Topic – Don’t underestimate the agent’s role
Mentor – Nigel Jeffries
Kevin: If you’re fortunate enough to travel to New Zealand, land of the long wide cloud … Long white cloud? You’ll hear people refer to trade me. It’s the biggest brand name in terms of marketing online almost anywhere in the world. But particularly New Zealand, market dominance is enormous. Joining me now is the head of property on Trade Me is Nigel Jeffries.
Kevin: Nigel, thank you very much for your time.
Nigel: Great, thanks for having me.
Kevin: Welcome to New York.
Nigel: Thank you. It’s minus 15 out there. It’s a bit of a change from summer.
Kevin: Bit of a change, bit of snow last night and a bit of black ice on the road, so you’ve got to be very, very careful.
Kevin: Nigel, what a fascinating product Trade Me is, and having been to New Zealand quite regularly, I know that it’s almost the gospel when someone wants to trade. We’ll talk about the dynamic of the whole portal because there are different areas, but let’s focus on property. Have you got an estimate as to the number of properties that are on the site?
Nigel: Yeah, around about 35,000. Most of the inventory, about 92% of the inventory comes in from agents, so that’s the bulk of the stock, and we have about 8% that comes in by FSBO, which is from the direct sellers.
Kevin: For Sale By Owner.
Nigel: And we also have the rental stock and the flat rate stock, so that’s shared accommodation.
Kevin: Yeah, that’s a huge database of users on the site, and we’ll broaden that out in just a moment, but I’m just keen to talk to you about the For Sale By Owner. Have you got any stats on how successful that is? In other words, how successful are sellers at selling their own property?
Nigel: Look, it’s a fascinating area. Initially we had up to about 13% of the stock coming in from direct, and that’s actually dropped over the last three or four years down to about 8%, and I’ll talk to some reasons for that if you like.
Kevin: Yes please.
Nigel: But in terms of the sell-through rate on that FSBO stock, we estimate that about 40, 45% of that stock ultimately ends up with an agent, which is super interesting. And I think that the two areas where the direct sellers really struggle is one, trying to cajole the buyers into a point in time to put offers in. There’s quite a lot of skill required to do that. And then the second difficult aspect is actually getting buyers to come up with an offer. And those two pieces of relationship management, in a sense, are what agents are super good at and what they concentrate on.
Kevin: Yes they are too, and I do think that people underestimate the role of the agent, not only as much in the negotiation and attracting people to it, but just the doing it. Like, someone selling a property may only see an agent when they do an inspection and think that’s easy, but it’s the inconvenience factor too when you’re trying to sell your own property. You’ve got to make sure that you’re available to show people through.
Nigel: Yeah, there’s a lot of things to pull together, and in fact the conference here, we’ve heard that there’s up to around about 200 steps in order to sell your property, so different functions, different processes. It’s a lot to pull together. The areas where there’s careful relationship management required is where the agent comes into their own.
Kevin: Yeah, and the negotiation skill too is the key thing. It would be interesting, and I don’t know if you’ve got those figures available, but the difference between someone selling their own property compared to having a professional negotiator on their side to get them the top price.
Nigel: Yeah, I don’t have those figures.
Nigel: It’s a-
Kevin: … it’d be very hard to get.
Nigel: … fascinating study. Yeah. The other thing is is obviously speed on the market. How quickly can you sell, and what price can you achieve via an agent, via a direct? You would have to think that often the agent would achieve a higher price and a speedier sale. It’s just what they do day in, day out. The very good skillset there.
Kevin: It’s a bit like doing your own plumbing or your own electrical work. An electrician or a plumber will do it so much more effectively ’cause they’re qualified.
Kevin: And there are a huge amount of qualifications needed to be a good professional real estate agent. If there weren’t, there’d be many more successful real estate agents, highly successful.
Nigel: Exactly, yeah. I mean, the compliance side of the agent is huge now. Obviously the direct seller doesn’t have to comply with as much as that, but there’s still a high degree of difficulty in selling your own home.
Kevin: Oh, totally. Absolutely. Nigel, can we broaden out a little bit for Trade Me, and there’s a reason for me asking to do this too, and I’ll demonstrate that in a moment. But Trade Me itself is more than just property. What are the other areas that you are focused on?
Nigel: We’re pretty ubiquitous across New Zealand. We’ve been in the top 10 brands in New Zealand for many years. The main businesses are, first of all, the marketplace. That provides new as well as used goods, particularly the used goods. That’s really where Trade Me’s come from. And then we’ve got motors and jobs and then property, so those are the main businesses. We also have insurance in there, dating, and a range of other sort of provisions.
Nigel: Interesting on the property side, we also come up against Airbnb. We’ve got holidayhouses.co.nz, so that’s our short-term accommodation business in there.
Kevin: The reason I ask that question was, and I knew what your answer would be, but it’s to demonstrate that you’ve got a huge amount of data. You can actually track someone’s … almost their entire life: when they’re going on holidays, when they’re buying a car, and so on and so forth. This must be fantastic for the agent to understand a little bit more about their potential client.
Nigel: Yeah, it’s really interesting. Most Kiwis are a trading member, and when they’re interacting with Trade Me, largely on a mobile device now, they tend to be in a logged-in state, so we know who they are, they’re obviously a member, and that gives us the ability to observe and provide and discover insights, really, on their online behaviour.
Nigel: So, in terms of property, we first often see them when they come in as a flatmate, or a youngster, they’re wanting share accommodation. Then they move through to renting their own house and then first-home buyer, family owner, family house and then investment property. They might buy the batch, they might look at our commercial or rural property. So we’re actually observing them all the way through their property life cycle, and there are some fantastic insights in there for agents.
Nigel: That’s the focus of our work at the moment is just discovering more and more insight in that data that can actually help the agent do their job better and faster.
Kevin: And of course you’ve built a great reputation as a trusted source for information. Can I just ask you, then, how you communicate with that database? Because you got to be very careful that you don’t lose them. In other words, they don’t lose that trust with Trade Me. Therefore I’m interested to know how you communicate with them, or how often.
Nigel: Yeah, it’s an interesting thing. It’s a little bit challenging for us. Because we’ve got a range of businesses that we need to communicate to our members on, we need to be careful with the frequency which we do that-
Nigel: And remember, it’s not just property, we’ve also got marketplace and jobs and motors and some other businesses.
Nigel: Also the trust level. Trade Me is hugely trusted. There’s a massive amount of trust in the brand equity, so to speak. So we’re extremely careful around obviously members’ privacy and the relevance of the material that we want to give them. So we’re very transparent in terms of privacy settings, and we like to get as close as possible to what those members like to hear.
Nigel: But remember that we have the great data, so we know within a reasonable degree of accuracy when they’re ready for a point in their property life cycle to want to hear about more insights on property.
Kevin: It’s a fascinating model, and just in closing, we’ve probably got another minute or two to go, can you tell me about the history of Trade me? How did it start, who started it, and how long has it been going?
Nigel: Yeah, look, Sam Morgan started it 20-odd years ago pretty much out of the garage on the smell of an oily rag, so to speak.
Kevin: Well I remember seeing a photograph of him right at the start in a convertible car, I think it was. It’s quite an iconic photograph. So he was obviously very, very young at the time.
Nigel: Yeah, very young. I think early 20s, possibly.
Kevin: Where is he now?
Nigel: He is-
Kevin: Is he still involved?
Nigel: No, he’s not involved. The story is he worked for many years … I think it was ownership with him, some other shareholders, including his father, and eventually they had offers, I think, in the early years from the likes of eBay and some others. Turned those down. Smart move.
Kevin: Smart move.
Nigel: And eventually sold out to Fairfax at what the time seemed an astronomical price.
Kevin: I was with Fairfax at the time. I remember it happening.
Nigel: David Kirk was the CEO at Fairfax at that stage, and Trade Me became a public company, which was a massive change for it. And then after a couple more years, Fairfax sold out of their final holding and we became a fully fledged, publicly owned entity.
Nigel: We’re now going into a new phase where we’ve had a couple of potential new owners pop their heads up, and it’s likely that April/May we’ll see ownership changed towards one of the large P E firms in the world. It’s yet to be put to the shareholder vote, but fairly likely that that would go through.
Kevin: Nigel, thank you for being with us. We’re out of time, unfortunately. But it’s great to catch up with you, and I look forward to next time I’m in New Zealand getting on to Trade Me. I’ll have a bit more knowledge about it.
Nigel: Pleasure to talk to you.
Kevin: Thank you very much.
Nigel: Okay. Cheers.
Kevin: Nigel Jeffries has been my guest from Trade Me, a great website. If you’re in New Zealand or even if your not, just check it out: Trademe.co.nz.
Nigel: .co.nz, yeah.
Kevin: .co.nz. That’s the website. Go and check it out.
Kevin: Debra Trappen is our guest tomorrow. Debra joined us at Inman Connect in New York, and more specifically she joined Sherrie Storor, and they talked about women up: the dominance of women in the real estate industry. That’s coming up tomorrow. See you then.