Real estate industry blames media for downturn..

And? Give a crap about it? An industry which has such an utterly low level ethics almost as a requirement for success? An industry which time and time again does nothing about agents blatantly ripping people off and charges, on average, about double the fees of Aussie and other comparable countries?

It's time Trademe etc dealt to the real estate extended lunch-break of an industry.

http://www.nzherald.co.nz/section/3/story.cfm?c_id=3&objectid=10509561

R

I still agree with them though!
It's perception of value/falls-to-come/uncertainty etc etc that drives the market up and down, largely influenced by media commentary masquerading as expert advice...

And yes I also agree with you - time for a bit of consolidation/clean out in the real estate market. Downturn like this will drive out a lot of the crap operators - The Joneses already being one example.

does the herald et al HAVE to do a major real estate story every fucking day?

yes it seems they do todays plague- the media

tomorrow, who knows whom will be trumpeting rising or falling prices but rest assurted there WILL be a story

I know. I can't wait for the to get back onto the Phillip Field bashing.

R

Well yes they do actually becuase it helps them sell newspapers

except the Joness weren't crap were they? but victims of the media

Don't know any specifics but I thought the Joneses were onto a good idea, possibly one the marketplace wasn't ready for here yet

They were a good idea... too good in fact.. so the real estate institute harranged them non-stop.. painting them as the cowboys.. when it was actually the existing real estate industry who were the cowboys.

R

RobW, I reckon bellamysgirl would love to discuss taito philip field's case

It was a RUBBISH idea. No incentive for an agent to sell your house for any more than rock-bottom to get the sale through - a fixed fee, especially one as low as there's that required massive turnover to be sustainable, encourages a fast, high number of sales. No incentive to actually get more money in the deal.
And lo and behold, they couldn't do anything like the numbers they needed to, even with pushing sales as fast as they could, and folded.

yeah they weren't really victims of the media who actually seem to have given them an easy ride

more like victims of bad timing

No incentive except for professionalism?

How is a fixed a no-incentive if the payoff is you have more people coming to you to sell their houses? Higher turnover wins.

Also, the size of the incentive to sell a house when it is a percentage of the value doesn't mean a more expensive house will either a) have someone to buy it, or b) - the important one - bare any relevance to the quality of service you get from the agent.

Real estate agents in NZ, on the most part, are lazy and do the bare minimum to sell a house. They are also in an extremely competitive industry (person to person) which means there are many times when they pull swift ones or try to - rarely acting in the best interests of the vendor - sell to get onto the other ten houses they're looking after and maintain their targets.

Simply, there's too much dead wood which have had their jobs protected by overinflated revenue - with no justification. It's not the 1980s, time they woke up.

The institute itself is also like a bad version of the police complaints authority - good in theory - but has basically ended up being an in-house way of protecting their own dodgy members. (this is why they've had their self-regulation ability partially taken from them - such is the lack of trust in the industry body to do the right thing by the public).

Jones' was a good idea in many ways.. simplifying the process and meaning every sale is worth the same to the company - removing much of the motivation/cause for the type of behaviour we have seen in the news so often.

R

Heh parallels between myanmar dictatorship and real estate agents - if the people don't know about it it isn't happening so try to stifle information.

... Yet the real estate association has no qualms about giving glowing ski-field-like weather reports when the weather is in fact shit.

By the time its hit the newspapers its already too late anyway, its better everyone knows sooner than later.

It's no incentive for the agent to price the property any higher than rock bottom to get the sale through. Vads you're right that professionalism would ensure many people do price accurately but this is all about the dodgy folk in real estate!
And Rob - their high turnover didn't win did it. It had to be unattainbly huge to make the business cover costs.
I don't disagree that there's all sorts of rubbish in real estate, but THE JONESES FAILED! You can't say that it's this great model etc - they failed. And they failed because they weren't earning enough to cover costs. Which starts to suggest that perhaps there is not these hugely inflated margins in real estate when the first player to come along and offer a "cheaper service" (for a sale over $250k odd) can't pay the bills.
I've got family in real estate who openly suggest that there is all kinds of dodge in the industry (which is why they are long-term successful frankly - people come back to a genuine operator) and that an overheated market of the last few years has made it easy for muppets to make money, but that won't last.
However, there doesn't seem to be these massive margins that a low cost operator can come in and blow them all away - the one group to try failed straight away in one of the most buoyant markets in quite some time.

Agents worked for themselves all along - not the vendor - it's the real estate industry's buggest ruse that they have much genuine regard for them at all. Also, the vendor has the final say on the sale anyway - it's not as if they're obliged to go with whatever the agent can line-up.



The model would have worked eventually. Someone will start up another similar one and it'll work. They failed, as you say, because they didn't do it right or ran the business poorly.. but having the institute harranging them non-stop - basically in protect the status quo mode - didn't help matters at all. They were happy with their little industry self-regulation ability and showed more often than not exactly why the industry has been revamped: Plain, shoddy, nepotistic, blinkers-on and inherently misleading as a norm in advertising and sales techniques.

As for the industry margins. Can anyone in your family explain why Australia etc survive on half the revenue on houses sold - and it's nothing to do with house prices. The industry here is bloated and had it easy too long - that's why there are so many hangers-on and fly by night agents. A good shake-up will do wonders for the housing market.

In the long-rn.. failed or not, Jones' gave lots of people the motivation to sell their own houses. Lawyers are offering conveyancy packages and advice etc.. And this has been motivated by an industry which has squandered its own good faith - not one which is doing a good job in general.

R

I'm not disagreeing with the rest of your points entirely, but the thing with The Joneses wasn't bad management or pressure from the institute - the numbers were just not workable. The people I know in the industry naturally did a competitive analysis on them when they started up and said right then "they aren't making enough - they'll be gone in a year". They ran the basic numbers on breaking even with an $8,000 (I think it was?) fee and said the sheer number of sales they'd need to do to make any money was unrealistic and would only lead to rushed sales jobs to be able to fulfil the numbers within a month.
As I understand it, Australian real estate agents are on about a 3% fee, whereas NZ should only be slightly over 4%? So not half, but yes at a lower rate - perhaps it's a realistic competitive environment over there? Not sure.

It's been commonly said many times that the cost of selling property in NZ is basically double what it is in Aus. (altho many situations here have a: x% up to $250k, then 1.5% thereafter - type deal where it reduces as you go up).

I've never once seen any justification locally other than the obvious 'we can get away with it' - the sure sign of an industry in need of a good kick in the pants.

R

I'm not really one for believing that media can move a market... in my experience a market drives itself and if it has enough voume and players than it cant be manipulated through press or single players trying to push it around. NZ real estate will have lots of players so its relatively 'perfect' in an economic sense which means that if prices are right there will always be some people looking to buy.
In my mind the NZ property market is behaving absolute technically correctly in that after a large surge the volume (turnover) will either stay strong and support the new price level or it will die indicating that no ones comfortable at these levels and then slowly but surely sellers will overwhelm buyers and prices will start to fall. IMO thats where we are now.

voume = volume

if the media moves the market then the market is a bloody slow mover 'cos the media have been dooming and glooming for the past 4 years

not completely true NR - while there have been negative reports werent these mainly from RB type suits etc... and dont forget all those TV property shows about doing up your home etc have fuelled property desires/development/speculation, thats all part of the media.

well all those property shows are still playing but the market's moved away so there's another instance of the falsity of the statement by the realtors

Current real estate fees work in pretty much the same way. Check out the book "Freakonomics". The writer analyses how little it matters to the real estate agent whether you sell your house for $700k or $750k

yup.. there is almost no incentive to get a good price..

imho it should work like this

house is valued at $700k. agent gets say $1k for selling it at $700k, then 10% of anything over that. if it goes for $800k, they can have $10k for a job well done. if they sell it for $700k they can fuck off.

otoh, its too late for that.. websites will take over the market. maybe there is a roll for specialised people to run openhomes, handle negotiations on a fixed hourly rate.. not an industry of thousands of bloodsuckers all chasing that one house every few months which nets then $20k for doing fuck all.

And the real estate industry wonders why they are held in such low regard by the public. This sort of thing has been happening for ages.

http://www.nzherald.co.nz/section/1/story.cfm?c_id=1&objectid=10526543

On this note: One of the top selling agents in NZ (based in Remuera) will be appearing in court over in-house dealings which essentially were for their advantage at the expense of a seller...

R

It was more to the advantage of themselves (or that particular case is).