For too long the real estate industry has tolerated inefficient work practices as a result of late adoption of technology that is more readily applied within other industries. Tony Brasier, Managing Director and Chairman of PRD Nationwide, says this is partly due to a lack of coherent industry leadership advocating any major national change.
By good luck rather than good management the consumers experience is much better than it was 15 – 20 years ago but there is still a long way to go to provide a fast efficient, conflict free process to transact a residential property.
If you have a closer look at typical steps a potential purchaser takes (including newspapers, the web and listing portals) when looking to change residence you would be excused for thinking there must be a better way. For most buyers it can be a very long and stressful process and one that, more than occasionally, leaves them disenchanted with the real estate industry and the specific workings of a number of agents.
Two options could improve the experience and streamline the process:
- One, common, national, industry led online listing system
- An agent on both sides of a transaction
The real estate listing portals have developed over the past 20 years, and have gone through a series of rationalisations that see us today with two main online listing sites and a number of secondary, location specific sites. The major media companies have invested significant capital to control the transition of one of their ‘rivers of gold’ from traditional print media to online advertising. All this as a result of very little proactivity by the agency community who have allowed themselves to be led by numerous external parties, all the time kicking and screaming about the cost, the lack of control over their own destiny and a huge amount of distrust. Despite these feelings, and a desire for an industry owned and led solution, they have failed to support initiatives from various Real Estate Institutes and allied bodies to solve their long term concerns – particularly from a national perspective. Unfortunately, agents and more particularly sales personnel are creatures of habit and very reluctant to change the system they go through to market a property; they tend to use the same mediums to promote a property time and time again. So once they develop a routine, it is extremely difficult to get them to change or even try something new.
In an ideal world there would be one listing portal covering all residential properties throughout Australia. This would be industry owned and operated, and each agent would pay a small percentage of their commission to list on the site. It would be the real estate industry’s answer to the Australian Stock Exchange – it would be to all intents and purposes the ‘Australian Real Estate Exchange’ or ‘AREX’. All property in Australia would be listed on this site by the appointed agent. All purchasers need only go to one site to view all available property. Every agent’s website in Australia would automatically load their listings onto the one site.
Hold that thought while you consider my second option for change – an agent on both sides of the transaction.
Everyone is aware that whenever a survey is conducted on the most trusted professionals, real estate is always ranked extremely low – even below politicians sometimes. In my 35 years’ experience, whenever a dispute develops in a transaction it is because a purchaser believes the agent is acting for them and not the vendor. Issues around gazumping, communication failure, inaccurate information and accusations of favouring other buyers usually arise leading to a dispute and hence the potential purchaser having a dim view of the agency world. The agent at all times is acting for the party that is paying it’s fee even though they try to act in good faith, at all times, when dealing with the other party – predominantly the purchasers. If an agent were appointed on both sides of the transaction there would be far less conflict as each agent is being appointed and paid by different parties. A real estate purchase is normally the largest transaction in most people’s lives, they appoint a solicitor to act for them, sometimes an accountant and when they are purchasing shares they appoint their own broker to transact the business. Yet, when it comes to buying a property, sometimes with no experience, they have a very high expectation of the vendor’s agent providing them with a first class service. An agent on both sides has been a growing trend in the commercial market over the past 15 years and there is rarely a major sale or lease that doesn’t involve an agent representing both sides. In the UK and USA this is seen as a perfectly acceptable practice. The Industry and Government should be promoting it as the best and most desired way to transact property and provide the consumer with far greater protection. It would take away the inbuilt agent/principal conflict in the system and result in better service, less consumer dissatisfaction and ultimately, an improvement in the perception of the professionalism of real estate sales people.
The major factors in making these types of changes are strong, credible industry leadership and real estate agents and sales people embracing new work practices for the long-term benefit of the whole industry.