Tony Brazier

www.braziers.co.nz

Tony Brazier

The Press - Wednesday 09 September 2009

The Real Estate Industry

It’s a funny old game, real estate. When entering, the first and most scary thought is how you are going to survive in a 100% commission based environment. Thoughts of switching from a cosy $/hr cheque or direct credit deposit is usually enough to put most people off.

People in real estate come from all walks of life and bring a multitude of skills and knowledge learned elsewhere to the table. Some come in from redundancy, business sales or re-entering the workforce after children. Others make a deliberate career choice due to looking up the ladder and not seeing an enticing future. There is no one pre-requisite for success.

Just as there are vast differences in participant’s life experiences, so too has the industry changed and developed over the years to meet their needs. In many professions there is a requirement to induct new members by having them overseen by a senior member for a period of time. When I started in real estate in 1987 such a system had just been left behind. It was the old QP system whereby for each three salespeople there had to be suitably qualified person (QP) to oversee them. The entrepreneurs of the industry saw this as limiting to their business growth and it was challenged as a restraint on trade. At the time there were 887 salespeople in the Canterbury/Westland district.

With the restriction on numbers of salespeople averted the mega offices were born, whereby one Principal Officer could engage as many salespeople as they could personally have under “effective control”. Every dairy that was closing due to the growth of the supermarkets seemed to be snapped up for a real estate office. At the time working a ‘patch’ or ‘farm’ area usually meant door-knocking the immediate neighbourhood around the office and the more offices you had the more reach, exposure, local knowledge and influence you had on the real estate needs of the citizens. By the end of the 1990’s salesperson numbers had grown to 1959. The public were extremely well serviced with most of us receiving at least one new salesperson’s flyer in our letterbox weekly.

Competition heightened with new and more innovative forms of marketing needed to attract the listings to the point where, in order to keep up, agencies began inviting their vendors to contribute to be seen “above the crowds”. Most marketing at this time was print material of one sort or another until the advent of the internet and its huge influence over this industry in the late 90’s early 2000’s. By 2004 when the market trends showed that prices should’ve slowed down, it was just as easy to sell a property to a buyer in Ireland as it was in Ilam, hence the market continued on, but changes were in the wind.

Suddenly the advantage of having multiple offices was under threat by a system that had the ability to reach into the living rooms or offices of every household, with the click of a button. Websites became the window into the business without the need for a street frontage and some very successful agencies began working from sites with no frontage at all. Branding and marketing money for agencies of all sizes was best spent on the company website for best effect at attracting attention from all over the world, not just locally.

With no greater constant than change as we head to the end of this decade, salesperson numbers are 2286 and many changes are afoot for the industry under the new Real Estate Agents Act 2008. This legislation has the ability to deplete numbers of salespeople in the industry as the cost of compliance, large fines, more stringent requirements for qualifications and on-going education make people double take before they ‘have a go’ in the industry, as they have done before.

Not all aspects of the new act are popular but generally it has been long overdue and for the most part meets the needs of the public in transparency and protection in the market place. How it affects the face of the industry with respect to numbers remains to be seen but it looks clear that real estate will not be a place for those who are not serious about compliance, full time commitment and on-going up-skilling. Agency principals will not be keen to retain those who are a risk or who are not reaching minimum standards. It is expected that once all of the act’s hooks and barbs are ironed out, the industry will be leaner in numbers, better educated, more compliant and more accountable.

The future is going to be interesting, if not exciting, for those involved. With the legislation intact and the web as the major influence it’s anyone’s guess what the typical real estate office of the future will look like. Who knows, it may be safer for an agency owner to go back to the old QP system to ensure survival in the future. I can hear the gnashing of teeth now.