Spaghetti
Finally, my interviews were complete. My imaginary finish line in the sand had been crossed. I had won. My prize? The unenviable task of identifying who threw that plate of spaghetti. My list of suspects was large, but the list of problems was larger.
Suspect 1: Real estate business owners
Problem 1: The business model
In 1854 Richardson and Wrench (R&W) opened for business. R&W were one of the first real estate agencies in Australia, soon to be joined by copycats Ray White and Raine & Horne.
But.
The copycatting phenomenon didn’t stop there. Thousands more real estate businesses followed, operating all across Australia using what is effectively the exact same business model as applied by Richardson & Wrench in 1854. Yep, that’s, like, over one hundred and fifty years ago now. Consider how much Australia has changed since 1854. Even the fundamental idea of ‘home’ has changed, never mind all that other stuff like technology, “The way business models are designed right now means that most real estate agents provide services to the Australian public within a very narrow scope, just outside of this narrow scope is the potential to repair and improve their broken relationship.” business, industry, and the economy. To put ‘change’ into perspective, in the early 20th century we thought there was just one single galaxy, the milky way galaxy, we now know we missed it by just that much!
Turns out there are more like billions of galaxies, each with billions of stars, each with goldy locks zones capable of supporting life, or ‘home’ as we know it on Earth. So listen real estate, we need to talk. Australians have changed, it’s not you it’s us. We have grown apart, we want different things. A 19th century business model isn’t going to cut it anymore. We’ve seen companies like UBER and AIRBNB resting their sweet, sweet pie on the windowsill to cool off. We’ve caught a whiff, had a taste, and now we want the whole thing. Your business model is kind of like owning a PlayStation 1 in 2015 – good for nostalgic reasons and for putting paper firmly in its place, but completely incapable of supporting a modern day gaming experience.
Salvage the parts that still work and throw the rest on the scrap heap I say. A business model represents an environment. Put something in a negative environment, you will almost certainly produce negative results. If the R&W business model is outdated and real estate agents are being forced to use it by their employers, then it’s obviously creating the right conditions for a negative customer experience. It’s time for business owners to walk their own path and stop blindly following the leader.
Suspect 2: New salesman
Problem 2: Entry-level training & experience standards
It takes just a few days to get your basic real estate registration in any one of the 8 Australian states and territories (Not including external territories). Think about that for a second, that means, on Monday the 1st you decide to entertain a passing thought; you’re going to become a real estate agent. Just like that, without having had any prior experience in anything remotely relevant to selling real estate, you enrol in a real estate course to complete a basic 3-5 day accreditation. Just to be clear for those of you who have not worked in real estate before, here is a list
of the jobs a real estate agent will typically encounter within the first 12 months of their sales career:
- Legislation
- Administration
- Customer service
- Telemarketing
- Door to door sales
- Sales and negotiation
- Client relationship management
- Electronic marketing
- Advertising and marketing
- Finance
- Economics
- Building, construction, home improvement
- Building inspection
- Conveyancing
- Photography
- Interior styling
By Wednesday the 10th, you have a job working for a local real estate agency desperate for more sales staff. The boss throws you a bone to get you started and on Friday the 12th, just 12 days after your passing thought, you are sitting at the kitchen table of a stranger’s most valuable financial asset using script and dialogue you’ve just learned from the office gun (stay off the Westside – Cookie Kwan) and marketing material provided to you by your employer which still has the old salesman’s name on it (‘ol Gill) trying to solicit business, charged at the office mandatory minimum of 2.2% – just over $12,000 commission on a $580,000 property.
Let’s hope the property owner does not employ you and throws you out on your ass, because although you may believe you are the reincarnation of Hercules, it’s more than likely that you are not a Greek demigod, instead, you are just an inexperienced mortal, incomprehensibly under prepared for the tasks and responsibilities which now lie before you.
The odds are firmly stacked against you as you compete with seasoned salespeople for your commission-based salary, what will you do to get the business and make money? Whatever it takes? What does that mean? You are now faced with a significant moral dilemma; If you get the business, in your heart of hearts you know you have never done this before, or anything like this – how will you justify the responsibility of selling this persons most valuable financial asset? You decide to push on, convincing yourself that there is actually nothing wrong with learning as you go. But what you have failed to realize is that the night is dark and full of terrors, it could take months, if not years, for you to acquire the skills of combat necessary to drink in the majestic halls of Valhalla. But you’re not going to let a little thing like the risk of severe malpractice stop you now are you, not when you are so close to winning your first listing! It’s a rookie error, which makes sense for you at this stage of your sales career. Rest assured, your mistakes will become painfully obvious to you when you miss a turn and drive your passenger off a cliff. After the crash, you’ll dust yourself off and decide you don’t want to drive cars anymore. No harm done, not to you at least. Unfortunately for your passenger (the property seller), they are lying still and motionless amongst the trail of wreckage left behind you.
I suppose congratulations are in order. You have just contributed to one of the largest problems facing the Australian real estate industry in 2015; low entry level training and experience standards, poor ongoing training and support (on average) and high industry burn rates; meaning that people
who enter the industry on average don’t stay very long. The good news is you still have time to stop all this from ever happening, if you resign now you can enjoy the moral high ground as you seek out a sales position with less responsibility. Until one day, when you return, ready to take back your rightful place (from Scar) as King. So for all of you real estate agents out there currently punching above your professional weight, don’t just get in the ring and think you can box (Brian O’Conner). Step out of the ring now with some professional dignity, or don’t step in at all. Either way, don’t wait until you get knocked out to recognize this isn’t where you parked your car.
Suspect 3: The property seller
Problem 3: Employment
Sometimes people choose to employ someone terrible, then act surprised when the results are terrible. What’s interesting is when people choose to blame the terrible employee for terrible results, which is like blaming Leopards for having spots. It’s not legally required to use a real estate agent when selling a property, it is your choice which real estate agent you employ – based on who you think will add the most value to your property. Use the significant resources at your disposal to choose the right one. Google can help you understand who your local service providers are and what is happening in the market. Friends and family with recent experience are also a good source of information. In any case, it’s time to stop blaming the cold when you forget to bring a jumper guys.
Suspect 4: A competitive market
Problem 4: The nature of competition
Let’s assume, for all intensive purposes, that for every 1 property on the market for sale, there is 1 real estate agent and 19 potential property buyers.
19 beauty queens…1 crown…Que tears. In this example, for every 20 people active in the real estate market, only 2 people can realistically be happy with the end result:
- The property seller; &
- The property buyer
But even for the lucky few, happiness is not assured. It is not uncommon for the crown to be made of thorns – and whom will the 18 unsuccessful beauty queens blame for their mascara stained cheeks?
The truth is, as the Australian real estate industry exists today, no matter how much it improves, it may never escape its fate – forever cursed by the nature of competition and mathematically destined for the Roy Morgan relegation zone.
…Need I go on?
Metathesiophobia
Metathesiophobia can be defined as the fear of change or changing things. Me? I’m scared of plenty of things, like deep water (which honestly is absolutely terrifying) so I can understand why some (the majority) of real estate agents are scared of change – no judgement here. But what are they actually scared of? I’m scared of large animals that live in deep water which can literally eat me. Real estate agents are scared of being made redundant and not making money – almost as though they are seeing change through the eyes of a 16th century villager watching Hermione Granger, Ron Weasley and Harry Potter fly overhead on their broomsticks shouting Avada Kadavra (a-VAH-dah ke- DAH-vra) at their top of their lungs as flashes of green light shoot from the ends of their wands. But can that even happen? I think there will always be a demand for premium services – I believe a more accurate question to be asking at this point would be around what level of demand will exist in 10 years time – not if demand will exist at all. What will people want? What will they need?
In Canberra, there are 1648 registered real estate agents and only 52 suburbs – approximately 31 real estate agents per suburb. The demand (and requirement) for real estate agents services in Canberra is exposed to change. I speculate that the number of real estate agents operating in Canberra’s real estate industry will go down as change starts to take affect. Is this a bad thing?
So how do we overcome our fears? For me the answer is simple. I won’t be a deep-sea diver or join the Navy – Unless a radioactive (Tepco branded) fish bites me while I’m on a field trip taking photos of my crush and I become the Spiderman of the sea. For real estate agents the answer is also simple. Re- design your business model so that change is not a threat, but an asset.
The relationship or the fear?
The Australian public does not like real estate agents. Real estate agents don’t like not being liked. Real estate agents also don’t like being scared, which is more than likely why they don’t like change. Turns out there are about 10 core issues leading to this dysfunctional relationship. Most of these issues are solved, improved, or, completely removed by change.
The irony in all of this is obvious. The ‘change’ that can help improve the relationship between the Australian public and real estate agents is the same change real estate agents are scared of embracing. So the question is…what’s more important? – The relationship or the fear?
Who threw that?
The way business models are designed right now means that most real estate agents provide services to the Australian public within a very narrow scope, just outside of this narrow scope is the potential to repair and improve their broken relationship. But as with all relationships, rarely is it the case that one side is completely to blame. The Australian publics satisfaction is also relative to their choices, not just real estate agents
services. Both parties must hold responsibility equally if they wish to live happily ever after. The Roy Morgan Image of Professions
survey does not allow this important detail to come to light within its line of candidates and questioning. More importantly, business models and professionals alike operate within the boundaries of inconsistent state and territory legislation (as opposed to a single federal legislation), administered by registered training organizations, created and regulated by both state, territory and federal government – who are elected by the people, accountable to the people (supposedly). So who threw that damn spaghetti at the wall? We all did.
Sam Joel
Real estate industry blogger
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