estate agents are on the endangered list
- 11th September 2015
Committee for Economic Development of Australia predicts
close to 40 per cent of jobs will disappear because
of technological advancements, with real estate agents
one of the highest-risk group. Photo: Josh Robenstone
old real estate agents. A number of companies are
eyeing their mouth-watering commissions for selling
real estate and taking a whack at it.
you consider an average agent's commission for selling
a property is 2 per cent, a $1 million property will
attract $20,000 in selling fees. Some agents can charge
up to 5 per cent in commission. When you consider
how many properties can be sold in a week or month,
you can see why your real estate agent drives around
in the latest Porsche or Lexus.
Group has repeatedly stated that it needs real estate
agents after all, they provide the company
with its largest source of revenues through listings
on realestate.com.au. The listed property advertiser
has repeatedly taken advantage of its position to
increase advertising prices and introduced new, higher
fee products. Ditto Domain.com.au, the property site
owned by Fairfax Media, the publisher of BusinessDay.
most of these are passed on to the property sellers,
there may come a time when agents will have to wear
some of those costs. Particularly as online sites
begin offering many of the same services a real estate
agent usually charges for: Things like providing a
list of comparable sales, an estimate for what your
house might be worth and recommendations on how to
improve your sale price, such as low cost improvements.
websites already provide those services many
free of charge. Others, like Onthehouse.com.au, offer
property profile reports, history of sales, similar
sales, suburb profiles and the list goes on.
the track, even buyer databases could be taken over
by online players after all, they are only
lists. Auctions could be easily conducted online,
so who needs an expensive auction marketing campaign?
another company is looking to take its own bite of
the property market, eliminating real estate agents
the US, around 20 per cent of homes are sold without
an agent and in Canada it's as high as 30 per cent,
but in Australia that figure is less than 2 per cent.
Resources, a tiny explorer, has agreed to buy BuyMyPlace.com.au
and the company that owns it. BuyMyPlace.com.au allows
property owners to sell their properties for just
$650, potentially saving them many thousands of dollars.
estimates that using a 2 per cent commission rate
and an average value of $525,000 for Australian houses,
real estate agents rake in around $7 billion each
year, not including the marketing and advertising
that goes along with it.
you consider REA Group has revenues of $523 million
and Domain an estimated $200 million annually, there's
substantial room for new players to take a larger
piece of real estate agents' commissions.
it's not just property sales that digital disruptors
are targeting. Property management is also under threat,
with BuyMyPlace entering that market following
in the steps of Rent.com.au, REA Group and Domain
offering landlords the ability to rent out their properties
and bypass real estate agents.
like 1Form.com allow renters to apply for multiple
properties without filling in applications for each
real estate agency or property.
physical newspapers were the primary source of all
things in the property market, but print real estate
classifieds have virtually disappeared - taken over
by the disruptors. Online stockbrokers have virtually
replaced full-service brokers, and it would seem odd
now to ring up a broker to make a trade, unless you
didn't have internet access. ATMs have mostly replaced
cars, real estate, property rentals and even general
classifieds are just some services that have been
disrupted in a new digital world, but this revolution
is ongoing. Commercial television and Pay TV is under
threat too from the likes of subscription video on
demand (SVOD) services such as Netflix, Stan and Presto.
have never before had the wealth of information they
do now, all just a few key presses of a smartphone
away. We have been empowered by the digital revolution,
and those industries that have traditionally relied
on old consumer habits may be consigned to the history
report by the Committee for Economic Development of
Australia predicts close to 40 per cent of jobs will
disappear because of technological advancements, with
real estate agents one of the highest-risk professions.
new wave of property sector disruptors suggests their
time may be approaching fast.
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King is a Motley
Fool investment analyst. He owns shares in REA
Group. You can follow Mike on Twitter @TMFKinga. The
Motley Fool's purpose is to educate, amuse and enrich
investors. This article contains general investment
advice only (under AFSL 400691).