Property Natter – what does agency look like Down Under?

In my last Natter, I explored the differences between estate agency in the UK and the US with the help of Harry Wilson from Stoke-based Sky Property.

Here, to get an idea of what the agency world looks like in Australia – another country with deep-rooted historical and cultural ties to the UK – I speak to Lisa Novak, director at Sydney-based Novak Properties, and Sam Hunter, COO of challenger portal Homesearch, an adopted Brit who has worked in both property markets.

A different way of doing things

In Australia, there are dominant property portals equivalent to Rightmove, Zoopla and OnTheMarket. But, when it comes to realestate.com.au and domain.com.au – the two biggies over there – the vendor pays for the advertising/listing rather than the agent.

Lisa says there are pros and cons to this approach, as the risk moves to the seller rather than the agent. It varies by location, but typically a vendor will pay 2,250 Aussie dollars for a listing on REA and around 1,600-1,800 dollars on Domain.

Lisa herself does something a bit different, selling a lot of her stock pre-market on Facebook, Instagram and LinkedIn.

“Some agencies say there is no other option, that the portals and traditional agencies are the only way,” Lisa says. “For me, there has to be another way. All the eyeballs are sitting there on social media. You must be able to get it sold. Plus there is no risk there, because it’s free to list.”

And some similarities…

Australian agents, by and large, employ the same commission-based system as the UK, with the seller paying the fees. It varies from area to area, but is usually between 1.6% and 2% plus GST (the Aussie equivalent to VAT).

Like the UK, there are a number of major corporate players – including Raine & Horne, LG Hooker, Ray White (Australasia’s largest real estate group) and McGrath – but a growing number of independents, too, as people seek a more individual, personal approach. 

Global UK agencies such as Savills and Knight Frank both have presences in Australia as well.

“Most agents work for a company, but this is starting to change a little bit,” Lisa adds. “It used to be very company-focused, now agents want more individual control, more identity. Even franchisees want to create their own identity, rebranding while remaining under the umbrella of the franchise company.”

Why didn’t Purplebricks work?

Last May, Purplebricks – the UK’s biggest Marmite agency – announced on the same day that co-founder Michael Bruce was leaving the company that its Australian operations would also be shutting down with immediate effect after a disastrous overseas expansion.

Purplebricks launched its Australian arm in August 2016, but the company said difficult market conditions in the two and a half years it was operating there – ‘combined with some execution errors’ – had resulted in the business not delivering the progress the board expected.

But how was the company viewed down on the ground, by the companies it was aiming to compete with?

“There wasn’t enough on the table for the agent,” Lisa says. “We do everything. That is part of our jobs. The marketing, the photography, the open houses, the advertising, everything. Absolutely everything through to settlement (completion).”

The lack of this requirement from Purplebricks – which typically relies on local property experts covering whole regions, and leaves viewings and sales negotiations to the seller – meant the firm attracted the wrong type of agents.

“As a result, there was a terrible stigma attached to it. It was seen as a joke, ridiculed almost. If you saw a Purblebricks board outside a home, you laughed, you knew it wasn’t selling quickly.”

Lisa says it was seen as a ‘cheap and nasty’ brand, which ultimately proved its undoing. While it has undoubtedly appealed to consumers in the UK, even if there are considerable criticisms that could be levelled against it, it clearly never repeated this positive brand recognition in Australia.

How are agents perceived?

The popular perception of agents as greedy, immoral and in it for themselves is a global thing, and not just something that UK agents have to suffer, according to Lisa.

A working mum who was voted the Most Innovative Person in Real Estate 2020 at the REB Awards – the Australian equivalent of the ESTAS – Lisa has been working in real estate for 18 years, but has only been in sales the last two and a half years.

“I saw a lot I didn’t like. The industry as a whole was stuck in a time-warp, with it being more about the agent than the people. So I have tried to take that and do things differently.”

There is still a stigma attached to real estate agents in Australia, she says, much like their British counterparts. “It’s seen that they make so much money without working hard. That’s not true. I can easily do 17-hour days.”

What does the average day look like?

Novak Properties is based in Dee Why, a coastal suburb of northern Sydney, and has a very different office which includes a six-metre marble antipasto bar which doubles up as a reception counter serving cheese and salami platters, freshly brewed coffee and fresh beverages. This cool vibe is replicated in a stylish, glossy website.

But what does Lisa’s average day look like?

“I do a lot more than the average! It starts at 5am. Usually I have 3-5 appraisals and lots of buyer interaction, with 100-plus calls a day. Sales-wise – it’s between two to six sales a week. I also focus heavily on social media, with four to six hours each day. That’s my biggest portal. We still use the main portals, but 70% of my properties sell through social media.”

Now to Sam Hunter, who has made an excellent impression on the UK property industry in recent years with the launch of Homesearch and his work as a mental health awareness advocate.

Here, we discuss the differences and similarities between the UK and Australian property markets and the biggest shock to the system he faced when switching from one market to another.

Having spent the last decade in property, first in Australia and now in London, he is in an excellent position to pass judgement on how the two markets differ.

“The first thing I noticed when I started working here was that it's so much more about the company than the individual,” he tells me.

“'Real Estate' (I still call it that) in Australia is about one-to-one relationships and recommendations, personal service and near on 24/7 responsibility and accountability.”

The classic agent line all over the world, he says, is ‘we know property is really about people’, but he thinks it's something that Australian agents really keep at the centre of their focus.

“The home is secondary. It only really comes into it at the point of listing. Until then the focus is purely on the people and building those genuine relationships.”

Priority one for Australian agents is building and working their database. “I think because we’re a smaller population, and have a less transient population, we never had the volume of enquiry or transactions that perhaps some UK agents did. It focused us to develop better habits, geared towards the long-term. That said, the best agents here are doing this too, and reap the rewards regardless of the market.”

Another difference, he argues, is marketing costs. In most parts of Australia (it's different in rural areas), the vendors themselves pay for their own marketing. This is known as vendor paid advertising (VPA).

“VPA allows an agent to learn very quickly who’s a motivated seller and who isn't. It's a wonderful mechanism against overpricing a home. So many vendors are willing to list their property above the market here because they have no real skin in the game. And it's the agents who suffer publicly. In Australia, there aren’t many vendors that’ll risk $3,000 by listing 20% above the market.”

Other differences, according to Sam, include ‘photosign’ boards, open homes (the best way to build a database if done right), auctions, conferences and training, development pathways, and effective business units.

Any similarities?

“Companies [in the UK] are starting to realise that if they invest in their staff, and allow them to build their own personal relationships that they won’t just ‘leave’, but they'll actually flourish, and the business will too.”

“I’ve only been in the UK for five years but I talk to agents who’ve been working for 30-plus and they all say it’s the most exciting time to be an estate agent, in any model, since they've been working. Change happens slowly, until it doesn't. And that time would seem to be now.”

Is the Australian model more akin to the US than the UK?

“I am going to sound perhaps too parochially Australian here, but I would say the US is more akin to Australia. I think Australia (and New Zealand, too) set the standard for property marketing and service worldwide.”

“The States and 'Straya are definitely closer aligned in terms of personal agent marketing than most other countries. As well as agents (and their companies) investing heavily in ongoing training and development to make sure they are always evolving and stretching their best.”

But from there, he says the UK and Australia have more in common.

“Average commissions in the US are 6% (split between selling and buying agents). In Oz, the average commission sits somewhere around 2.5% (though the best agents are up around 3.5% and their clients are happy to pay).”

What was the single biggest shock when you switched markets?

“Income (and even income potential). I've never only been motivated by money, but it definitely allows you more freedom in life when you have more of it.”

“Agents in Australia often work on a commission-only basis. This sounds scary, but it’s actually freeing. You can completely control your destiny. If your mindset is right, and you're willing to work, then you have no ceiling for the kind of business you can build and income you can generate.”

He says commissions range from 40% right up to 90% of the gross feed depending on your company and the structure they offer.

“When I was told in my interview with my former employer that negotiators (in the UK) were paid a basic salary of less than £20k and then 10% commission on top my first thought (for any Arrested Development fans reading this) was ‘I've made a terrible mistake’.”

He adds: “I still can't quite understand how anyone can make a living and build an actual career on money like that (or even want to).”

“I can appreciate there was a machine behind me facilitating a lot of my success, but an earning structure so low doesn’t encourage creativity or loyalty and I think it’s where a lot of the industry here comes adrift. Pay structures have lost more great agents too early in their careers than any bad market ever has.”

How are agents perceived in Oz?

“Wherever you go in the world, I think there are agents who operate in such a poor way that they tarnish the rest of us,” Sam says.

“That is the sad reality of a largely untrained, unregulated (and in the UK, unlicensed) industry. People see TV shows about agents who drive nice cars, wear expensive suits and spend their days drinking coffee or touring houses. The reality, as we all know, is much different.”

Overall, he says, agents are better thought of in Australia than here. “But I would say that's largely due to the barriers to entry and due to the fact that there’d be a world-class agent in every market. It's harder to come in and survive if you’re crap.”

“Australian vendors and landlords are conditioned to ask twice when presented with a 'no-catch low fee' whereas here they think that’s the best deal for them. Agents in Oz are forced to continually improve their offering, rather than just lessen their fees. That, in turn, builds a better reputation. It's a positive cycle.”

Great answers, Lisa and Sam! Many thanks for your contributions.

Until next time…

*Nat Daniels is CEO of Angels Media, publishers of Estate Agent Today and Letting Agent Today. Follow him on Twitter @NatDaniels.