Advertisement

Real estate war breaks out in Adelaide

Sep 03, 2014

A real estate advertising turf war is breaking out in Adelaide as local agents bristle at a surge in charges by market leader realestate.com.au.

The News Corp majority-owned website dominates the South Australian market, but it is facing a serious challenge from an interstate player that is offering SA agents the chance to buy into a new sales website.

Realestate.com.au recently increased its fees and introduced a rebate scheme – 7.5 per cent of booked ad turnover – for agents that list with it.

Vendors can only list their house on the site through a registered real estate agent. If the agent books a $2000 ad package for the vendor, the agent gets a $150 commission from realestate.com.au.

And that’s where the happy arrangement may have sat were it not for the entry into the market of a new player – the east coast-based Domain group, part of Fairfax Media.

Domain has bought a Canberra-based website – allhomes.com.au – and is using its model of shared ownership with agents to roll into the Adelaide market.

Allhomes is the leading real estate advertising site in the ACT and surrounding areas in regional NSW.

When the Domain Group bought Allhomes in July for $50 million, Fairfax Media chief executive Officer Greg Hywood said: “This acquisition demonstrates Fairfax’s commitment to invest in growing Domain nationwide.”

First stop in the expansion is Adelaide.

Agents in Adelaide have already received a letter from Domain Group CEO Anthony Catalano marked “confidential”.

“Fairfax Media’s Domain Group is delighted to announce an offer to all South Australia real estate agencies to participate in a new industry-owned real estate digital advertising business,” it says.

“The business will be 50 per cent owned by South Australian real estate agencies and 50 per cent owned by Fairfax Media.

“This is the industry’s chance to create a genuine alternative and put a stop to the widespread concerns over the behaviour of other media companies.”

Interested agents have until 19 September to register their interest – and some have already agreed to buy in.

“At this stage, we have pre-commitments from a number of Adelaide’s largest agents accounting for more than 40 per cent of all property sales in South Australia,” the Catalano letter says.

“The initiative will be publicly launched on October 1 as part of a major advertising and marketing campaign for domain.com.au which begins this month and continues through the Spring selling season.

“The marketing campaign will target greater audience and leads, providing your vendors with even more value for money.

“At the same time, you will receive fair, competitive and consistent rates as part of our commitment to provide a trusted and valued service.

“You will also be treated equally, with all agents offered the same rates in the same geographic areas – any and all offers or incentives are available to all participating agents.

“Equity participation protects against future price gouging because we will partner and consult with the industry.”

InDaily asked several agents what their problem was with realestate.com.au and News Corp’s Advertiser and Messenger listings.

No-one wanted to “upset the apple cart” or end up on the wrong side in the impending war.

“It’s as simple as this,” one senior agent said.

“They got greedy.

“It used to be almost free to advertise online.

“Now, realestate.com.au charges a bare minimum of $600 and it’s the agent who has to upload the content, get the photos, write the copy etc.

“They have increased those charges to a new rate system that’s based on which suburb the house is in and what it costs.

“If you’re selling a $500,000 house, expect to stump up almost $1000 for the online ad.

“We’re not sure of they’re doing this to subsidise the loss of revenue in the newspaper ads or to drive people back to the paper.

“Either way, it’s become ridiculous and that’s opened up the way for a new player, or maybe more.

“It’s bigger than Ben Hur.”

Another agent said there was also one set of rules for the “big players” and another for smaller agents.

“I know one big name in Adelaide who’s getting a 50 per cent rebate on his newspaper ads for high priced properties,” the agent said.

“If the owner’s spend on the ad is say $5000, then the agent is pocketing half of that.

“That’s fine for him, but it’s of no benefit to the actual seller or other agents who want to compete on an even footing.”

Another agent cautioned against the shift to other sites.

“It depends on where the buyers’ eyes are and, at the moment, all the SA buyers are looking on realestate.com.au,” the agent said.

“Unless agents can agree as an entire industry to shift all the stock to another site, then they’ll be forced to stay where the buyers are.

“If they succeed in breaking away, it will blow a hole in REA and News Ltd’s dominance – there’s a lot at stake here.”

Realestate.com.au is feeling the heat and hit back with a written offer to agents “to recognise and reward you for the valuable content you provide to enrich our site, such as agent profiles and sold results”.

The letter, seen by InDaily, says agents will be rewarded with “7.5 per cent on total spend”.

One agent who was happy to talk was Anthony Toop of leading agency Toop & Toop.

“It’s a changing world and there’s lots of discussion everywhere,” Toop said.

“Newspaper ads for example are becoming much cheaper so there may be a trend back to that.

“But there’s also real estate online sites and blogs everywhere and many have their own portal.

“The buyers are often finding a house in the paper and then looking for more info online..

“Keeping track of how buyers make their decisions is the key for the agent.”

Buyer and seller advocate Chris Waterman said vendors should make themselves aware of how they can best spend their marketing budget.

“Most sellers have an idea of what they want to spend; how they get best value for that spend will decide what exposure they get to the market,” he said.

For the big players – News Corp and Fairfax Media – there’s a lot at stake.

If Fairfax grabs a substantial share of the Adelaide market, News Corp will feel the pinch.

The local branch of the Real Estate Institute has not responded to InDaily’s calls.

Local News Matters
Advertisement
Copyright © 2024 InDaily.
All rights reserved.