My co-hosts are Pete Matthews (CEO at Realtair & President of the REINSW) and Phil Tarrant (MD at REB Online).
Join us for an in-depth discussion of significant insights from the 2023 Macquarie Benchmarking Report and how this impacts you.
The #TechTuesday training series is a collaboration between Tom Panos & Realtair
My co-hosts are Pete Matthews (CEO at Realtair & President of the REINSW) and Phil Tarrant (MD at REB Online).
Join us for an in-depth discussion of significant insights from the 2023 Macquarie Benchmarking Report and how this impacts you.
The #TechTuesday training series is a collaboration between Tom Panos & Realtair
numbers are building up, beautiful so it's the White Shirt Tech Tuesday.
Speaker 1:White shirt. White shirt. Who needs a pinstripe prison when you can bring the white shirt brigade? And we pulled out the big guns. We've got with us, of course, phil Tarran, who many of you know, in fact, was, in a recent report, one of the most influential people in real estate in Australia. He's also one of the owners and founders of REB, from the company Momentum Media that analyse the productivity of real estate agents across Australia and produce various reports, including dealmakers, reb top 100, which is what most people are aware of. Plus, you also receive if you don't every day an email and get on that email list to find out what's happening.
Speaker 1:All real estate. And also Pete Matthews, who has just finished his two-year stint as president of the Real Estate Institute and also one of the founders of RealTare. And we're back together for our first Tech Tuesday for 2024, where we bring you everything to do with technology and we are a big believer in tech not substituting but complementing a real estate agent. And today we're going to do a deep dive of the Macquarie Bank analysis of the real estate industry, which they do. They seem to do it, peter, every two years off the top of my head, isn't it? It's not a report that comes out every year.
Speaker 3:Nice thought. It's a pretty comprehensive report across a lot of the Macquarie Bank customers and some big businesses in there, Tom, so it's some pretty interesting data that came out of that.
Speaker 1:Yeah. So, pete, you did a summary of the report. Phil, I sent you the main elements of the report that we're going to discuss. We're all going to chime in. It's now 4 o'clock. We're going to aim to go in at 4.30.
Speaker 1:Phil Tarran raised a very good point before we went on air. He says why are we doing this? And I said, oh, educate the agents. And then we said, oh, step after, that is hey. If you see that some of these issues that come up in this interview are impacting you and you want to solve it, you might find that real tear solves some of those issues. Maybe not all of them, but many of the most important. How did you feel, pete? How did you feel about when you read the report? And I know you spend your life is spent helping real estate agents understand tech better, listen to more real estate, make more money, have a good life, but you also auction a lot of real estate. In fact, where you are right now, you're at one of our big real estate operators, constipopoulos, from the McGraw Group in that Parramatta area, and you told me he's got on February 3rd. That's a quick start to the year.
Speaker 3:How many?
Speaker 1:options, have you got?
Speaker 3:No, they've got 130 onsite auctions on February 3rd, that single day, which I think has got it. I don't know if there's you know some 130 auctions.
Speaker 1:Yeah, Real estate office on February 3rd. Just to give you an idea, there used to be real estate agents in Australia that wouldn't actually do an open home until after Australia Day. Yeah, the world's changed. I actually think what happened this year if Christmas hadn't come along, agents would keep signing contracts. Because what I've learned and I reckon real tear, I think COVID's been part of it people now actually feel like it's not this four weeks that we have off, we're on the phone, we're doing deals and to me, I can't get over how many people started work basically on the 3rd of January again this year.
Speaker 3:Yeah, it was what was interesting just on Conn and his team. I mean they've done a stellar job to plan that event and to, I guess, get owners. They had quite a few owners, tom, that were signed up well before the year it ended, that were scheduled to go to auction on the February 3rd, but yeah, they haven't let any public holidays or any breaks impact what they're doing.
Speaker 3:There's seen some really strong numbers too, like the average amount of people coming through opens in their first weeks were 10, but there were some with lesser numbers and some with a lot more. But that's pretty good across that big broad number. But just anecdotally, because you just reminded me of something, is that? I mean I think we are partly responsible giving agents tools that they can use remotely.
Speaker 3:But also too I think what was really interesting is this year is I looked at all of the prospecting numbers to see if agents were prospecting early in the year and in the first 10 days of.
Speaker 3:January. There was more prospecting done in the first 10 days of January than there was in the entire month of January last year. So I think agents have definitely understood that the end of the year might have presented a few challenges, and one of those was a bit of a lack of stock, and that everyone's been out actively prospecting, trying to find and ensure that this year is not going to be as stock light as it was last year. So there's been plenty of activity, not just in the listing side of it but definitely in the prospecting side of it too.
Speaker 1:Look, 62% of people in this study by Macquarie Bank, the largest study of real estate businesses in Australia in recent time. 62% of their expenses are occupied by staff salaries and commissions, and Phil also. I'd love you to weigh in on this, because you run a. How many staff you got in your business, phil? It's a lot more complicated. A couple of hundred? Okay, a couple of hundred, right? So 62% of expenses are occupied by staff salaries. It went on to say staff attraction and retention consume significant focus for principals. Rising staffing and wage costs 69%. Finding and recruiting new staff 60%. Property management retention 53%. It appears that it's all to do with people, people, people, problems, people, staffing and Pete. What are your views?
Speaker 3:Yeah, so, look, I saw that as probably one of the pretty big highlights out of that report and it's probably no surprise, I think, to most principals listening to this that there's been a pretty big increase in the expectation of staff. I guess when you look at it you've got not just on the property management side there's definitely been that.
Speaker 3:I mean property managers. I don't think you could ever pay them enough. It's such an incredible and important job that they do. But more particularly on the sales side, where you've seen an increase in expectation from the salesperson to get more share of that commission wallet. So that was an increase on the last time the report was done, which I think you're right, was about two years ago.
Speaker 3:And anecdotally, it's felt like that has been the case because there has been a lot of new models that have come in that are maybe a little bit less touch but certainly pay a lot more, and then that's translated into the traditional model and probably the area that's put the most pressure on You're going to pay your salespeople more, or your fixed costs aren't moving too much.
Speaker 3:So really what you're doing is just eating in your profit margin. So finding that 63% of you know all principals were worried about that part of the business wasn't a great surprise to me at all.
Speaker 2:Yeah, phil, your views. Well, thanks, tom, for forcing me to read this report, because I probably wouldn't have done it otherwise, and it's been a great and able to, so I do have by way of disclosure. Thank you for that nice introduction about me, tom, and I have a report, two things Number one I am wearing socks. And the second point I have a big focus on productivity inside of our business and I see inside of our integrated marketing media company exactly the same parallels what we're seeing inside of real estate agencies based on this report. My team are already sick of me talking about it and we're only really a week or so into this calendar year and productivity and productivity is going to be the key mantra that every single person inside of real estate will be talking about this year and beyond.
Speaker 2:If you haven't yet read this report, you haven't had access to it. No doubt, tom, it's available in the notes or somewhere other. Do yourself a favour and go and read it. You would have seen, tom, just very quickly before Christmas, that momentum increased stake in managed the property management platform that removes trust accounts from real estate. So I have a bias towards the property management side of things as part of it. But I see in this, on the agency side of things that we're real to will be a great enabler, is that you really got to empower people to do the people jobs and you got to be leveraging technology to do the heavy lifting. And if you're not doing that, you're not doing that real estate, you're going to be chasing your tail.
Speaker 2:What was really important to me as part of this report is a headline number one productivity. Number two efficiencies. But number three look where the clues are successfully clues, tom, as you know the outliers where they're performing. They've got they've got more properties under management per property manager and they have more sales per agent and it's pretty simple the equations running a real estate office or agency. Go out there and find those dynamics that work and chase them and look towards technology to drive.
Speaker 2:That would be my summary is all part of this. There are agencies out there in the trend. There's a lot of a lot of stresses on revenue. At the moment, agency commissions are down. I was quite alarmed by those drops, tom. I think 1.65 is the base number now for real estate commissions and property management commissions are down as well. So the key point for this is that you need to understand what your value proposition is, and it's not price and it's not what you're charging commissions, it's everything else, and that's the productivity of the real estate agents and those agents that leverage technology the best. That's my quick notes on it.
Speaker 1:Yeah, well, I've got it. I did a session this morning with a bunch of people. The guy wants to go from 700 to 1.2 and he was saying, oh, I need to go put someone on. And then we sat down Pete, you'll be fascinating. I said, before you go off and pay someone 70, 80 grand, can I ask you what do you want this person to be doing? Have you got a job description? And he goes no, I haven't.
Speaker 1:I said well, we've got five minutes left on this coaching call, let's do it together. So I had my remarkable there and I shared my screen. I was drawing it up. At the end of it this is what came up. He wanted someone to send out free listing kits. He wanted someone to do, you know, nurturing database, price updates. He wanted someone to be doing the admin, signing contracts.
Speaker 1:I said listen, before you go any further there, I've got to tell you there are tech things that you can do now that you don't have to outlay 80 grand. I go, you can just go off. And I said you know, by the way, I said I'm doing something with real tear the Sarva. I said have you thought about getting real tear? Get ready for this, Pete. He goes, no, we've got it. And I said, because it must be a few people like that, oh, no, we've got it. He goes we're paying for the, for the tech stack. And I said so what you want to go off to is spend another $80,000, right? And you just told me I saw an agent here in Byron Bay doing deals on Christmas Eve, on the 24th mate.
Speaker 1:He was doing it all off his mobile phone, getting the person assigned sign the contract, happy days, and he was heading to the beach hotel to get pissed afterwards. He goes is this too good to be true? He goes. I just exchanged it and he goes. I haven't even been in Melby's from Melbourne. I haven't been in Melbourne for three, four days. He says, and I'm still doing deals.
Speaker 3:Yeah, and look, nothing gave me pleasure, mate, more than seeing the fact that we see the numbers nationally and you see the talk about productivity. He feels just talking about that. Here's an agent who's in the board shorts to do deals, not running around trying to get contracts exchanged or sending off agency agreements or dealing with staff around all that stuff. They're just doing it all directly from their phone, which is great, I would say.
Speaker 3:though like to that agent the amount of times that I think we just automatically default to what we know, so that when you feel like you're a bit overwhelmed and you need help, you go oh, what I'll do, I'll just get a person to thrive that problem, without sort of understanding either what tech is available. And even before we start looking at everything outside, look at what you've got. I mean, we've actually spent the last probably six months and we're definitely focusing this month is that we're getting rid of the word demo from our vocabulary and talking now about workshops, like it's pointless having technology and even paying for realtor if you're not getting value out of it. So how do you drive value? Well, you've got to be having agents perform activities and feel. Talk about productivity. Well, what productivity do you want?
Speaker 3:If somebody wants to write a million dollars in comm, then they have to sell a certain amount of properties, and if they're going to sell a certain amount of properties, they need a certain amount of listings. If they're going to get listings, they need to do appraisals. If they're going to get appraisal, so they need to do prospecting. It's not rocket science, it's pretty simple. And the difference is, I think, in most cases, is that is that one there is no plan to. If there is a plan, the plan does not go as deep as saying what prospecting do I need to do to drive the appraisal activity, that I need to get the listings which will generate the sales which will give me the sales column. And it's that kind of, I think, discipline that you know we've lacked before. And so what? We automatically default to is.
Speaker 3:I need to get a resource that can help me with all these things. If people just start looking at the very basics of what they got now and start with the, what we used to do back when we were listening to Selenton is that you say how can I create a system where I can talk to more people and give them information that's meaningful? You've got tech that can do that for you now that does provide that and does create a measurement and does give a principal transparency to hold that salesperson to account. And it's just what we did a business plan for an agent the other day who wanted to write half a mill based on a million dollar sale price with a 1.9% commission average, which was theirs, so marginally higher than the state average.
Speaker 3:They had to do seven price updates a day, 48 days a week three days a week. So 48 weeks a year, three days a week, seven prices updates. Three minutes ago it's 21 minutes worth of prospecting, so it's not a big ask.
Speaker 2:And then I said, oh, what if I want to do a million?
Speaker 3:We'll do 14.
Speaker 2:Is it that mechanical, peter? I'm a lot of. I've never sold a real estate on behalf of anyone in my life. Is it that mechanical? Because what you're talking about here is productivity and efficiencies and leveraging technology to do it. Can you structure it that way and it's predictable the outcome that you will get.
Speaker 3:Yeah, yeah. Well, look the thing, I guess the caveat to all of this and you look at the I guess the queries in this Macquarie bank report where principles are concerned about retention of stuff and paying it out and all the rest of it. You look at it and you say, okay, well then, how does somebody create a plan? Most people feel in real estate don't have a plan. They have a plan of what they want to achieve. They just don't have a plan of how they're going to achieve that. So I'm certainly not saying that tech is going to replace any relationship at all, but what it does. And to go back to Tom's early point, we first came on board it's an enabler. So if I've got a thousand people or 2,000 people on a database, I can communicate with them and give them information that's relevant to them. We know two and a half years of price update data. One in 10 of those generates a market appraisal.
Speaker 3:So if you send the price update and you either make a call before to let them know it's coming or you send the price update and you make a call after to talk them through that report and then you then schedule that. You might decide to schedule it every three months or six months or whatever. You will end up with one in 10. That's just the statistical average nationally. That will turn into an appraisal. Now whether that appraisal converts to a listing, that's where you've got an appraisal to list conversion.
Speaker 3:If you look at the industry average, that's around about 30%. If you are doing a lot more prospecting, that might drop a little bit. It might come down to that 2025. And if you've got a listing, you know that your conversion for an auction versus a private treaty might be a 10% variable from, say, 90% to 80, 90% for auction, 80% for private treaty within the agency period. And you know what commission is and you know what the sale price is and you can work out what the gross comm is. So it is. It doesn't mean that your plan is going to follow exactly that formula, but that plan and putting that process behind that plan certainly gives you a much greater chance of success than what's currently, I guess, probably the norm.
Speaker 1:I think drifting that. Listen, not every flight is going to get to their destination at exactly the time that is actually up on the screen, but it is going to get there and I think it drifts in that direction and I think that's what a plan does. And I'm looking at this report here. This is another thing that I've taken out of it 47% of principles are over 50 years of age Right, 47% of principles. It goes on to say that 40% of principles have plans to sell. There's an exodus happening, isn't there? There's a changing of the guard. It appears to be on the horizon.
Speaker 3:Yeah, but I mean you don't have to look into why is it that our principles are getting older? Why isn't it that, like it has been historically, that there's been a kind of refreshing of that? You've had 20-year-old principles that have bought businesses and that have grind them and all the rest. That's just not happening anymore. The thing that I'd probably look to with that is that you as an agent, instead of it being the natural progression to be a principle. I remember when I first got my first share of Walletville just so that you know, I was on a 35% commission payment, which I replaced Tom, by the way. He went and started his own business. I think you might have thought it would be calm that I was then, but 35% and my first commission only job was on it.
Speaker 1:I was being ripped off by the boss You've just made it public. I was on it, so I've got. So so work this out. I'm the loyal guy that was with him for about two, three years. I'm on 30%. He gets the new guy at 35%. But, Phil, do you realise in today's era they would call that slave labor in real estate no one gets paid that 30% to 35%.
Speaker 2:The point I would make, tom, is that Peter's much better negotiator than you and probably a better real estate agent, because you weren't looking after your own rice bowl. But the dynamics and the economics of real estate have changed. You see, those shares now to the agent is increased rapidly, so revenue is fluctuate but profitability is down. It's harder to make money. You've got to do more work to make the money that you're used to because commission rates are down. There's a lot of challenges and, to the point, around 47% of agency principles agents are over 50 years of age goes to a sense around creating value inside of your real estate business, and that's what this whole report is about. Is that? How do you create value inside of your real estate business Now, if 40% of them I can't remember exactly the number are looking to sell within two to five years? If I was one of them, if I had the thing that I looked at every single morning, what I want to achieve today to be how to create value inside of my real estate agency, my real estate business, and how you do that is the key, and how you do that is the art. What I have noticed is the makeup.
Speaker 2:According to this report. Chance of income is moving rapidly towards property management. And the numbers there, tom. Back in 2007, 29% of all agency revenue was generated through property management. Today it's nearly 50%. Nearly half of the revenue generated by real estate agencies is through property management. Why do you think that? Well, if everyone's looking to sell at some point, where do you create value?
Speaker 2:What's a sellable asset you have inside of your real estate business? A lot of it is tied up with your rent roll. Now, with your rent roll the way, there are a lot of the challenges in running it, because it's a tough job. Peter, you made that point. It's a tough job. Even the best senior property managers are shocked by the numbers about $85,000 a year. I don't think that's enough, by the way, for the work that they do. There's pressures there around the economies of it. However, if you're in the business of real estate, and how do you create value? You don't do it by dropping your commissions. You don't do it by lowering your property management commissions. You create value elsewhere, tom. Now, that's why you've got such a big coaching business. Do you ever want to understand how do they create value other than using real estate as a great system to augment the power of the professional.
Speaker 3:Yeah, I'd add to that too. You look at it, phil, it's on the property management side. The fact that the retention of property managers there's more than half of the principal survey are worried about their property managers, and I'd say part of it is that they're concerned about exactly that, about the renumulative side, because it is a really, really tough job. We saw during COVID, really, what the true value of property managers were and I think now that's starting to be translated into property managers understandably recognizing their value. And also for businesses, as you said before, because they're getting so much more of their revenue coming from the property management side, they're realizing the true value of that asset. And equally too, on the tech side, like you've got to have the right efficiencies in place and utilizing technology appropriately in the property management space just as much as you do in the sales space, like it is exactly the same. So, using your platform or others those that are sort of using bits and pieces of things, like I think it's just wholly embracing the software of choice.
Speaker 2:Otherwise you can end up subscribing to too many things without actually committing to really anything, and that's what I think is really and that came out clear in the report as well is the fatigue of trying to run too many different technology systems simultaneously which don't interconnect with each other. And there lies the future for real estate technology is having interconnected platforms that serve different parts of your business. But the point is, tom, how do you build an effective real estate business today? Is that you generate a very good sales business and you pivot that into creating value through a large rent roll business, which gives you opportunities for succession and or sale. That, according to report, that sounds like the way you got to do it.
Speaker 1:Yeah, Peter, I'd love to get your view on it. And while you're doing that, I'm just having, I'm looking at this Melbourne and Sydney, Victoria and New South Wales had a lower property management commission 5.9%. And then you go to it's fascinating, Pete Queensland 7.5% Jumps up there. Go to Western Australia 8.5%, Nearly double.
Speaker 3:Yeah, incredible, isn't it? And it'd be really easy to understand what the multiples of the multiple rate is for property management over there, considering that, like you're getting a lot more per deal over there. So I wonder if that's sort of driving the value as well, because we still haven't seen any massive lifts in property management multiple values. I don't think, and I really think that those that have got a really strong technology base, those rent rolls, are certainly worth more in that multiple.
Speaker 3:But yeah, I thought that was quite incredible really. I mean you look at the sales commissions in New South Wales 1.76% average property management 5.5%. Victoria, that really surprised me that there were a lot less in New South Wales 1.59% versus the New South Wales number which was 1.76%, and also property management still down, you know, 5.9%. I know that it's a little bit better than New South Wales, but that still was a surprising number from my side.
Speaker 2:Don do you think, Peter Sorry, Tom do you think, Peter, that this is as low as sales commissions can go Like and what needs to be done to get sales commissions back up to where they were three, four years ago? Is this the new norm?
Speaker 3:Oh, do you know it's funny. It's a really really good question and I hate to think about whether this is right or not. But if you look at the average sale price of a product, say if you're taking South Wales, if you've got a million dollar sale, which is certainly that's less than the median value it's a $17,600 commission.
Speaker 3:So for a seller to go on page $17,600, that's quite a bit of money when you consider that you've also got marketing. That is then added to that which could be in the vicinity of $5,000 to $7,000. So it's a $25,000 decision to sell a million dollar property. So it's not. I don't think any consumer would sit back and say that that's cheap and I think that it's going to be a really interesting position on the consumer side, because consumers don't really care about the percentage, they care about the cost. I think we spent a lot of time focusing on the actual percentage, so I hope I'm wrong, but I suspect that in two years from now that 1.76 that will be less is it would be my prediction for that reason that I think the consumers will be expecting more. Property prices will continue to rise. I think the cost per deal will not necessarily reduce, but I think the commission percentage will.
Speaker 1:I can't get over. I had a real disconnect with my perception of what I thought the public thought of remuneration of real estate and what they truly, truly feel. I mean, I keep reading the comments on some of the TikTok posts I put up about real estate and the average person says why would I pay 30 grand for a guy with a clipboard outside a house for four weeks just because they decided to be there, instead of us who are at the shopping centre doing our shopping to hear back what they're going to say? We'll do the open home for four weeks ourselves. So there's a view that I think out there in the perception is that a real estate agent, you can get the job done without a real estate person If all they've got to do is sit at an open home, take names and numbers and then sell it to the best person.
Speaker 3:Yeah, I can hear everyone in our industry thinking the same thing as.
Speaker 2:I am.
Speaker 3:What they don't get is what the role is that we have to do and the time that it takes and the fact that we do everything at risk. We provide our labor upfront for no charge until we actually get a result that satisfies our customer.
Speaker 3:So I mean that's something that I don't think that vendor was taking consideration, and perhaps we don't sell well enough either, but that's also part of the reason why I guess our value per deal is probably high in the eyes of the public, because they just don't get that we put it all at risk. I did think it was interesting, though, like in each state, there was a focus of what the three challenges that they had. In New South Wales they said staff wage costs increasing that was 70%. Finding and recruiting new staff that was 62%. And deteriorating economic conditions 86% were the top three things they looked at the things that they wanted to focus on in New South Wales, and this is why I love this report. There's really good insights. 84% said that they wanted to increase their properties under management, which is no surprise from what you were saying before. 57% said improving the efficiency, which is employing technology and improving staff training and development, and 52% said growing revenue from existing clients.
Speaker 3:So trying to get more from the customers they've got rather than searching for new ones. And that was just New South Wales, but a lot of what was after in New South Wales was also reflected across the other states, so I don't know if you guys looked at that and had any insights or commentary around those things, but I thought that was pretty interesting.
Speaker 2:I saw those numbers, pete, and I actually put a big mark against them. I thought they were pretty well considered and observed. I think it comes to this intersection between running a profitable business in search of productivity and, to your point around, how hard is it going to be? For it's funny because real estate sales is measured against the commission that the agent takes at an industry level. To your point and to Tom's point, that the community, the consumer, doesn't see that way. The company sees an absolute number and they have a relationship with that absolute number, as in, that's a lot of money Actually, I could buy a new car for the amount of money I'm paying is the commission for the sale of this house, whereas property management is pinned against the commission and it's universal and the consumer, ie the property investor, that's the currency, how it's used. So you've got these two things working in different directions. Now, property management, businesses inside of real estate if they keep their commission stable, they're going to get upside in revenue because rents are going up and they'll continue to go up in time. That's not happening on the sale side. So you have so many people. There's not a simple transaction inside of real estate because you have multiple different people. We have a buyer, seller and someone sitting in the middle. Same happens on property management.
Speaker 2:So how do you navigate the growth of your real estate business? I do note, tom, that most agencies are seeking growth. So you've got agencies are looking for growth, they're dealing with challenging economics and running a real estate business. And again to me it comes back to productivity. If you're not going to be able to generate too much more money from real estate sales, how do you do that more productively? And I find it quite concerning when I hear comments from Tom where people actually embrace technology but they don't use it. The question I would have for you, peter, is how do you measure that? How do you actually understand the utility of how people are using Realtare, for example, inside of their organization? How do you get them to use it better? And then how do you actually help them measure that productivity increase, because that's going to be the heart of creating value inside of real estate businesses moving forward, which isn't price or commission orientated.
Speaker 3:Yeah Well, I think it's a I don't know that we've nailed that question If we could get every person that signs up to our platform to use every single part of our platform, whether you're a Realtare or a. Crm or anything. It'd be absolutely so. It'd be such a joyous thing if everyone used every part every time.
Speaker 3:What we measure though is we put a health school for each of our customers right down to an agency level. So we're agent level, I should say so. We would say we've got a customer success team that just purely work with those customers, based on health school, just to get them engaged with the platform. The second part of it is that I guess you look at an agent and getting active in any part of it it's the amount of times that they come back to the platform.
Speaker 3:So what are our daily regular users and we don't have 100% of users using the platform every single day, but it's a roundabout. I don't think it's near enough to 70% all there about. So it's a pretty big number and that's another number that we measure and that actually increases. That's been increasing every single month.
Speaker 3:I do think that probably I think one of my most critical things that anybody can do in a real estate business is that you've got to have a plan, and that's what I was talking about earlier is just if you've got a plan, then you can actually and you make that clear, and you make that clear to your team, then that's something that you can measure. It's also something that, once you measure it, you can create an expectation and create accountability, and I think a lot of agents would like to earn more and they probably also wouldn't be too upset with their leader providing them or actually making them accountable, really giving them the tools but actually holding them to account to actually use them. And that's one of our big drives this year is saying what is your plan, what's your expectation, how you? You know we've got the systems to monitor it all.
Speaker 3:Let's make sure that you hold them to account and I've done a couple of sessions, just a bit late with some of our key customers where we've been talking specifically about that accountability to the agent using the software, and the thing about it is they all want to earn more money, they don't want to put their business at risk. They do want continuity, and the one thing that creates a lack of continuity is a lack of consistency. And you know, if they're consistent with their prospecting, everything else falls into place. But one thing, just in terms of commentary, manos Finiacus has made a comment and I love it. You know, volume is vanity, profit is sanity, and I think the thing about it too is is that you know like you've got businesses that are quite happy to promote their multi-million dollar sales profile and there's a great number of listings, but are they actually making money?
Speaker 3:And you know, over the years I'm sure we've all seen it where you see, you know big blasts of these businesses that have got, you know, big profiles and all the rest of it and then all of a sudden, within a couple of years they don't exist anymore and because they're doing it off of sort of unnatural steam and trying to cut corners. You know, our business is pretty simple. We, as agents, we build relationships with people that live in a marketplace. You know, if somebody, if we miss a listing because we never got called in, that's not the owner's fault, it's not the person that lists it, it wasn't the principal's fault, it was the agent's fault that they never introduced themselves to that owner.
Speaker 3:And to me that's a really simple thing that you know. You've got to make yourself your self-account, to build your own business. So I think if we kind of have that lens on, that will improve productivity and agent taking greater responsibility themselves, not expecting that a principal is going to do more things for them other than provide leadership and provide them, if need be, with tools and maybe to measure and hold them to account. It's not a complicated business this game, and you said all the time, tom, it's a people business. It's not a property business, it's a people business.
Speaker 1:So, pete, if you and I were operating today on the commission split that we were on back in 1990, that was roughly the year that this was happening If we were to write a million dollars on 30%, that's 300, is your share, and today, typically if you write a million, it's 600,000. Right, yeah, it's 600,000. And in addition to that, you could probably, with the tech stack that's available now, you could probably get by with getting rid of one less assistant in your team. So that would be another $70,000, $80,000 that you're saving. You'd have set up a company, so taxation will work out a lot better.
Speaker 1:Look, I've got to tell you if you're a serious guy or girl, real estate is not a bad business to be in. When you look around other jobs that exist on the planet, it's the highest paid hard work. It's the lowest paid easy work. I get all of that. I understand all of that and I also get the fact that it takes a special person to be able to go to work. As Peter said earlier on, all the risk is up front. I will take this buyer out, I will work all week and there is no guarantee I'm going to get paid anything. It takes a special person. The average person would rather go working at Politics Men's Wear and leave with 50,000 a year guaranteed than the unpredictability of maybe $300,000.
Speaker 1:Peter, I know that on a tech Tuesday we always try and encourage people who may be sort of sitting there. Oh, should I do it? Should I explore it? Susan, if you can put in the chat box and also on social media, get on a realtear. Is it dot com or dot au? Peter, I have the Christmas. It's dot com. It's dot com. Realtearcom. You're trying to have a crack in. Thank you, susan. You're trying to have a crack in the states Realtear's. Really, I know you're back in New York in two weeks' time, aren't you?
Speaker 3:No, I leave tomorrow. So, yeah, leave tomorrow. Yeah, so I've made a completely different environment over there now, as you know, with the lawsuit where they're now, you know what's going on there, phil?
Speaker 1:There's a change in the lawyer. Quickly, for all our listeners, tell us what's going on there in the change of law in the US, because I see Tom Ferry getting on social media. Relax, everyone, we'll work through this. It's going to be fine trying to pacify everyone. They're all freaking out there.
Speaker 3:I know All that they're really doing. Tom is going from you know the buyer's agent's never been paid a fee directly by the buyer. The listing agent signed up. You know a commission of, say, 6%, almost like it was before deregulation. I remember in New South Wales not that it was ever six, but it was close to- three.
Speaker 1:So that's 100% for the first 102% thereafter. Off the top of my head, that's exactly right.
Speaker 3:But so they're charging 6%. And the seller? So the buyer's agent, the? Selling agent sort of lets the buyer's agent know they've got that this listing they effectively. Then the buyer's agent interests their buyers. Those buyers with the buyer's agent says no fee is paid.
Speaker 3:It's just that the listing commission is split between the listing agent and the buyer's agent which effectively means the seller is paying that full 6%, which means that they're paying the buyer's agency portion of the comm. Now that's existed for decades. There's other abnormalities with that, with multiple listing services and all that kind of stuff which is different to where we operate in a portal space here. But ultimately the Department of Justice took the NAR and all the major companies to court and they were successful in saying that that is a conflict of interest. There will be a course of appeal. That was two years just to get to that point. So there'll be years of lawyers debating it, just like it does in the TV shows.
Speaker 3:But there is a real concern in the industry that they're going to have to, as a listing agent, deal with buyers directly. I mean, that's what we do. We do that every day, and if you're a buyer's agent, you actually have to now justify a fee because you can only be paid by the buyer, not by the seller. So that hasn't. It's not law yet, but that's what they expect is going to happen. So they will just become like us and I think the way that we operate there's a lot for the US to learn from us. There's a lot that we can learn from them as well, but in terms of the transactional prices, that's the big change that's happening there.
Speaker 3:So you might see half of the buyers' agents disappear. The other half will probably become listing agents.
Speaker 1:So if you're a vendor on Facebook, you're probably not on the webinar, but you're on Facebook because I've got a public page. If you're a vendor in Australia or New Zealand, for that matter watching it, you'd feel good to know that you're paying less than half the fee of what a vendor does to sell their home in the USA.
Speaker 3:Yeah Well, imagine if you're a vendor in the USA and you just this becomes law. You go from paying 6% to 3% by instant, and that's the, I think, is the great fear, because you've got some of these businesses that actually have got a buyer's agency side and they've got a seller's agency side, and that's really where the conflict of interest is quite evident. They're getting part of both sides of the transaction, but it's going to be interesting. So I've got a few meetings over there and I love listening to all the fears that they have sitting there and saying, well, this is we deal with this every single day and they find it quite bizarre, but they've got a lot they can learn from us in the way that we transact.
Speaker 1:Maybe while he's there, phil, he can take manage to the USA as well. I didn't realise that you'd increase your stake in that. Do you know what managed this Pete?
Speaker 3:Yeah, it's great software, fantastic software for property managers, and that's the thing too, like it's, you know it's at the cutting edge of the way that property management is done and you look at all these numbers in the Macquarie report, there's no surprise that people are worried about property managers because you need to have software that can help a property manager manage more properties in order to pay them more. Like you can't have it both ways, you can't say, listen, I'm just going to pay you more and you can manage the same amount. You need systems and processes and technology that can actually create efficiency in a way that that property manager operates and software like managed can do that comfortably.
Speaker 2:Pete, thanks for the insights here in America. You've given me a lot more colour to what I knew was going on there. I imagine that's quite a positive outcome for an organisation like yours, because it sounds like agents are going to have to start working a lot differently to how they have worked in the past whether just sitting at the interstate real estate brokers is what they call them, having a calling up your mates who sits on the buyer's agency side to get a transaction done. They're going to actually have to get out there and hunt and prospect and be a lot more customer facing, much like an Australian agent. So they'll be chasing productivity as well.
Speaker 3:Yeah, they will, and I think also too. So I'm just plugging in because I'm going to hire them and lose power here. Yeah, I think that's true. I think it's such a you know for them they don't need to change too much. It's not a major shift. But I'll tell you that I'll probably look more at Tom when I think about opportunities beyond the tech side of it. Like they need to be taught how to engage as an agent who works for both sides and I don't know that we've perfected it here in Australia either. We certainly have our problems. You just have to ask Fair Trading and they'll tell you that they get plenty of complaints from buyers right around the country. But it will be quite an area of opportunity, I think, if it actually does happen, both on the tech front and on the training side, because they're going to need a lot of help.
Speaker 1:All right, beautiful Tech Tuesday, first one for 2024. Pete's going to go off and pack his 20 kilo bag or probably flying business class. You'll probably give him 40 kilos.
Speaker 3:I'm great. Tom is what I'm praying for, so if everyone can do that for me, that'd be tops.
Speaker 1:All right, visualisation Visualisation. Having said that, it hasn't worked for me. In Byron Bay Car spot, car spot, car spot I keep driving around and around and around in circles. Hasn't worked for me. Phil Tarran, we're going to get back together. What's making headlines? Start educating everyone on what's happening every week. I want to thank you so much. This is the report we've been talking about, by the way, is Macquarie Bank Report. I'm going to make sure that we send a link out there that people can get access to that report. And yeah, all the best, gentlemen, and thank you again. To Real Tear for Tech Tuesday. Thanks Tom, thanks Macquarie, for putting that report together.