Peter O’Malley has written a book about the changes in the industry and how agents need to mold what they do to meet those changes, the major one being digital disruption.  Peter joins us to discuss the changes and the impacts we are already beginning to see.

Transcript:

Kevin:  I was interested to pick up a book the other day written by Peter O’Malley. Peter is a real estate agent. He is the principal of an agency called Harris Partners, and Peter’s been in the industry for quite a long time. It is an interesting read because it goes into a lot of things that are near and dear to my heart as well, particularly the changes in the industry and how agents need to mold what they do to meet those changes, the major one being digital disruption. Peter joins me.

Peter, thank you very much for your time, and congratulations on the book.

Peter:  Thank you, Kevin. And thanks for having me along.

Kevin:  It’s a pleasure. The book is called Inside Real Estate. I’ll tell you how you can get it a little bit later in the interview. Let’s talk about digital disruption because there is a lot of talk both within the industry and outside the industry. How has that changed the way agents work from your perspective, Peter?

Peter:  The way it’s changed the agents’ workings, Kevin, is they’ve become a lot more database-oriented than outright advertisers of real estate. Real estate is still advertised, of course, Kevin, but we’re seeing a lot of instances where agents nurture their database and are able to offer vendors an off-market transaction without the need to go to the open marketplace as such.

In some market conditions, I support that strategy, Kevin, and in other market conditions, I question that strategy. If the market is in a full-frontal boom – and the Sydney property market, for example, rose 20% in the last nine months – in those circumstances, I would always encourage an owner to expose their property to the open market because you never know how high the price can go.

But in a slow market – say, what you might have in Townsville at the moment – if you want to sell your house and an agent should happen to pop up with a qualified, ready-to-go, cash buyer off-market, you’re probably well-advised to sell off-market, because the open market is probably not going to be any more generous to you given that, say, Townsville is so flat at the moment.

Kevin:  Interesting, Peter, to hear you make that comment about marketing, particularly online. I don’t know whether you’re aware, but Australia is the most expensive country in the world to advertise on the Internet, and I think that’s a disgrace.

Peter:  I’m very aware of that point, Kevin. I’ve previously written a blog about that point as such. Consumers need to ask themselves what value are they getting for these expensive Internet ads? And that’s a topic that is covered in the book.

That is something that I believe has driven off-market trades in the industry, Kevin, as real estate agents are saying, “Hang on. Why am I going to spend thousands of dollars advertising to buyers who I already know? Why don’t I just cut the third-party provider out?” And that’s an understandable business strategy that agents are adopting to consumers’ benefit and one that I applaud.

Kevin:  Just to stretch that thinking a little bit further, here we’re talking about two major portals – RealEstate.com.au and Domain.com.au – that are charging extraordinary figures to advertise when you can go to the States and it’s next to nothing to advertise on the Internet. I sometimes wonder if there is room for a third player, a third serious player, who’s going to hold both of these websites to account, Peter?

Peter:  I think there is room for it but no one’s been able to execute it, as we all know, Kevin. A lot of heavy hitters have tried to be the third player in this space, and the industry at large has attempted to do so.

At the end of the day,