time to say high again and to keep you up to date with what
I've been doing and with some of my thoughts about the real
estate industry, now I've had a bit of a national sample.
It's been incredibly fascinating travelling around the country
working with some dynamic business owners and their sales
teams. Throughout New Zealand there are some fascinating
strategies being implemented to gain that elusive competitive
The most notable is the move to drop the costly strategy
of "bums on seats" to get market share. The new
entreprenurial operators have quickly realised the huge
cost of lost opportunity, marketing and space provision
for people who are simply not productive. Rather there is
a move to greater individual productivity through close
management, coaching, accountability and by recruiting your
best people away from you. That also implies a new recruitment
strategy, but more of that later.
There is also a move away from letting sales consultants
have their own personal assistants. These operators see
the need to control both the quality and quantity of what
leaves their offices. So they are seeking to reduce payouts
to sales consultants, to improve internal systems, to provide
positive and innovative work environments and to ensure
sales consultants are not tied up with paper and administration.
This means more support personnel but the sales consultants
are free to focus on productive tasks and the business owner
has control of what's going on.
In some towns the market share is being captured by independent
entrepreneurs. They know their destiny is their hands and
they are acting accordingly. It appears they see a danger
in abdicating the responsibility for the "latest idea"
or the "success recipe" to any marketing or franchise
group. These independents seem to possess an ability to
change quickly and their internal culture reflects the need
to challenge some of the industry's traditions. They lack
the national brand power and networks of the national groups
but they appear to make up for that with energy and passion.
Whether the law is changed or not I predict a drastic drop
in the numbers of sales consultants over the next three
years. This will come from 2 strategies. The one I mentioned
earlier regarding more productive people in more managed
environments. This will leave less business for those who
persisit in the mediocre levels of much present individual
productivity. The other is the change in how we recruit
being brought about by two phenomena.
1 The traditional sources of recruits are drying up. Traditionally
we recruited plenty to find a few good ones as there were
plenty of people willing to give real estate a try. More
about this in a later communique.
2 We will have to compete with other industries now to get
the new breed of productive and skilled people. The people
we need don't have real estate on their list of career options
yet. It will take a change of recruitment strategy and perhaps
method of remuneration to obtain these people.
Once they are on board and work at new levels of productivity
that will simply not leave room for the traditional sales
In the meantime everyboby is trying to recruit everybody
elses top people .
The average buyer and seller (aged 38) is generally more
techno-literate than the average sales consutant (aged 52).
This means the client may know more about what's on the
market than the average sales consultant.
This gives the client the ability to eliminate contact with
sales consultants for the purpose of sorting to a short
list. This may avoid some contact totally and reduce the
income of those sales consultants who still rely on leads
from floor time and any remaining company paid advertising
It's clear too that there will be more acquisitions and
mergers with the beginnings of parallel branding already
evident. This provides a scale of economy by reducing total
overheads whilst increasing the gross fee pool. It has to
watched though to ensure there is a continual growth in
sales consultants productivity and incomes otherwise the
recruiting wheel will have to keep turning. There will also
be more co-operation between companies rather than the tendency
to compete with exclusion at all costs. Indeed there will
be marketing (master list) or even local MLS groups appear
as a strategy to replace competence on obtaining good stock.
I suspect too that there will be more closures and none
of the groups will be insulated from this. The distiinctly
average operators will simply be left too little business
by those who adopt the competence/productive combination.
The challenge will be whether the national groups will replace
their losses with the strong independent entrepreneurs or
whether they will take the next cab off the rank. The other
question is whether the strong independents will continue
to grow their businesses on their own or whether they will
see a value in belonging to a national franchise or marketing
group. Could be a bidding war here.
There is also a rush to start new property management divisions.
Perhaps the lessons of 1998 which showed the value of having
other revenue streams have been remembered. However over
the last 18 months the strong have built their propery manangement
portfolios by acquisitions from those operators who needed
the cash. This field will show increasing competition as
the new entrants seek to make this aspect profitable and
the strong operators use their marketing muscle to compete
for additional business. Accordingly the value of property
managements could rise.
So those are my thoughts for now.
I'm taking a break from the 3rd Sept until Friday 17th Sept
because I'm getting married again on Sat Sept 4th. Yep Darrel
and I are doing the right thing and we will be away for
a couple of weeks somewhere warm.
Darrel finishes with Colliers Jardine this Friday and will
be working with me in the business from the middle of Sept.
I'll be in touch as soon as we get back, but don't forget
I'm here until the end of next week if you'd like a chat.