New real estate agency models bloom in spring

“From the outset, we knew that the way forward was to have one central database throughout the group. This is something other networks don’t do and would find near impossible to try to implement now.”

Unlike franchises, where agents only tap into clients and listings within each franchise, Stone agents can access all properties and locations from one company-owned central database.

They can also access each client record showing a full history of sales and leases.

“This enables all of our offices and team to have a clear and thorough understanding of what our clients’ needs are,” Mr Mumford said.

At The Agency, agents are “contractors”. They work under The Agency banner and pay head office a cut of up to 30 per cent of commissions and keep the rest. They also pay a fee for desk usage.

There are no franchises unlike Stone, but it has a shared client database.

“The Agency’s motto is to assemble the nation’s best agents under the one brand. This ensures that our clients only deal with a premium agent nationally,” chief executive Matt Lahood said.

“The central buyer database is agile and updated in real time and is shared as the ownership is all one, not a franchise with separate owners.”

Ray White and LJ Hooker, still two of the strongest brands, run on a mostly franchise model, where each franchise owner runs the agency independently and pay a franchise fee to the franchise owner. Commissions are split between franchise owner, franchisee and agents.

Ray White director Dan White says franchise models bring out leadership.

“Real estate requires good leadership, and those who have their own business can lead. The concept of a franchise allows them to build their own team and bring them together for the common cause,” he said.

McGrath combines franchises and company owned agencies but founder John McGrath says there is not one “perfect model”.

“It’s all about the people behind the model,” founder John McGrath said.

“We also believe we have the balance right in terms of structure and remuneration.”

REIA president Malcolm Gunning, agrees with Mr McGrath but cautions that while business structures irrelevant, good agent service is crucial as is the need to overcome disruption from the likes of DIY platforms such as Purplebricks or BuyMyPlace.

“The public used to be attracted to the big brands, bit like Mcdonald’s,” he said.

“They had a lot of services than the smaller ones, but it’s a level playing field now. Whether its Cunninghams or Stone, all information is available to clients.”

“The differential is the people who work in the agencies. And if you can’t value add to the transaction, clients go to Purplebricks.”

Mr Gunning urged agents to return to being “the local professional”.

“What good agents do primarily is to promote the properties to a broad range of buyers and push the price up. They must have current market knowledge if the area and offer trusted advice.”

“What they are able to do is re-focus on the strength of the property … and articulate that.”

Mr McGrath said agents had the capacity to fend off competition disruptors because while they were cheaper, they would never replace knowledge.

“The clients that use us realise that a great agent adds significantly more value than they cost. If you pay a 2.5 per cent commission to an agent and obtain a 10 per cent premium sale price then it’s a great deal.”