Disruption in the Australian Real Estate Industry: What Principals Can and Need to Do

Thanks for watching this 2016 Real Estate Grow presentation: “Disruption in the Australian Real Estate Industry: What Real Estate Principals Can and Need to Do“. While ‘ Disruption’ is a buzz word and our industry boogeyman is ‘the Uber of Real Estate’, I believe this is absolutely not a discussion about technology.

There are genuine risks to our business model, and technology will continue to change and improve, but these are readily addressed by applying the right strategic approach to growing your real estate business.

Please leave any questions or feedback in the comments below. If you’d like to discuss any of the topics covered in this presentation, or learn more about how a Business and Vision Review can help your real estate office benefit from disruption, call Jacob Aldridge on 0427 151 181 or email j.aldridge@businessdepot.com.au

Key Chapter Points

0.05 – The only time you see Jacob Aldridge. This isn’t a talk about technology. His passion is creating wealth for real estate business owners, and that’s the focus for this webinar.

0.46The Agenda:

  1. Lego Wealth in Australian Property, and how little of it Real Estate Principals end up with;
  2. Video What we can learn from other industries who have faced disruption;
  3. Playing Cards What we can learn from previous changes in the real estate industry;
  4. Business Card How a strategic approach will ensure your office survives and thrives; and
  5. Coloured Pens A practical checklist, so you walk away with key learnings AND actions.

3.36The Australian Property Sector is worth $321 Billion annually. The Real Estate Industry – despite being at the centre of the sector through sales and property management – is worth just $10 Billion. This is spread across 10,000 Agencies and ~73,000 people. So of the Billions in Australian Property, the average real estate agency generates just $1 million in revenue and the average real estate principal earns ‘not much’.

4.38Introducing Real Estate Grow and Jacob Aldridge. He’s seen many changes in the industry since joining in May 2000. He and his partners founded Real Estate Grow, which has now successfully merged with businessDEPOT, in order to bring the best international business strategies from a range of industries into the hands of local Principals.

6.00Disruption #1 Blockbuster v Netflix. Why would you get fully dressed, hop in the car, drive to the next suburb and risk paying late fees to watch a movie, when you can stream it directly to your tv? Answer: You wouldn’t, and that’s why video stores have gone out of business. But there are 2 key lessons to learn:

  1. Change doesn’t happen overnight. The DVD was invented in 1995 and ‘disrupted’ VHS technology. But when Jacob broke the Guinness World Record for Movie Watching in 2003, they did so entirely on VHS because it was more reliable.
  2. Disruption means change, not apocalypse now. Just as Blockbuster faced a crisis with Netflix, so too did Cinemas face a crisis when Blockbuster etc opened. They responded by improving the customer experience, and that’s what great real estate offices are already doing.

12.41Theory of Disruption. Research has demonstrated that there are 4 elements of an industry, any one of which opens it up to disruption (via technology or otherwise). So which, if any, apply to the Australian Real Estate industry?

12.261. Limited Access. This used to exist in the real estate industry, and was known as Information Asymmetry. Basically, the Agents had access to all the information and the Buyer did not – which gave the Agents power. The internet changed all of that. It ‘disrupted’ the role of the real estate agent – who could no longer rely on being the expert, but instead had to become an expert on marketing and negotiation. No longer a risk – been there, done that, bought the t-shirt.

19.01 – Disruption #2 Why Uber for Real Estate won’t work

2. Redundant Intermediaries. These are hurdles – distributors, individuals, laws – within an industry that do not add any value. Think elevator operators from the 1950s, or buying mattresses direct from the manufacturer. This is the secret to Uber and Airbnb – they saw laws about taxis and accommodation as adding no value, and so their secret wasn’t a great app it was breaking the law on such a massive scale that the laws themselves had to change. This is why many people will waste a lot of money failing to build ‘Uber for Real Estate’ – as long as real estate agents and PMs continue to add value, there aren’t any massive laws to be broken.

21.48 – 3. Complex Experiences. Buying a home is complex. But it will only get so much more simpler – don’t expect an app to magically simplify the experience. Nothing to worry about here.

23.34 – 4. Broken Trust. This is the big risk to real estate agencies and principals. Only 9% of the Australian public trusts us. And that’s the reason we’re exposed to disruption. Any technological innovation only has to be marginally better … but wrap it up in a Virgin or Google logo, a brand people do trust, and there will be earthquakes felt through the industry.

27.44 – Don’t Build Technology. Build Community. To overcome these Trust issues, you need to build your business to benefit your community. When you and your team make a valuable contribution to every tradie, small business owner, community group and resident in your community then you will have their Trust. And the Google App won’t stand a chance beside you.

29.52 – What Choices are you Making for your Future? Right now, you can choose to leave the industry, bury your head in the sand (and be forced out), or think strategically. Which are you choosing?

Thinking Strategically begins by analysing your business across all 12 Key Areas. Jacob explains all 12 areas, and runs through a simple checklist for Principals under the categories of Leadership, Revenue, Reputation, and Wealth. If you’re not sure about how well you and your business are applying these skills, strategic business advice from a real estate industry expert can help.

42.52Key Learnings.

45.45End.

Please leave any questions or feedback in the comments below. If you’d like to discuss any of the topics covered in this presentation, or learn more about how a Business and Vision Review can help your real estate office benefit from disruption, call Jacob Aldridge on 0427 151 181 or email j.aldridge@businessdepot.com.au

Thanks for watching!