Disrupting Real Estate: The High Cost of Selling Homes in Australia
In Australia, the journey of selling a home is not only complex but also expensive, primarily due to the high advertising fees imposed by dominant property portals like realestate.com.au and Domain. As Sarah Martin reports, homeowners like Dimitri Chrisis are finding themselves in a bind, where the cost of advertising their property can make a significant dent in their potential profits.
Chrisis’s experience is a telling example of the frustrations many Australians face. Initially working with a real estate agent, he was shocked when advised to lower his price expectations dramatically, leading him to attempt selling his property privately. However, this route also proved costly due to the hefty fees required by property portals for private listings, which are often double those charged to agencies. “It is shocking – how can they be charging people [who want to buy a one-off premiere listing] double the price? It is very unfair,” Chrisis expressed his dismay.
The issue extends beyond individual experiences. Mike DelPrete, a real estate technology strategist based in the U.S., describes Australia as one of the few global markets where the home seller bears the cost of advertising. “REA is the best in the world at this… They are just printing money,” DelPrete said, highlighting the portal’s profit-driven strategy that leverages its dominant market position to impose high fees.
Further compounding the problem is the alleged anti-competitive behavior of these portals. Andrew Blachut, owner of PropertyNow, points out the significant challenges faced by alternative and private selling models due to the pricing strategies of portals like realestate.com.au, which is majority-owned by News Corp. “The single most powerful element controlling Australian real estate is realestate.com.au; it is a $27bn company… No one else has more power to influence how Australians buy and sell property than realestate.com.au,” Blachut stated.
Despite the high costs and challenges, some Australians, like Chrisis, continue to pursue private sales, finding that direct interactions with buyers can lead to more transparent and satisfactory negotiations. However, others like Sydney homeowner Sam Ryan prefer the traditional route, using agents to avoid the stress and intricacies of direct selling.
The situation raises significant questions about the future of real estate in Australia, especially as disruptors like BuyMyPlace struggle to gain a foothold in a market resistant to change. As Matthew Driscoll, founder of BuyMyPlace, points out, psychological barriers play a substantial role, with many preferring the security and hands-off approach offered by agents despite the potential savings of private sales.
This ongoing issue suggests a need for regulatory review and possibly intervention to ensure a fairer real estate market that doesn’t overly penalize those opting to sell without an agent. As the market continues to evolve, the call for change grows louder, echoing the frustrations and aspirations of Australian homeowners aiming for both transparency and affordability in their selling journey.
References:
Melissa Fisher
Founder, Acuity Development Group & The Right Team