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Agents stand to benefit from changes coming to Property 24 and Private Property

Agents stand to benefit from changes coming to Property 24 and Private Property

Editor

A week ago today, the Competition Commission released its report on online platforms, including the largest property platforms – Property 24 and Private Property – finding that these portals impede competition and imposing new conditions.

What does this mean for estate agents?

Well, there are quite a bit of technical changes which you can read about here, but the main conditions that affect agents are in the form of contracts and pricing.

In terms of contracts, Property24 and Private Property must put an end to multi-year contracts with large agencies.

Let’s look at fees

According to the report, Property24, Private Property and, PropData must provide interoperability at no fee for estate agents to feed listings to other platforms (currently there is an R500 monthly fee payable by agents). The portals must also cease charging for incoming listings.

What about advertising?

The Commission is of the view that these leading property portals “exercise extensive price discrimination based on the volume of listings that an agency brings, both at a group and at an office level.  PP as well ?

These differences are not based on cost. Rather the claim is that the difference is based on the value provided and that larger agents bring more listings and hence provide more value to the platform. The primary difficulty for the platforms is explaining why this justifies price differentials in excess of 300% on rate cards and none have attempted to do so.  

There is no objective value-based pricing model at play but rather relative bargaining power that drives price differences”.

Good news for small agencies – SIPB and SIRP

The effect of these price differentials on smaller agencies is that leads to lower visibility in the market as marketing budgets are depleted, which the Commission believes impedes competition.

To remedy this situation “Property24 must introduce a Small Independent Business Package (SIBP) for business users with 30 leads or less priced at an average per lead or listing level within 15% of the average of all other business users, reducing to 10% later”.

Property 24 has also been tasked with the creation of a Small Independent Rental Package (SIRP) for 10 or fewer rental listings. Agents qualifying for SIRP are to be charged a weighted average cost per listing for rental listings that is no more than 15% higher than the weighted average cost per listing paid by all other agents listing on the Property24 platform.

According to the report, Property24 must market the SIBP and SIRP in such a manner that it creates awareness amongst agents, even those who are not clients of Property 24, and this marketing must include a dedicated page on the Property24 website explaining who qualifies and what the SIBP and SIRP includes, as well as a communication channel for those estate agents wishing to make use of the SIBP and SIRP.

Private Property received no such instruction as it has already created a Kickstarter package that addresses this issue.

The creation of an HDP (Historically Disadvantaged Person) programme

Property 24 has more homework to do in that the Commission has instructed it to provide an HPD programme at no cost, which will include:

  • Personalised training, including site design and support,
  • Branded listings,
  • Five value-added services per month,
  • Access to the market intelligence report
  • Twelve months of free standard listing subscriptions for new HDP agents

When is all of this happening?

The Commission has given detailed timelines for these remedial actions, the longest being twelve months, however, both Property 24 and Private Property can appeal this report, by applying to the Commission, on good cause shown, to vary these remedial actions.

Should this not lead to satisfaction, either portal may within 20 Days of the Commission’s decision, and on good cause shown, make an application to the Tribunal. The Commission will be entitled to oppose such an application. 

Essentially this is a long-winded way of saying that these actions may take place soon within the next year, or not at all, depending on whether the portals decide to appeal the Commission’s findings or not. 

Comment from the industry

“One aspect that hasn’t been addressed is the billing system that Property24 uses. I will go as far as to call it a thumb-sucking exercise and unfair business practice. They invoice an agency for the number of leads they say you as an agent received. No verification or proof of such leads is provided, despite various attempts over many years”, shares Bennie van der Merwe, chairman of MLS Bloemfontein.

“I think Mr. Tim Cohen’s comment in the Daily Maverick stating that while the “Commission’s findings are not uniformly bad…the level of understanding of what they are investigating is naïve and their solutions are bordering on laughable”, will likely prove the most profound. I would love to be a fly on the wall in five years when the unintended consequences of the Commission’s recommendations end up strengthening the dominant portal, to the detriment of all others”, says Jan le Roux, CE of Rebosa.

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