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Smaller agencies have a role in ‘new normal’

independent agencies

Picture: Cynthia Machala, principal Syn Mac Properties; René Bekker, principal of René Bekker Properties; Ebo Quagraine, principal Propertyzz.com

Recently it was said that smaller independent agencies find it harder to compete with well-known brand names in the ‘new normal’. Do they still have a role to play?

There is no doubt that 2020 has changed the way we do business in real estate. Remote working and the need for social distancing has made a strong online presence essential.

Also read: What can SMEs expect in 2021?

An old debate has now been rekindled. Who will serve this modern client best – the franchise with the well-known trusted brand or the local independent agency?

Some of the bigger brands recently claimed that the pandemic is already causing a contraction in agency numbers like that seen after the Global Financial Crash of 2008. Gerhard Kotze, managing director RealNet, says they are seeing top performers choose established brands that have “the knowledge, technology and means to support agents who want to work remotely”.

The focus now is on creating efficiency to make the customer experience with your brand a better one. “It is going to be harder for independent agencies to compete with your bigger franchise brands,” says Paul Stevens, CEO of Just Property. They are already seeing bigger franchises absorbing smaller franchises around them because the bigger brands have the ‘economies of scale’ – that is the staffing, offices and tech systems to create a business that is financially viable.

However, while most of the principals of smaller agencies Property Professional spoke to agree that times have been tough since last year, they all passionately believe that smaller independent agencies still have an important role to play.

“I strongly believe that there is still a role for smaller players in the real estate market, especially the low-cost market. Our economy needs small businesses,” says Cynthia Machaba, principal of Syn Mac Properties in Soshanguve near Pretoria. She finds it most concerning that small businesses might be forced to close shop because of this difficult time, and that big companies are coming in strong to eliminate smaller companies to eliminate competition.

Not so fast

Jan le Roux, chief executive of Real Estate Business Owners of South Africa (Rebosa), has no doubt about the value brought to the industry by estate agencies that place a premium on service excellence. “I believe there will always be room for top performers even in the smallest of agencies. There however is no doubt that such individuals will have to be at the top of their game with technology and everything that goes with it to be relevant. Data is everything going forward,” he adds.

After looking at their stats, the Institute of Estate Agents of South Africa (IEASA) found that the movement of agents from smaller to big agencies and vice versa are similar. “So no, we would not say the trend is for agents to move to the larger agencies at present. We believe this to be due to the fact that the boutique and more personal agencies are very well received by the home-owners and buyers in a specific area,” says Annette Evans, general manager of IEASA Western Cape.

Adriaan Grove, CEO of Entegral, a tech service provider for real estate, strongly disagrees with the impression created that smaller agencies are struggling to survive. He says according to their customer retention stats, the pandemic did not result in smaller agencies closing as many feared. On the contrary, he says they have noticed an increase in the number of agents who have or are busy opening new agencies. “Smaller independent estate agents are not only hanging on, but thriving during Covid-19,” says Grove.

Adjusting to the new normal

It has often been said that small, micro and medium enterprises (SMMEs) are the key to job creation and growing the country’s ailing economy. The National Development Plan envisions that by 2030 SMMEs will contribute 60-80% to GDP increase and generate 90% of the new jobs in South Africa.

Read: The missed opportunity: SMME’s in the South African economy

Many of today’s biggest names in local real estate had their beginnings as a small independent franchise. Grove believes that even now the smaller and independent agency is perfectly situated to thrive since the way of doing business has shifted towards being more virtual. Unrestricted by having to comply with franchise requirements, it is less complicated for smaller independent agencies to make decisions whether about moving their office completely online or to cheaper office space or adapting new tech tools.

Some of the smaller firms have been very innovative in adapting to the ‘new normal’ such as expanding their service offering to clients. René Bekker, principal of René Bekker Properties in Richards Bay, says during the hard lockdown period they ventured into property finance to provide an additional income stream. “The smaller agencies are stronger than one might anticipate – and we adapt to our circumstances that we all find ourselves to be in; probably like anyone else we find ways to survive challenging conditions,” she explains.

Various initiatives were taken to stay on top of tech developments. Machaba says to ensure their sustainability her firm partnered with some providers of tech services in the industry. Ebo Quagraine, principal of Propertyzz.com says they have invested in art virtual tour equipment and technology. Heather van der Spuy, principal of Steer Properties in Cape Town, says they find marketing through affordable social media platforms a big win especially for agencies on a tight budget.

“Covid has been a great reset opportunity,” says Quagraine. He says for the smaller agency there will always be a place in real estate. “There is always a place for those who seek to own the space … those willing to shift gears, make the effort and place the resolution of customer problems at the centre of their business are the ones that will thrive,” he explains.

The dynamics of real estate may have changed during the Covid pandemic but the heart of real estate is still about building relationships adds Grove. “Running a real estate brokerage is more about the people behind the business and less about franchise or independent status and that’s why smaller and independent brands are here to stay,” he concludes.

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