Kylie Davis: (00:02)
Welcome to the PropTech Podcast. It's Kylie Davis here, and I'm delighted to be your host as we explore the brave new world where technology and real estate collide. I passionately believe we need to create and grow a sense of community between the innovators and real estate agents, and sharing our stories is a great way to do that.
Kylie Davis: (00:19)
Now the aim of each episode is to introduce listeners to a PropTech innovator who is pushing the boundaries of what's possible, and to explore the issues and challenges raised by the tech and how they can create amazing property experiences. So my guest in this episode is Mark Armstrong, CEO of Rate My Agent. And this is a fascinating story of how Rate My Agent has grown over the past five years from being, of all things, an auction tipping contest website to becoming a listed ASX company valued at 250 million and Australia's largest review site for real estate agents. And they're now launched in the US.
Kylie Davis: (00:56)
Now, as Mark explains, 99% of the population pretty much Google everything before they purchase anything. And that includes real estate. In this episode, Mark explains how Rate My Agent works to help agents become undisruptable by helping them amplify what we do well and share that with the world regardless of the review platform that it occurs on. Mark Armstrong from Rate My Agent, welcome to the PropTech Podcast.
Mark Armstrong: (01:23)
Kylie Davis: (01:24)
My pleasure. So Mark, every time we have a new guest on the show, we ask them to do their elevator pitch. And having been through the REACH Programme, I reckon yours must be pretty tight. So bust it out.
Mark Armstrong: (01:37)
I hope it's pretty tight. So Rate My Agent, we're a digital marketing business. Our role is to help agents collect, share, and promote reviews and customer feedback. And the reason we do that is 90% or 95% of consumers nowadays are looking for online validation. They're looking for online reviews or online testimonials. And traditionally agents haven't collected reviews very well or very efficiently, and in many cases, after they've collected them, they don't use them as a marketing tool. We see many agents who have reviews in photo albums in their office or a card sitting on their desk. And when you don't get your reviews out into the marketplace, it's very hard for consumers to find them.
Kylie Davis: (02:27)
Yeah. So how did Rate My Agent start? How long have you guys been going for?
Mark Armstrong: (02:33)
We launched getting close to five years ago now, June, 2014.
Kylie Davis: (02:37)
Mark Armstrong: (02:38)
My background was in property advice. I'd been advising people through the market for 10 or 15 years. But we actually started as an auction tipping competition, a game called Property Tycoon.
Kylie Davis: (02:51)
That's where we met, when I was at [News 00:02:54].
Mark Armstrong: (02:56)
Exactly, exactly. We pitched that to News and to a few different places, and essentially, for the listeners, it was a game like footy tipping. We would invite people to tip on properties that were going to auction each week, and if they got the tip right within a $50,000 range either side, they would win the tip and the value of that property would be added to their virtual portfolio. And at the end of the season there would be a cash price.
Mark Armstrong: (03:26)
So that's where we started, and that's when [Xavier 00:03:31] and Ed, the two co founders of the business ... It was a really manual job to run that game.
Kylie Davis: (03:38)
Mark Armstrong: (03:38)
And Ed jumped on board and said, "Hey, let's automate this and make it a lot easier." And through that automation, I still remember the day where Ed showed us a pie graph of Richmond, in Victoria here, where the office is based. And he showed us a graph and it showed us which agent had sold the most properties within Richmond. And Xavier and I looked at it and said, "Wow, can you break that down by agency?" And in a few clicks of the keyboard all of a sudden we saw market share per agency. And then we could see who was selling the highest average sale price. We realised that the data we'd collected had so much more power than just running an auction tipping competition.
Mark Armstrong: (04:24)
I think within 24 hours we had registered the name Rate My Agent, we had changed the whole business model over, we didn't bin Property Tycoon but we just put that on the shelf. And that was the moment that the penny dropped, that there was actually a bit of business here.
Kylie Davis: (04:41)
So instant pivot basically?
Mark Armstrong: (04:44)
Yeah. And five years down the track, so far so good.
Kylie Davis: (04:48)
So far. So why are reviews so important? You were saying that what 99% percent of people are looking for online insight into who they're going to use.
Mark Armstrong: (05:00)
I think there's two ways to validating someone's experience or whether they're the right person. One is a numerical analysis. How many properties have you sold, what's your average sale price, how long have you been in real estate? All those sorts of things are numerical validation, but they don't actually put a story around the experience. And what a review does is a review really brings that person to life. It tells a story about that person and it really can bring out the personality of the person.
Mark Armstrong: (05:43)
And that's what consumers, forget real estate, it's across the board. And there's an old saying that people will do business with people they like. And just [inaudible 00:05:50] it, a lot of agents traditionally would walk into a listing saying, "I'm the best because I've sold the most property in this suburb."
Kylie Davis: (05:59)
Mm- hm (affirmative).
Mark Armstrong: (06:01)
But for consumers, they're like, "Yeah, okay. But what are you going to be like to work with?" And with a review you can say, "Look, I'm a really highly recommended agent. I actually sold the house across the road from you here, the Smith's house. And this is what they think about me and my performance." And all of a sudden you're tying in not just the fact that you've got experience selling, but you're also bringing that story to life. And in many cases you're bringing that story to life from people that the consumer already knows, their neighbours, people within their community, their school community, or their sporting community. So a review really ties all of those things together.
Mark Armstrong: (06:42)
I often tell the story of an agent in Victoria here who rang me once, this was a few years ago, and said, "I just wanted to let you know I've been proven wrong. When you first launched Rate My Agent, I hated the platform. I couldn't see any value in it because I was a new agent, I didn't have that much experience, I hadn't sold too many properties. And my impression was you were just going to support the agents that sell the most."
Mark Armstrong: (07:09)
And he said, "I've been proven wrong. I've just won a million dollar listing in the Doncaster area." And after he signed the authority he asked the woman, "Why did you choose me?" And she said, "Well, I went to Rate My Agent and I read a whole lot of reviews, but one of your reviews jumped out at me. And it was a review that you had worked with a family where there had been a death in the family, that the husband had passed away. And the story that that person wrote about their experience with you was what jumped out at me." So she chose that agent based on one single review because she related to that story. And that's the power of reviews. People can relate to the story that someone else is telling.
Kylie Davis: (07:54)
And it gives us insights into how emotional property buying and selling is too, doesn't it? And how powerful that story is in its ability to relate to that emotion.
Mark Armstrong: (08:08)
Absolutely. If we think about when people transact real estate, someone's born, house is too small, we need to transact. Someone dies, house is too big, someone leaves home, someone gets married, someone gets a new job and is transferred. Selling real estate is actually an indicator of really big life-changing moments. So real estate agents actually get involved at a period of time where it's not just the transaction of property, there's a whole lot of other things, good, bad, indifferent. There's a whole lot of other things going on around that transaction. And that's really the story that we want to bring to life.
Kylie Davis: (08:51)
Yeah. So Mark, what's your business model around this? How does the business work?
Mark Armstrong: (08:57)
Yeah, I'll just quickly touch on how it doesn't work.
Kylie Davis: (09:00)
Mark Armstrong: (09:00)
We're not a lead ... I think it's important that it highlights who we are. We're not a lead-generation business. We're not a transactional business. So although we do deliver leads to agents, our revenue is not derived from the transaction. So what I mean by that is we don't take a cut of the agent's commission. That's their job to list and sell and market property.
Mark Armstrong: (09:27)
Our revenue model is based on, as I said earlier, we're a digital marketing business. So we build tools to help agents not only collect that feedback, but promote it through Facebook, and Google, and through their own websites, and through email marketing. Really taking those reviews that were often just sitting in someone's inbox on their email, or sitting on one website where you had no control over them, and accessing those tools to really get those reviews and market them out into the broader marketplace.
Mark Armstrong: (10:07)
So agents or agencies or brokerages can pay us a monthly subscription and they can access varying tools depending on how many tools they want to access. That's the main way we generate revenue. We're a SaaS business. We're a subscription business. And then we also access Google and Instagram and Facebook's ad networks. And within three clicks, agents can convert their reviews into digital ads. So essentially we resell Google and Facebook and Instagram ad networks, and we make money by clicking the ticket through that system.
Kylie Davis: (10:46)
Cool. And so how many agents do you have on the platform now? Like how big are you guys?
Mark Armstrong: (10:53)
So in Australia around about 80% of all Australian agents are on our platform or use our platform. Agents have a profile on our website whether they like it or not. But real estate is a public transaction. So I guess in a sense we are very strong in the Australian market with 80% of agents using our platform.
Mark Armstrong: (11:16)
We currently collect a review for one-in-three properties sold across the country each month. And about a third of agents across Australia elect to take up some level of subscription and pay us a monthly subscription to access those marketing tools. We're rapidly growing in the US. As we all know, there's over a million agents in the US. I guess the problem in that market is half of those agents are part-time agents. They don't really ... They're Uber drivers and real estate agents. So half the agents in the US don't actually transact over the course of a year. But at this stage we've got a bit more agents in the US using the platform. So around about 40,000 to 45,000 agents have engaged in the platform and we're growing rapidly in the US market.
Kylie Davis: (12:12)
Wow. Fantastic. And so has the response from agents ... It's obviously changed over time in regards to the platform?
Mark Armstrong: (12:22)
Very much so. Yeah, very much so. I think the cycle we've been through is, when we first started, I wouldn't say there was strong pushback, but there was certainly some pushback from some agents. And the pushback came from the idea that, "We don't think reviews are important. We've survived a long enough-"
Kylie Davis: (12:45)
Or a good idea.
Mark Armstrong: (12:45)
Or a good idea. We didn't get that so much. I think the psychology in the industry was we're a referral business, we don't need reviews. We get personal referrals and we don't feel the need to collect written testimonials from our customers, because our customers go out there and talk about us and refer us business. So there was that psychology of asking for a review and getting a review.
Mark Armstrong: (13:19)
I think we saw, when we spoke to agents, only 10% of agents actually get ... Or only 10% of the transactions were actually getting customer feedback coming through when the agents asked for it. So that's where we started. And very quickly the agents' psychology changed to, "Actually, no, reviews are really important."
Mark Armstrong: (13:38)
Because it's not what Rate My Agent wants. It's not what a real estate agent wants. It's what the consumer wants. And a consumer wants to be able to sit in bed at night and tap away on their keyboard and get this information. They don't want to have to call a friend, or go to the local footy club and ask [inaudible 00:00:13:56]. They want to be able to do their research online. So very quickly the agents realised that actually reviews are important.
Mark Armstrong: (14:03)
And then it moved to the next step of not whether we should or shouldn't collect them, but how should we collect them, and which review platform should we use? Should we use Google or Facebook or Rate My Agent or whoever it may be? And that's where our business evolved into we're now an aggregator of reviews. So we can import reviews from all over the place. And we have a concept called Everywhere Reviews. So you get one review in Rate My Agent, and then we can syndicate that across the Google platform. We have a relationship with domain now via our API, where our reviews flow through the domain and they flow through to Facebook. They flow through to all the social networks.
Mark Armstrong: (14:47)
So the idea was to listen to the agents and think up on the fact that their problem very quickly moved from our reviews, good or bad, to now which review platform do I use. And one of the things the agents really love is, they're now understanding that if you get a review on Rate My Agent, you only need to request it once and receive it once, and then our platform pushes it across the web for them.
Kylie Davis: (15:17)
And so is that your differentiator between other review platforms like Google or other agent platforms out there, that you're actually sucking all of the reviews in and making them usable for agents?
Mark Armstrong: (15:32)
Yeah, there's two major points of difference. I think, absolutely, that's the first one. What we've said in the past is if you get a review in a platform like Google, your review is ... It's like being stuck in concrete. You've actually given control of that feedback to a third-party platform, and you're relying on that platform to drive traffic to that review. And you've lost control of that review.
Mark Armstrong: (16:01)
So we want to release that control. So by getting that review into Rate My Agent really puts you in control, and now you can use it anywhere you like. You can use it in listing presentations, and through social, and through email, and through Google. It's releasing that. So there's no doubt that taking the review and really turning it into an asset, and that asset being controlled by the agent, is one of the major differentiators between us and other review platforms.
Mark Armstrong: (16:33)
But I think the other one that's really important, and really quite unique to Rate My Agent across the globe, is every review on Rate My Agent is linked to the transaction. So not only can you read the review, but you can see which property the review relates to, you can see when the property sold, how much the property sold for, where it is on a map. So it has a very high level of what we call verification, because it's linked to the transaction. And you will-
Mark Armstrong: (17:03)
... Because it's linked to the transaction. And you avoid that problem ... I was reading an article over the weekend about a dentist who had a review posted on Google, and it was a very negative review. This dentist actually had to take Google to court to find out who posted the review because he's got no idea who posted it, he doesn't know whether it was a competitor, he doesn't know whether it's a genuine client, it's affecting his business. Google refuses to take it down, and he's stuck because he'd love to address the concern, he'd love to address the negative review, but he has no idea who posted it.
Mark Armstrong: (17:40)
And I think that's a major problem with reviews, is that there's too much power gone to the reviewer. We all call them keyboard warriors. They can sit there and they can have their opinion and write whatever they like to a large extent, but then there's no consequence that comes back to them if their review is defamatory or if their review affects the business. So, by linking the review to the transaction, we don't allow anonymous reviews. The agent will always know who posted that review. And we only want to hear from actual customers, people that bought or sold with the agent. And again, that gives the agent more control. It means from a consumer point of view, the reviews are more relevant. We know that it's not a competitor or someone who's just felt like they've been hard done by, it's an actual customer that the agents worked with.
Kylie Davis: (18:40)
The reviews can be good, bad, or ugly, I guess.
Mark Armstrong: (18:44)
They can be.
Kylie Davis: (18:44)
Yeah, but the agent's got the control to respond to them.
Mark Armstrong: (18:49)
Yeah, absolutely. The agent's got control to respond. Probably even more powerful, the agents got the ability to pick up the phone, to call their customer, have a coffee with them, work out what their issue is, address their concern. Here's a great example of a negative review on our website, someone posted a review that said, wasn't very happy with the experience and the crux of the negativity was when they picked up the keys and they got the remote controls of the roller door, the roller door batteries were flat in the remote control. And they said, what terrible customer service by the agent.
Mark Armstrong: (19:27)
And the agent said to us, what should we do? And I said, go to 7/11, buy a couple of batteries, go over to the person's house, give them the batteries and say, is there anything else I can do? That review got turned into a positive review because the agent responded to it in a really professional and positive way. And I think that by giving the agent that level of control so they can manage the process is really important.
Kylie Davis: (19:57)
Yeah, it's really true, isn't it? Sometimes $ 5 on a couple of AA batteries can really be the difference. But if you've just spent $1.2 million on a house and you're trying to get your car into the garage and you've been moving all day, it can be the bit that tips you completely over the edge into craziness.
Mark Armstrong: (20:19)
Exactly. And it's not a question of right or wrong. Someone's feedback is not a binary right or wrong feedback, their feedback is our experience. And when you deal with different people, as a real estate agents do, you have to be just continually offer a really high level of service. Don't have an opinion about the feedback, but just deal with the feedback. And sometimes, we can all look at the feedback and say, wow, that's a bit unreasonable. But by taking a negative stance towards that feedback doesn't help anyone. Take a positive stance to it, address it, deal with it, and move on.
Mark Armstrong: (20:55)
Let's just pause there for a moment and hear a quick word from our sponsors.
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Kylie Davis: (22:01)
So, Mark, it's obviously been a pretty hectic five years. What have been the key landmarks in your growth?
Mark Armstrong: (22:09)
I think some of the things that we spoke about, some of the things that we did, I think linking ... When we first launched Rate My Agent, we would just a simple review platform, and anyone could come in and write a review. But I think that if it was a genius to it, I think linking that review to the transaction and empowering the agents was really where we saw the website take off. By locking the system down in the early days and making Rate My Agent a review request platform only, although we have opened the platform out now, but in the early days, it was review requests only. So, agents had to log in and request a review. So, I think those things were the things that really ignited the business and really made it take off. And from there, we've just held on for the ride because it really just exploded, which was wonderful. I didn't know what organic growth meant until I was experiencing organic growth. And then, you realise that organic growth is often something you don't have a hell of a lot of control over, in a good way. It just really starts to take off. So, I think that the key for us was our independence, was really important, and really garnering that trust of the community. We're not here to fight against you, we're here to work with you. And being a real estate person myself, I could walk into a meeting with an agent, and I knew exactly where they were coming from. I could relate to the experience.
Mark Armstrong: (23:51)
We went to the market, in inverted commas, we called ourselves agent friendly. And I think that's still the case. And then, we changed that psychology and said, we support good real estate agents. Unashamedly, we support good real estate agents. And another agent said to me, once, I don't like your platform. And I said, that's fine. I said, good agents love our platform. And then, he started to suggest that, are you saying I'm not a good agent? I said, I'm not suggesting anything, I'm just telling you the good agents do love our platform. And a few months later, he contacted me and said, I've actually had a closer look. I get what you're saying now. And now, he's an avid user of the platform.
Mark Armstrong: (24:32)
So, I think a lot of other businesses took a confrontational approach where there's a binary, we win, you lose. I think a lot of other businesses attacked agent commission. We very clearly, right from the start, and we say this in the US now, and we're very committed to this, we are not here to put downward pressure on your commission. We're here just to help support you. So, I think, for us, that whole overarching thing there, that it was really about taking a positive approach to the industry, engaging with the industry, listening to the industry, building a platform that supported good agents, rather than a platform that competed with good agents.
Kylie Davis: (25:15)
Right. Cool. But you guys have listed on the stock exchange, haven't you?
Mark Armstrong: (25:21)
We have, yes, about 18 months ago.
Kylie Davis: (25:23)
How big a decision was that?
Mark Armstrong: (25:26)
Look, I think for us it was very organic for us. It wasn't a major decision. I think at some stage of the process, you need to raise capital and you can go to VCs and the private market or you can go to the public markets. There's pros and cons on both sides. There's no perfect solutions for that. But for us, we just really wanted to see... There were three things that we wanted to tick off before we would consider a public listing. The first one was we wanted to test our business model. We were the first to go and the only ones to go to market with a model that said, we won't touch your commission. We're going to find another way to derive revenue. And really, in the early days, we didn't know whether that was going to work. We didn't know whether that was going to resonate. So, we went to test that first. So, we built subscriptions and warms and see whether people would use them.
Mark Armstrong: (26:29)
The second one was, off the back of that, we wanted to see whether we could reach profitability in the Australian market. It's well and good selling a product, but if you can't reach profitability, then there's so many businesses out there... Look at Uber, is it ever going to be profitable? We wanted to build a really strong business offer, offer a strong foundation. So, we wanted to make sure that we were profitable. And before we listed on the stock exchange, we had two or three quarters of cashflow, positive profitability. And so, for us, that was a tick.
Mark Armstrong: (27:08)
And the third one was we wanted to see whether our philosophy and our business actually resonated in an external market, an international market. So, we went to the US, and very quickly, we could see that actually Rate My Agent has a really strong application within the US market. So for us, it was a natural progression. It wasn't the goal or the objective to IPO. It was just the goal to continually grow the business. And it's the same thing today. Where are we now? We're in the US. Our role now is to make sure we consolidate that market. We'll probably move into Canada next, and possibly the Asian markets.
Mark Armstrong: (27:59)
But it's all very organic and it's about opportunity. Rather than trying to force an agenda, we were a business that just continue, looks into the distance. We look at opportunities, we evaluate opportunities, and we make an informed decision about whether we should pursue or not pursue that opportunity. So for us, there was an opportunity. David Williams, our chairman, had a lot of experience in taking businesses through to IPO. There wasn't a huge amount of workload from a management point of view, that allowed us to continue to focus on our business. So, it was a very organic process.
Kylie Davis: (28:43)
Oh, cool. I've got so many questions around this. What's your market cap at the moment?
Mark Armstrong: (28:54)
It's had a good few weeks. I think it's sitting around about 250 million.
Kylie Davis: (28:55)
Mark Armstrong: (28:58)
The share price is sitting around about 60 to 65 cents at the moment. And we suspect there's still a long way to go.
Kylie Davis: (29:08)
Right. But that's not bad for five years work.
Mark Armstrong: (29:10)
It's not bad.
Kylie Davis: (29:11)
That'll do. Yeah, that'll do. So. Here's my next question, Mark. Why does a well-funded company on the US stock exchange need to take part in an accelerator like the Second Century Ventures Reach Programme? Why not just go straight in?
Mark Armstrong: (29:27)
Look, I don't think there's one singular way to attack a market. We certainly did just move straight into the US market, and we started to grow in the US organically in the same way we did in Australia. But I think, as we all understand, real estate is a relationship business. My father taught me he or she who builds the most relationships wins. It's not about the money, money's a byproduct of success.
Mark Armstrong: (29:57)
Relationships is really where it's at. When we had the opportunity to essentially partner with a membership base of 1.3 million agents, which is what the National Association of Realtors has, it's a very, very, again, a very organic and logical step to build a relationship with the biggest trade organisation on the planet. So again, we didn't think of it as being a big decision. We just saw it as being a very logical decision. And that relationship with Reach and the guys there, Dave and Tyler, is a wonderful relationship for us. It's a very trusting, very supportive relationship and very happy we did it.
Kylie Davis: (30:47)
Yeah, fantastic. But the question I've got too is that this whole idea of reviews for real estate agents, it originated out of the US. So, why do US agents need an Australian review site in their market? Or even another one because I think Phil Kels and Jeff Turner created did Real Satisfied originally?
Mark Armstrong: (31:10)
Yeah, that's right. And we have a great relationship with Jeff and Phil. Good day, Jeff and Phil, if you're listening.
Kylie Davis: (31:15)
Hello. We should do a shout out to the boys.
Mark Armstrong: (31:21)
I think it's a really good question because I think before I met with Jeff and Phil, I think we've probably had the same impression that we saw there was potential that a company like Real Satisfied was a competitor to Rate My Agent. But when we sat down and we had a beer and we spoke about where we all sat in the marketplace, we actually saw that they were complimentary. The reason being is that Real Satisfied is a platform that collects reviews, but it's not a platform that really takes that next step of promoting reviews. It doesn't have the integrations and have the tools that Rate My Agent has. Google's very similar. Google's a platform that collects reviews, but they don't have those promotional tools.
Mark Armstrong: (32:09)
So, after a few discussions with Phil and Jeff, we decided that Rate My Agent really starts where Real Satisfied finishes. And we ingest Real Satisfied reviews into our system. So, anyone who has Real Satisfied reviews can put their vanity key into Rate My Agent, and their Real Satisfied reviews will be ported into our system. We're now looking at the process of taking the next step of linking those reviews to the transaction because Real Satisfied reviews aren't linked to the transaction from a consumer point of view. So, we can turn a Real Satisfied review into a really powerful ... Or we can amplify the value of that review by linking it to the transaction.
Mark Armstrong: (33:02)
And now we've got access to Rate My Agent marketing reports and our social media manager and our ad networks. So, I think that, for us, it was about, as a business, we don't make money from collecting reviews. Real Satisfied make money from collecting reviews. The other one is Testimonial Tree, makes money from clicking reviews. Our review platform's free. So we're not competing with their market. We're happy to ingest their reviews into our system because it's the next step, which is really what Rate My Agent does very well. And other platforms, for whatever reason, that wasn't their business model. We focused just on one industry, the real estate industry. Other review platforms, Trust Pilot, a great review platform, but it's not specific to real estate agents. They would never link their review to a transaction.
Mark Armstrong: (34:02)
No, they would never link their review to a transaction. They're trying to be a review platform for everyone. Whereas, we're just building the tools specifically for agents. As I said, linking that review to the transaction is the really unique thing that we've done.
Kylie Davis: (34:16)
I guess there's a real strength in that, too, isn't there, because it's not just about an agent sending out the request for your own review? Because often as a consumer you get that request, and it's like, "Oh, they just want me to write something nice about them, because we've just transacted." But if the consumer can review it wherever they're comfortable reviewing it, but the agent can still pull it in and get the value out of it, that's a win-win for everybody.
Mark Armstrong: (34:44)
100%. We shouldn't be competing. We should never be asking the consumer to do the same thing multiple times. It's just a really inefficient market. I guess we saw a very inefficient market, and made it, and still are making it much more efficient.
Kylie Davis: (35:04)
Let's just pause there for a moment and hear a quick word from our sponsors.
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Kylie Davis: (36:18)
Has your move with REACH, going into the REACH programme over in the U. S., has this been a move away, Mark, from organic growth to deliberate growth? What's your future hold?
Mark Armstrong: (36:33)
Look, I just think it's one part. It's one iron in the fire. We have a great relationship with REACH and are building great relationships there. But also, we've now integrated with some of the biggest MLSs in the U. S. market. We have 450, or almost 500,000 agents connected to our platform via the MLSs, that's another relationship that we're really fostering. We have a wonderful emerging relationship with Inman, the Inman group. Molly McKinley, and Laurie Davis, and Paula all joining our business in the last three months or so, and building that strong relationship within that agent community through Inman.
Kylie Davis: (37:17)
Yep. Big shout out to the girls.
Mark Armstrong: (37:20)
Again, it comes back to that idea that real estate is a relationship business. I think if there's one thing that RateMyAgent is really proud of, it's the relationships that we build and we maintain. I don't think there's any great, I mean, if you look back in Australia what we did, it was very similar. We started to build great relationships with the larger corporate entities. We integrated, and we integrate now with MyDesktop, and [inaudible 00:03:47], and Box+Dice. Everything we did was about building that trusting relationship with the industry. NAR is no different. That sort of strategy, it's building the relationship with the industry.
Kylie Davis: (38:04)
Mark Armstrong: (38:21)
Yeah. Look, I think the review... and I don't know if I should say this, but I'll say it... we're still in the Wild West when it comes to reviews. The authenticity of them is, I mean... I read a review on Google a little while ago that was, I won't mention the agency name, but it essentially said never use this agency, because I was driving in my car and a car that was branded with that company name cut me off in the traffic. That was literally-
Kylie Davis: (38:54)
Yeah. You being watched all the time.
Mark Armstrong: (38:57)
... that's irrelevant. That that has a negative impact on the business, but it actually adds no value to the consumer who's reading it. I think what we are going... There's lots of, I think it was TripAdvisor that was recently fined in Australia for putting up fraudulent claims about their reviews. As I said, I read the article about the dentist who had a negative review on Google. I think what's going to happen is, reviews have been great. The pendulum has swung way over in favour of the pertinent person writing the review.
Mark Armstrong: (39:35)
I think what we're going to see happen is the pendulum will come back, and it will equalise where there's a balanced approach, where the person who's receiving the review, has an equal amount of power as the person who posted the review. Because at the moment, the person who posted the review can do that with complete anonymity, so we have no idea who they are. They can write whatever they like, and the person receiving the review is forced to go down through legal channels, very expensive legal channels, to try and address that. I think we've just got to see, I think we will see, the laws will catch up. The laws always lag. The laws will catch up. People writing reviews, we have to take away, and this is across society. If you get reviews, people-
Kylie Davis: (40:31)
The whole keyboard warrior. Yeah, trolling.
Mark Armstrong: (40:35)
Yeah. I mean, sports people get absolutely smashed when they play a game of football, and they miss the goal. I think accountability is what will come into the space, and as I said, the laws will catch up. It's something we've always been passionate about, finding that balance between the person writing the review, and giving them a voice, but also being fair and balanced to the person receiving the review, to give them some recourse to address that negative or positive feedback, whatever it might be.
Kylie Davis: (41:08)
Do you think that the way that we read or use reviews as consumers is likely to become a little bit more mature, too? I know that when I read reviews, I'll often, when I'm looking at a new business that I haven't used before, I'll look at the really good reviews, but then I'll also look at some of the terrible reviews to see if they're... well, if they've got any... but I'll always read them to see what those people were complaining about and to see how they handled them. Then I often also click onto that person's review if it's Google, to see what else they reviewed, to see if they're a regular troller or not, because I think it's sometimes gives you a really good perspective on the business and how they handle negativity, which can actually work in the business' favour sometimes.
Mark Armstrong: (41:50)
Yeah, absolutely. I think that's spot-on. I think consumers are being educated. It's been going through a self-education of how to interpret a review. A really good example of this, my wife and I, we went to Thailand a couple of years ago. We were looking to book a resort. We did the same thing. We clicked on the negative reviews. There wasn't many, but one of them said, "Really terrible service at this resort. I was in my room. I ordered a pool towel, and it took two hours for the pool towel to get to my room." From my and my wife's point of view, we just thought, "Grow up."
Kylie Davis: (42:25)
Yeah. Why wouldn't you walk to the pool yourself?
Mark Armstrong: (42:30)
Yeah. Get a pool towel yourself. You know what I mean? We took the interpretation that that guy was an idiot. We didn't place any emphasis on that review. I think that is what's happening. The other thing is that it's also reading. I think as you mentioned, reading the response, because the data very clearly shows that in the eyes of the consumer, it's not the negative review that really forms their opinion, it's the response to the negative review that really crystallises their opinion. If you get a negative review, and you respond to it in a very professional way, then the consumer thinks, "Everyone makes mistakes." Consumers don't expect perfection. There's that old saying, "It's not the mistakes we make, it's how we deal with the mistakes we make." I think a negative review gives the opportunity to put your hand up and say, "You know what? I probably could have done better there, but this is how I'm going to resolve the situation, and move on." Consumers will love to see that response.
Kylie Davis: (43:37)
Mark, you're in the U. S. You're connected to all the cool kids, Molly, and Laurie, and everyone from Inman. What does the next five years hold for real estate, generally? What's your reading of the tea leaves?
Mark Armstrong: (43:50)
Yeah, it's a good question. I've been involved in real estate for a long time. I actually think it's already happening, and this will be more pronounced. We're going to go into a very clear two-tiered real estate market. The lower tier, the iBuyers, the commission-free models, I know Purplebricks didn't work out, but that sort of low-touch, low-service, but cheap model, which will tend to be for cheaper real estate. You tend to find that real estate with a lower value has less volatility in competition. It's price points, it tends to be more. Very clear that there's not 20 people looking to buy that sort of property, so the value provided by the agent can sometimes be less noticeable. Property owners who have that type of real estate will be more inclined to go to an iBuyer business model in the U. S, or to a Purplebricks type of business model, or the sell-your-own-home business model where we give you all your tools, and you put it up online yourself, and you negotiate it. I think there's a market for that type of business, but it's at the bottom end of the market.
Mark Armstrong: (45:19)
Then you'll have that high-touch, high-service, top end of the market. Those agents will always... We've developed a concept called the "undestructible agent". An "undestructible agent" is that person that offers a very high quality of service, that builds really strong relationships, and adds enormous value. A million dollar property, the difference between a good agent and a poor agent, it be tens of thousands of dollars, and in some cases, hundreds of thousands of dollars, and really sort of being able to negotiate at that sort of level. I think we'll see, particularly in places like the U. S., we will see a rationalisation of the number of agents. I don't think we'll say 1.3 million agents in the U. S. forever.
Mark Armstrong: (46:15)
I think we'll see a strong consolidation at that top end of really good real estate agents who offer a really high level of service to people who, in most cases, the value of the property will be higher. I think we'll see that emerging market of the iBuyer market, the self-serve market. It will find its space, but it'll only be in particular markets and particular price points. We see in the good agents, we see a really positive outlook. If you're a good agent, and you offer a great level of service, and you get great customer feedback, you're really primed and in a perfect position to capitalise on that part of the market.
Kylie Davis: (46:59)
Very cool. Very cool. I love that idea that, yes, we're moving in kind of two, that it's starting to separate out, as opposed to trying to be all things to all people with all the tech for all the properties. It really does make no sense for us to try and only be one thing.
Mark Armstrong: (47:15)
I mean, if you look at the... sorry to just keep going on that... if you look at why Purplebricks failed, they will never go into get market share in the Bondi market in Sydney or the South Yarra market in Melbourne. They're very high-touch markets where people have got longstanding existing relationships, and that's the sort of service they want. Purplebricks was never going to find market share in those markets. It was always going to be very hard to find market share in those markets. Yeah, it's really breaking the two markets apart.
Kylie Davis: (47:51)
Fantastic. Mark, have you got some awards coming up?
Mark Armstrong: (47:55)
We do. Our Agent of the Year Awards are being announced this Thursday, Thursday the 20th of Feb. It's the night of night for real estate agents.
Kylie Davis: (48:09)
Fabulous. Fabulous. Well, look, thank you. It's been really fascinating to hear about the RateMyAgent story. Thank you. I've learned a lot that I didn't actually know about how you guys operate. I love that idea of the person with the best and the most relationships wins. I think that's really extraordinarily powerful in this day and age. Mark Armstrong, thank you so much for your time.
Mark Armstrong: (48:34)
Kylie Davis: (48:35)
Good luck in the U. S.
Mark Armstrong: (48:36)
Thank you very much.
Kylie Davis: (48:37)
That was Mark Armstrong, CEO of RateMyAgent. I don't know about you, but I've got a whole new appreciation now for the value of reviews in real estate, but also an understanding a little bit of how poorly so many of us use them and how much potential there is out there for us to demonstrate to the broader public that the real estate industry is changing and delivering much better service. I love Mark's comment that in real estate, the person with the most relationships wins. We're seeing that more and more, this movement away from the transaction and towards the personal. Amplifying your reviews is a great way to effectively scale your personal recommendations. I think the fact that a company as big and successful as RateMyAgent using the NAR REACH programme to launch in the U. S. is fascinating, again, tied to the RateMyAgent view about the value of relationships. I love that they're consistent in that. I wish them all the best in the U. S., but from everything I hear, they're already going gangbusters.
Kylie Davis: (49:34)
Now, if you have enjoyed this episode of the PropTech Podcast, we would love you to tell your friends or drop me a line, either via email, LinkedIn, or on our Facebook page. You can follow this podcast on Spotify, Apple iTunes, and Google Podcast. I'd love to thank my support, the very wonderful Charlie Hollands, who is the best, and the fabulous Jill Escudero, and our sponsors, Beepo making outsourcing easy, and HomePrezzo. Thanks, Nate, turning data into amazing marketing content. Thanks, everyone. Until next week, keep on PropTeching.