In recent times the goliath Australian real estate franchise, McGrath Estate agents, has been in the news for all of the wrong reasons.
Firstly, the share price plummeted after floating on the ASX for $2.10 in December (currently 0.77c at time of writing) and more recently there have been some high profile defections from the group with 36 individuals breaking away to form their own ‘boutique’ offices. Yesterday, an open letter from John McGrath to his loyal tribe was highly critical of these defections and he didn’t hold back in saying that he felt that the agents who left were unethical and he had ‘zero respect for them’.
I want to make it clear that the purpose of this piece is not to join the mob that is currently enjoying the turbulence that McGrath is going through. I have friends that work for the company and, in my professional opinion, there are some very good agents still working in their network.
As a small business operator and the owner of a so called ‘boutique agency’, I am interested to observe what is happening to them at the moment and understand why. I have a problem with franchising, and I suspect that after some phenomenal success this is becoming an issue for their brand. Make no mistake, John McGrath was an exceptional agent who changed the game. He emerged in a complacent market place and raised the bar. The distillation of his personal success into the meteoric rise of the brand around Australia was masterfully executed so hats off to him for an incredible and inspirational success story.
With this success a huge number of agents wanted a piece of the pie and, in my opinion, one mistake made by many McGrath operators was they hired almost everyone. I shouldn’t generalise but in our area they offered almost every agent a job. In the short term this meant they strangled the competition, especially small offices, however now that we are in the medium term phase of their business life I feel the excellence that John himself brought has been diluted.
The issue I see is that if you hire people on the premise that you will make them rich then you are likely to hire mercenaries. If they think they can get more somewhere else, they will move. It seems John McGrath is feeling hurt as he helped create some of these millionaire agents and now they are turning against him, but is anyone surprised? It appears their grievances are all about money. The new brands are hatching as we speak, touting technology, superior marketing and so on, but with no mention of better consumer protection or focussing on limiting their clients’ risk exposure.
Real Estate is about people, it’s a very tough space to work in and as an agent you are dealing with people often under incredible duress. These operating conditions often spring two types of agent, supportive professionals or manipulative sales people. When I interview candidates and ask them ‘why real estate?’ many say ‘I love houses.’ If you love houses, maybe you should be an architect.
This business needs people who care about the business, not about gross commission.