The DIY Real Estate Game - Industry Change Episode 5
In this episode of the DIY Real Estate Game’s Industry Change series, host Richard Toutounji interviews Malcolm Gunning, President of the Real Estate Institute of Australia (REIA). Gunning reflects on the 110‑year history of the REIA and the rapid, unprecedented disruption facing residential real estate, driven by digital platforms (property portals, rating sites, low‑cost transaction services like Purplebricks) and the broader sharing‑economy model exemplified by Airbnb. He argues that traditional reliance on regulation and licensing has bred complacency, and that agents must become nimble, offering genuine value‑add services rather than merely providing market valuations that are now publicly accessible. Trust, community branding, and personal reputation (e.g., face‑on‑flyers, local sponsorships) are highlighted as key differentiators, especially as consumers become more informed and demand transparency. Gunning discusses fee structures, noting typical 2 % commissions versus lower‑cost portal fees, and explains how agents can justify higher fees by creating competition and delivering superior sale prices. He observes regional variation across Australia—Sydney and Melbourne face affordability pressures and higher disruption risk, while regional markets still value traditional agent services. The conversation concludes with a forward‑looking view: agents who innovate and maintain professionalism will thrive, while less professional operators will be displaced.
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Welcome back to Industry Change. It's Richard Toutounji, and today I've got Malcolm Gunning aboard. Welcome.
Glad to meet you.
And Malcolm is the president of the Real Estate Institute of Australia. the REIA. I wanted to talk to you because I just think that with every industry and the change of industry, I love to understand how that industry body is moving forward, is looking at the past, is looking at the future and kind of figuring out what to go. Now, the Real Estate Institute of Australia, the REIA, is well known in this space and you deal with a lot of that market and all of that change and I'd love to know a little bit more about how How your peak body has actually made the shifts and made the adjustments through all these changing times and technology and Airbnb. How have you kind of dwelled this process?
Well, the Real Estate Institute of Australia has been going for, I think, 110 years, and in the various states have been going for 120, 130 years. So there's been an evolution. Real estate's changed dramatically from, you know, the 19th century through through to here we are now in the 21st century.
Yeah.
And the big challenge for particularly residential real estate is the amount of change that is coming down the line now, particularly through what we see happening in the rest of the world, is dramatic. We've never seen anything like this before. So the industry itself has to be— has to adapt very quickly. And in the past, we haven't been nimble. Change has been slow, and we've hidden behind or relied on regulation because residential real estate is highly regulated in most of the states.
Sure.
So there's been a little bit of complacency in as much as, well, we're regulated, we're licensed,
everything will be okay,
everything's okay. But as we know with Airbnb and with Uber, What they did to those industries. So we're looking over our shoulder and saying, what's coming?
Right.
And we're going to move quickly.
It's a really interesting point you say there because yeah, it's industries that have been pretty stable and all of a sudden there's a new player on the block with a lot of backing, a lot of money behind it, a lot of change sitting in, I almost like say, the gray area. where they're not kind of coming to the front, they're just playing on the outskirts, but all of a sudden they're right on your doorstep then.
That's correct. And we can see that with a range of areas. Look, you've got portals coming into the property management area. So you're looking at really having a platform where property owners and tenants can match up. So the property manager's position will be eroded. Yep. Then you've got Rate My Agent type arrangements. So, you know, you rate your restaurant, you can rate your doctor, you know, you rate your accommodation. So you're going to rate the real estate agents for sure. So a lot of real estate agents say, hang on here, we don't like this. But the public do. Whatever the public want, the public are going to get. And that's the big thing.
Interesting. Whatever the public want, whatever the consumers want, that's what they're gonna get. That's what's gonna win.
Correct. So hiding behind a registration or that type of thing, you're not going to win business in the future. I've been around for a long time. Look at my age, my lack of hair.
Well, I've got the lack of hair too.
But one thing that we have to be good at in real estate, and many of us are, is to be nimble and quick and change with the time. Look at, I suppose the biggest example, Richard, is we all used to sit around on a Saturday 10 years ago, have a coffee, and read the real estate ads when we were looking at leasing or buying property.
Sure.
What do we do on Saturdays now? You sit with your iPad looking at the portals.
Straight through, yeah.
Okay, and that's 10 years. You've seen Fairfax go from the rivers of gold from the classified ads of a Saturday to now being a fraction of what it was and print starting to disappear.
Well, yeah, I saw an advertisement for one of those, one of those real estate portals saying if you're not on our platform, you know, you're not in the game, you know, in the real estate game. I thought, you know what, if they said that 5, 7, 8 years ago, it would have been, yeah, sure. But if you say that now, it's like, well, it's pretty much factual now. People are looking at it in a different way. When we talk about marketing in our company and we educate any business about how to market, the first thing we always talk about, especially today, and I don't think anything will change, is building trust in the marketplace. I found that real estate agents have known this for a very long time because I see, and for years, you see a flyer in a mailbox. It might not be the most appropriate thing now, but you still see their picture on the flyer. Then you see the billboard with their picture. Then you see that the house is sold by this agent. Other industries haven't really— they're taking up that offer now, they're taking up that process now, but I found the real estate market always did that process. I'd love to know who kind of— why you guys started that process of really branding a person's face, and do you think that's the future, or do you think that's aged? How is that going to work with the new technology?
Because most people want a trusted advisor with their biggest asset, particularly a home. What's changed in real estate is what you're talking about is that the real estate agent tended to be the custodian of the market, the market information in their suburb. Yep. So if you went down and saw Malcolm Gunning down the road, you saw all these signboards with his face and he knows what's going on. He can price my house. But guess what? You can go online now and with a very— with a few clicks, you can find out generally what your house is worth. So the valuation of your property is not so important. So what the agents are doing now, residential agents particularly, they're saying, I'm the one who can achieve the best price for you. I've got the expertise. This is where they've moved to.
Okay.
Now I've got the expertise. to value-add to your transaction.
Yes.
Because you've all got a special home.
Yep.
And every home's special, as you know.
Yep.
And mine's better than the one down the road.
Sure.
So, but I'm able to recognize that. I'm able to then put myself between the prospective purchaser and myself, and I'm going to be able to get you the best price. And that's what the fees are paid for. Those that think that the process— and this is where the cynicism came from the public— Because the public started to believe that the process sold the house.
Right.
Okay, and also, we agents in Australia, particularly a lot of the young agents, there's been so much money made out in real estate. Let there be no doubt, over the last 5 or 6 years, real estate agency, particularly residential real estate agency in Melbourne and Sydney, has been awash with money.
Oh well, we see that, yep.
Okay, so, you know, but we agents, you might put our images on Facebook, not so much an old bloke like me, but a young man or woman have been very successful, made a lot of money. They have a photograph of themselves standing in front of a sold sticker. Sold the property 10% over the reserve, and just in the corner of the signboard is their new Porsche.
Yes.
So what does Joe Public think about that? Okay, so most, most people think when you as a business person, you don't care.
Sure.
Okay, because you can negotiate that, it doesn't matter. But a lot of, a lot of people think, hang on here, am I paying too much? Am I
paying for their lifestyle?
Paying for their lifestyle. So we became a bit brash. And that's why in New South Wales and to a certain extent in Victoria, when all this underquoting legislation came in, people got angry that the agent couldn't accurately tell them— a purchaser— tell them where they should be in the market to buy the property. Now, the market went mad.
Yes.
But so a lot of trust, a lot of the agent collateral disappeared during that time. That the collateral was being the custodian of the market value. The market value now, um, you take more notice of CoreLogic, Domain, or real estate. That's where they, they give you— they're the market monitor. So the agents lost a bit of— lost that mystique.
Sure.
And said, well, you— I'll tell you what your property's worth. And but Richard, you'd say to me, but I already know what it's worth. I already know that it's worth this amount of money. Now what are you going to do to get me a better price than that? And how much you're going to— and how much you're going to charge me? So then the challenge for the real estate agency is, how am I going to value add to that transaction when you take 2 or 3 2 or 3 things away.
So the value-add is still very important then, but it's done in a different way.
You asked about the agents that promoted themselves very well. So if you've been in an area for some time, and most real estate agents get themselves associated with an area.
Yep.
I've got grandsons that play footy out of, um, out of Coogee.
Yep.
Out of all the teams that are running around there, Every I think every prominent real estate agent's got a tag on the shorts or on the jumper. So, or what what's that? What what does that tell you? That that agency is associated with that area.
Sure.
So what what people want? People are becoming more village orientated.
Yes.
So they'll go to the local butcher. They'll go to the local whatever solicitor. More community. So Malcolm Gunning. Well, Richard is associated with that community. They sponsor the community. They give back to the community. They must be good blokes or good people.
So the branding and marketing, what you're saying and what's possibly gonna happen in the future, and it's already happening now, it's about making sure that, you know, if you want to drive that fancy Porsche, you've got to make sure that you put yourself in the community correctly and And do it well and be consistent in that.
Correct, very much so. But you also have to be innovative. So you have to understand that the public are not dumb anymore.
No, they're not.
Okay, so they're going to get more and more information, and the challenge for the real estate agent is to be able to broker that information, be able to sift through and say, look, Richard, you've got those facts and figures, but let's just run through a few things here so we get it very clear. This is what the buyer's going to be looking for in your property. This is what sets your place apart or what it doesn't, and this is how we're going to market it.
And correct me if I'm wrong, I mean, the future then will really be about providing a service as a real estate agent to stay in business. From what I'm seeing, what you're saying is providing a service that is second to none, providing convenience so that person can sell their property without having to do all that legwork, pretty much.
True.
And that's where the value will come. I mean, with these new portals coming in, yeah, there's gonna be platforms that connect the buyers to the sellers. Happy days. But at the end of the day, people still want that trust and credibility.
Richard, not all will.
Yeah,
I— from the information that we've got from the United States, which is a pretty sophisticated market over there, the real estate agents have lost a Upwards of 20%. That's
quite a lot.
Of the market in the last 5 years to areas which are low-cost portals to sell your— platforms to sell your property. We've got Purplebricks coming in. Yep, big advertising at the moment. So really what happens is you transact your own property. You use these to go through, there's a set fee, you get advice. But really, you're the one that you you the vendor is the one that's driving it. So, and that makes a bit of sense sometimes.
Makes a lot of sense.
It does. If particularly, let's just talk about fees.
Sure.
So let's just talk. Here we are sitting in Surrey Hills. This is where the smashed avocado on toast is all about. Okay. Let there be no doubt. And it's a highly desirable place to live. You know, for the the baby boomer like me, the empty nester. Or the professional wants to come and live here. So it's going to cost you $750,000 to buy a 55 square metre one-bedder.
Fair call, yeah.
Okay, so a 55 square metre one-bedder is a box. Yep, straight up box, a good location. What's unique about it is the lifestyle and probably the architecture of the building outside. So to sell something like that, you're probably going to be charged a fee of in and of the city of $10,000 to $11,000. That's at 2%. Let's just use that as an indicator. You might be able to get a purple bricks and you can sell that for half that fee.
Yeah.
Okay, so you'd say to yourself, well, how hard is it to sell?
Sure, that'd be the obvious question, I would say.
The box.
Okay. Yeah.
So now there's an agent I know that works this area that specializes in that sort of property. And if I said to him, look, I can get a purple bricks, he said, I know you can, but I've got a group of buyers that are going to compete for your property. I've sold so many over the last 7 or 8 years. I'll introduce this property to a group, and I'm of the opinion that I'm going to be able to significantly add value to it. So if you're of the opinion that it's worth $750,000, I'm fairly confident I'm going to be able to get you a price above that. Because I'll create the competition.
Got you.
Okay, and you'll go, okay, so this is the challenge now. Um, most of the savvy, uh, vendors will want to negotiate the fee. You get me a bonus, I'll pay you a bonus.
Sure.
Okay, and a good agent said, yep, I'll back my— I'll back my skill. If I get you a bonus, you give me a fat fee. Yeah, most people like that idea. Yeah, some people don't.
Yeah.
So the whole way we're doing business is unless the agent can value add to the transaction, they're going to get a very ordinary fee. They're going to be disrupted.
Makes sense. And the ordinary fees, then what people, the consumers, are basically wanting to say, hey, that's fine, you're a service provider helping me, or you're an expert that's going to get me the extra price. And if you do that, you'll be rewarded. You can go get your Porsche, pretty much. I mean, that's, that's the value there because you're selling a high-priced item.
So what does that mean for the industry in Australia? Now we've had— so Sydney and Melbourne, what we've got to understand too with this affordability debate that's going on, that's really only a Sydney and Melbourne debate. Other parts of Australia, and your viewers would know very well what happens in Western Australia, prices are falling, or Brisbane, or you go to the Northern Territory, it's up there the other way.
Everybody's moving to different areas.
So real estate is not like it is in Sydney and Melbourne. So up there, they'll gladly pay— outside of Sydney and Melbourne, most places— they'll gladly pay a fee for a real estate agent because buyers are scarce. I've got to stop losing money because it's going back the other way. So this is really very much a Sydney and Melbourne type thing.
And this is where the Sydney and Melbourne really, if you want to play in this industry, the first industry for change, you have to be prepared for change. Otherwise you're saying, well, move up in other areas where you can go back to old-school business.
Old-school business, very much so. It's not going to be as much disrupted up there. When I was in Darwin,
yep,
they wouldn't know what Purple Beach or Rate My Agent is and that sort of thing. It's a very different marketplace.
Yeah, no, that's really good. It's really good. And it's so interesting because every industry is going through some sort of disruption disruption right now. And it's great to understand that, you know, if they take the advice and if they kind of work together within that industry body and not be so against it, there is, you know, ways to continue that business. It's just about staying innovative. And how do you think a real estate agent should be marketing themselves to the consumer now? What do you think the best way for them is?
That's a very, very good question. Having a profile of an agent running around, being in the area, standing in front of a beach or a rural property or something like that, I think they should be able to talk about the market. I think they should be able to give information. I'm always of the opinion when we go out there, we should tell the owner or a landlord something they don't know.
Giving a lot of value.
Correct. So what happens is, the owner or the landlord of the property says, well, gee, I didn't know that. So first of all, they're recognising that you have some skill instead of just flashing your CV. They've got to understand that you've got empathy with them. You understand my house.
Yes.
You understand what I know is good about my house. And then what you've got to have is they've got to have that trust in your skill as a negotiator. In real estate, there's an old saying, if you can't sell yourself, you won't sell the house.
I like this. So you're basically saying the first step is give value, give information that the consumer doesn't know or want to know, especially selling their house. Then they come to you and then they say, okay, you've got me hooked in with the content, the value you gave me. Now, do you have the credentials, the qualifications, the experience to actually sell my property?
Correct.
So instead of going straight to show the flashy car, show what I've done, you've got to go one step first and actually show a bit of value on the front end.
Correct.
Last question, how do you predict the future?
Our industry will continue to do very well.
Yes.
But the better agents will earn more. Yep. And the less professional agents will be disrupted.
Love it. That's this week's episode of Industry Change. I thank you so much for your time. It's really great to get an understanding of your industry and how the REIO is gonna take that forward.
No, thank you very much.
Thank you so much.
It's been very enjoyable.
Thank you.
