Push to regulate booming Airbnb. Why!

The Australian Hotel Association has called on the State and local governments to regulate Airbnb listings, after the release of a report that found the on line accommodation service was booming in WA.

It has been revealed that there has been a 50 percent increase in WA listings over the past year to more than 8100 and this number continues to grow at around 4% per month. The report also determined that 61% of all listings are entire homes or apartments.

Not only has Airbnb become a great way to earn additional income but in many cases Airbnb has been the saving grace that has saved many who have been on the brink of losing their homes through foreclosure due to financial hardship being experienced in the current real estate down turn.

There is absolutely no doubt that Airbnb has been a revelation in the travel and accommodation industry and as is often the case with all ‘disruption models’ their success is accompanied by detractors.

Airbnb has received its fair share of criticism including complaints about fair housing implications and discrimination, privacy and terms of use, pricing transparency, tax avoidance by both Airbnb themselves and their hosts as well as the effect their model is having on housing affordability (rental pricing).

Sometimes the criticism is warranted and understandable, like when once quiet and peaceful beach side neighbourhoods are infiltrated with waves of young raucous and rowdy school leavers. Certain circumstances may justifiably warrant regulation, but in most cases those making the biggest noise are the ‘Old Guard’, businesses build on clunky inflexibly business models with the inability to adapt or worse they are led by people who fear change!

The West Australian real estate market is akin to the Travel and Accommodation industry; they fear change. We speak to hundreds of real estate agents on a weekly basis and on a weekly basis we hear the same excuses, ‘auctions don’t work in WA’, ‘auctions don’t work in our area’, ‘auctions are only for properties on the higher end of the market’, ‘I am too old or been in the game too long to try auction’ or ‘auctions only work over East’.

This is nothing other than a fear of change!

Auction Services’ 5 Stage Selling Strategy with Auction Option, offers sellers and agents the flexibility to adapt with changes in any market conditions. By stripping price from the equation it allows the market conditions to control the sales process. Throughout the 5 stage selling strategy you have up to 5 opportunities to create a competitive environment resulting in properties selling in less time (on average 28 days) and for the highest the market is prepared to pay!

Auction Services is offering FREE training on this amazing strategy, our next workshop is on the 13 December 2017.

Starbucks focusing on human beings. How odd!

I recently read an interesting article written by Chris Matyszczyk titled, ‘Starbucks Just Made a Major Decision That’s Really Going to Annoy Some People’, followed by the sub-title, ‘Turning its back on the modern world’

Even though Starbucks has no presence in WA, I would bet my last long mac topped up that there isn’t a West Australian who hasn’t heard of the famous coffee shop chain, so naturally I was intrigue.

So what was the breaking story, the headline news that has half of the US up in arms? Starbucks made the decision to close its online store, their new CEO Kevin Johnson is focusing on human beings.

How odd! (as aptly described by Chris Matyszczyk)

In a world that is blissfully digital, where barely a decision is made without some form of digital interaction, where a day doesn’t start or end without us looking at our phones, a world where just about every response to every question is ‘google it’.

In a world where the retail landscape is changing and changing fast, more and more outlets are pushing, not to create a strong online presence (because if you don’t have that you are already out the race), but to dominating search engine results and to find the magic algorithm that will put their business onto their potential client’s social media feed.

In a world where the restaurant and take-away businesses haven’t escaped this digital apocalypse. That’s right, just in case you missed it you don’t have to leave home for a gourmet meal or venture outside of the office during your lunch break, hell no, simply click on Menulog, Hey You, Foodora, Skip, Delivery Hero or Deliveryoo. For crying out loud we live in a world where our school kids are no longer pushing inline at the tuck shop but ordering Eber Eats!

Yes, how odd in this world!


BUT, Starbucks understands and has realised that ‘Humanity stills matters’.

Even with this cataclysmic shift from the traditional (if you were born before the year 2000) to the digital, Starbucks has taken the brave decision to do something quite stunning. The coffee chain has stopped, thought, and realised that what it’s offering is a human experience, something an online store struggles to or in fact cannot deliver.

When your core brand experience occurs in physical stores, it’s wise to enhance the value of that. The return, Starbucks hopes, will be that going to one of its physical locations will offer some level of actual joy. You know, the human kind.

Creating an experience is about reaching the emotional side of people, something that can only truly occur when all five senses are evoked.


We Get It!

Auction Services understands that as the real estate world has moved on, there has been an evolution in methods of sale available to sellers. Sure these methods offer convenience and save you time but they strip the true emotional element out of the sales process.

An auction is designed to create a human experience, it brings all the buyers together in an open and transparent environment, it is an environment that is filled with excitement, an excitement that can only be understood through the study of human psychology. We don’t generally tell others that we secretly revel in winning something while others lose, but face it, that’s often the truth!

There’s the adrenaline rush of bidding against an opponent to see who will ultimately win.

Interestingly, even if we end up paying more than we planned for, because the competitor bid us up, there’s this sense of ‘I showed em! I won!’. There’s a certain sense of satisfaction that comes with winning an auction.

Hearts beat faster. People have to catch their breath. Decisions must be made, often quickly. Since timing is always an issue with auctions, that alone causes excitement. Will a person make a big bid at the last minute, surprising everyone else? Will something that you thought no one would want end up going for more money than you ever thought possible? That sense of unknown coupled with an ‘anything’s possible’ mentality helps make the auction process uniquely exciting.

Auction Services conducts exciting real estate auctions. It’s your call!

The Decline of Toys R Us…What Happened?

Toys R Us filed for bankruptcy towards the end of September. Yes, arguably the most popular toy store in the world, Toys R Us which has over 35 stores in Australia and 750 international stores (outside of America) and more than 245 licensed stores in 37 countries has recently filed for Chapter 11 Bankruptcy.

It has often been said that Toys R Us, established more than 60 years ago set the standard when it came to toys. There is no question that if the popular TV game show ‘Family Feud’ had to go out and survey 100 people asking them to name a toy store, that Toys R Us would come up as the number 1 answer every time.
So what happened? Where did it all go wrong?

The obvious response is ‘another retailer slaughtered by Amazon and on-line retailing.’ But this conclusion comes short of describing why the Toys R Us leadership did not do the obvious things to keep Toys R Us relevant.
In the events leading up to the bankruptcy of Toys R Us, it was more a case of the wrong assumptions leading to bad outcomes!

In 2005 KKR and Bain Capital bought Toys R Us for about $6.6 billion, plus assuming just under $1 billion of debt, for a total valuation of $7.5 billion. But the private equity guys didn’t buy the company with equity. They only put in $1.3 billion, and used the company’s assets to raise $5.3 billion in additional debt, making the total debt a whopping $6.2 billion. What did this debt mean for the company? In short it created a cash outflow of $450 million per year just to pay interest on the loans.

Although risky, leveraged buyouts as described above are not unusual, the problems were in the assumptions used to analyse the risks.

The biggest assumption behind a debt-financed takeover is that the company can cut costs to improve cash flow and thus pay the interest. But behind that assumption is an even bigger assumption. That the marketplace won’t change dramatically.

Their plans were to lower operating costs, close some stores that were under performing, license some offshore stores, and sell some assets (real estate) to raise cash and repay the debt.

But what did they miss?

1. The accelerated growth and popularity of online stores such as Amazon.
2. That growth of on-line retailing would stall traditional retail stores, thus creating a major loss of value for retail real estate
3. The changing landscape of games. Let’s face it with the advent of technology and the advancement of video games kids today are not spending much of their time paying with traditional toys.

Toys R Us choose to focused on the war with WalMart and Target who had decided to launched a full scale price war to dominate holiday toy sales. A war these giant retailers were winning not only because of price but because of convenience. Parents could now do their toy shopping while they were doing their general weekly shop.

Simply put because of their debt Toys R Us did not have the resources to fight the traditional discount and dollar brick-and-mortar retailers and build a major on-line presence plus keep up with the changing landscape of traditional toys and keep paying their debt. They wanted to, let us not forget Toys R Us actually had a very strong online presence launching toysrus.com over 20 years ago and further strengthening their online presence in 2007 when they bought etoys.com and toys.com which all happened after the LBO.

In layman terms, it is like being forced to take a pay cut but still having the same mortgage repayments. Their lack of financial resource meant they were always behind the ‘8 ball’.

Because of poor assumptions, poor decisions were taken resulting in lower earnings and profits putting Toys R Us in a position where they simply could not afford to service their debt.

So what does this have to do with real estate?

The real estate market is more dynamic and harder to predict than ever before. Yet, agents are still listing properties using a pricing strategy. To price a property, you have to make far too many assumptions and often these assumptions result in properties remaining on the market for 90 days or longer (current average days on market is 72) and selling well below market value.

Auction Services 5 Stage Selling Strategy strips price from the equation and allows the market conditions to control the sales process. Throughout the 5 stage selling strategy you have up to 5 opportunities to create a competitive environments resulting in properties selling in less time (on average 28 days) and for the highest the market is prepared to pay!

To find out more about the 5 stage selling strategy contact Auction Services Australia

(Article Note: The Toys R Us chapter 11 filing did not include operations in Europe and Australia, licensed stores and joint venture partnership in Asia, which are separate entities)

Dying breed or bucking the trend?

There is no doubt that more and more today customers are looking for a ‘buying experience’. Offering standard ‘vanilla’ no longer cuts the mustard!

We live in the digital age where just about everything you could ever imagine is available at the click of a button. Not only is it now more convenient to get the things we want and need, but is in most cases cheaper.

We live in a world where we could work and live without ever leaving our homes. In order for businesses who don’t offer their products and services online to successful compete, they need to be giving more, they need to be offering the customer added value, they need to be providing an experience!

For those of us in our mid-thirties and older, we will remember the days of walking into the local video store to rent a movie for the evening. Yes, that’s right we would get in our cars, drive a few blocks down the road, spend probably 30 minutes browsing tens of DVD covers trying to make a choice, then drive back home to watch the move. Let’s not forget that we had to return the DVD by 12 noon the following day or face penalty fees.

In 2008 there were 56 Video Ezy stores in WA, today there are just 6. Blockbuster Video has over 370 video stores across the country, today there are 16 with only 3 in WA. The introduction of digital TV and subscription services like Netflix and Stan has devastated the rental industry.

9 News Perth recently aired a story titled ‘Video Revival’, which told the story of Video Ezy Spearwood owner Matthew Rolfe, who decided to buck the trend by diversify. His store now offers collectables and movie merchandise for just about every movie ever released.

Visiting the Spearwood Video Ezy is no longer about choosing a movie for date night or to keep the kids entertained, it is about stepping into the world of movies. The collectables and merchandise allow customers to take part of the movie home with them.

Although the digital world has brought convenience, lower prices and wider choice, it can’t offer you a buying experience. As humans we have an inherent need to use all five of our senses and the more of our senses we engage the greater the level of satisfaction.

Steve Jobs once said:

“You’ve got to start with the customer experience and work back to the technology – not the other way around.”

Steve Jobs quote could be remixed into something like:

“You’ve got to start with the buying experience and work back to the revenue – not the other way around.”

The buying experience includes the entire process that the buyer engages in as they move from status quo to purchase. The status quo represents what the buyer is doing before they embark on the buying experience, while purchase represents the final step that moves someone from buyer to customer.

That experience consists of different elements from the buyer’s psychology, to the information they consume, to the interactions they have, during the buying process.

None of these elements is more important than the buyer’s psychology and emotions – their desires, needs, wants, and fears. This psychology governs much of what the buyer will experience.

It is really simply then, businesses that can offer the greatest buying experience will win the customer.

Just as we encourage all of our readers to go away and ensure they create complete buying experience for their customers, here at Auction Services Australia we are continuously working towards not only creating but also continuously improving the buying experience for our customers.

Working together with real estate agents we want to ensure that the auction method of sale is not only a great experience for the agent but also for the sellers and buyers.

From our professional booking agent, informative website, legally approved documentation, personal mentoring right through to our unique 5 Stage Selling Strategy and FREE coffee at all our auctions, Auction Services Australia want to create an experience beyond expectation for our clients of both cash unconditional and subject to finance auctions!

Who the F**k is Arthur Fogel? A story about how being bold and creative revolutionised an industry.

If you’re the same vintage as me, you’d have to agree that the music industry has changed significantly over the last 20 to 30 years. We saw albums replaced by CDs and CDs give way to digital downloads. And then you can throw illegal downloads into the mix…..
All this has had a negative impact on the revenue artists make.
The music industry struggled to cope and the documentary “Who the F**k is Arthur Fogel?” looks at how Arthur Fogel recognised the effect technological change was having and revolutionised the concert business.
He created mega concert tours for artists such as Lady Gaga and U2, adding value to an existing revenue stream and giving them the opportunity to earn additional income that may have been lost in record sales.
In a way, the real estate industry is facing a similar. Private treaty sales have held sway for a long time, but agents’ market share and income is being eroded by For Sale By Owner, and models like Purple Bricks and OpenAgent.com.au.
This is where agents need to do something different, something those alternatives can’t offer and that’s where auction comes in. Auction is like the concert tour of real estate.
Arthur Fogel said people go to shows because they want a show, they want showbiz. They don’t go just to hear a song, they get excited about the show.
Auction day is a chance to put on a show, put the property on a pedestal, create some more interest. It’s an event and makes agents and properties stand out from the crowd and gives them a competitive edge.
At Auction Services we’re taking a leaf out of Arthur Fogel’s book; we want to take on the new business models that are disrupting the industry and help more agents succeed with auctions.
We also want to add value to the day itself and make it more of a ‘show’. From the start of the new financial year our flat fee will include a coffee van with every auction booking. Agents will also have the opportunity to join FREE weekly coaching seminars to help them manage and run effective auction campaigns. We want to make auctions a fantastic experience for agents, sellers and buyers.
Like Arthur Vogel, we’re not just going to sit back and put up with the changes, we’re going to do something about it.