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Facing the market

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With John McGrath - CEO McGrath Estate Agents

 John McGrath has come a long way since landing his first job in a small agency in Paddington after failing the HSC. Five years later, at the age of just 24, the “nervous rookie” sold a Point Piper mansion for $11.25 million, smashing all sales records at the time and immediately placing him on everyone’s radar. Moving forward to establish McGrath in 1988, the brand has since grown to become one of Australia’s most successful real estate groups with 95 offices throughout the east coast and a sales force of more than 900.

Beyond the 30-year commitment of building an exceptional real estate brand, John has volunteered an enormous amount of time, including five years as co-host of Real Estate Hot Topics, to help others succeed in their chosen career. Many of our industry’s highest profile sales professionals began their careers with McGrath and know they wouldn’t be where they are today without John’s vision, mentorship and support. However the journey hasn’t always been smooth, the last two years having been particularly challenging, with share prices of the publicly listed company plummeting and John finding himself in the media firing line. During a recent interview with Lee Woodward, John spoke candidly about his current position and how McGrath is evolving to bounce back stronger than ever and meeting the demands of a rapidly changing market.

From 'perfect storm' to the foundation for a strong comeback

In late 2015, the McGrath board and senior management team made the decision to list the company on the ASX following a period of rapid growth, which saw the company recognised as Australia’s third largest residential property agency. John says, “We made the decision to go public because we felt it would allow us to further grow the business and retain and incentivise key people, which can be easier and more effectively achieved in a public environment.”

Within weeks of floating the company, a severe contracting of listings hit both the company’s profits and internal culture hard. John reflects, “It was almost like the perfect storm. When you miss your prospectus forecast, you get heavily caned.” He takes the mission of rebuilding shareholder value, which is currently stabilising, “extremely seriously”, particularly knowing that a number of staff and many mums and dads had invested in the company.

After a recent overhaul of McGrath’s board of directors and management team, John says they now have the foundation in place to make a strong comeback. “We've got a brilliant new team of people at the helm of the business,” a team that includes new CEO and a familiar face at McGrath, Geoff Lucas, who rejoined the company in February. “During the restructure, Geoff was the first person I thought of for CEO,” says John. “I've always had enormous friendship, trust, and respect for Geoff. I think he's one of the best real estate executives in Australia, even while he was working elsewhere, his passion for the brand continued.”

The fine line between opportunity and risk

The real estate industry is undergoing rapid change and John says no one is immune to it. This is true whether you own or work for a large company like McGrath or a boutique independent agency. According to John, change creates opportunity, but it also creates risk. He says, “Those that ignore the changes and continue to do things the way they did in the ‘good old days’ are at risk,” adding that every principal, sales manager and agent must carefully consider how the changes will impact them and let go of any fear that prevents them from losing their market share to those that embrace change. “It's an interesting time to be in real estate. I believe the greatest agents will see their best years over the next decade.”

Technology is advancing, but don’t use it as an excuse to hide

With technology advancing exponentially, John says the industry is at risk of losing the human touch if agents hide behind digital screens and the latest gadget. “And we’ve only seen the tip of the iceberg,” he warns. “Over the next five to ten years, we're going to see technology, particularly mobile technology, that will make agents far better at servicing their customers and managing their own businesses from the palm of their hands.” But no matter how far technology advances, John emphasises that it will never replace the sense of trust and confidence personally instilled by an agent. He says, “It can't replace someone who looks you in the eye, who gives you that great feeling of trust, who gives you recommendations based on exactly where you're at right now, and holds your hand throughout the process. The great agents of the future will have the brilliant technology platform to make them efficient, but they will also have the authentic, human touch that makes people feel respected and confident that they are being looked after by someone they can trust.”

While John has heard many people say that realestate.com.au is the digital future of the industry and could be a threat to jobs, John’s view is that the portal is a leverage platform to help agents grow their businesses. And he sees social media in much the same way. He says, “I don't think it (social media) is going to overtake the industry, but I do think it's going be the new way for people to promote themselves or, more importantly, promote their customers’ properties, because there are a lot of passive buyers out there. In fact, about 92% of the community is not actively looking to buy.”

John maintains that, when used correctly, social media is so effective at promoting properties to the right target markets that he suggests every business owner ask their sales agents to outline their social media strategy before each new financial year. He says, “I think social media is the REA Group of today. You can very cost-effectively promote your properties and yourself through those platforms for probably a fifth of what you will be able to in a few years. So right now, take advantage of it and jump on it.”

Ultimately, John says technology is there to free up an agent to have face-to-face conversations with people and sell in the old-fashioned way. “Technology can get their attention, but it will never take the place of the master craftsperson at selling who can give a buyer the confidence to justify their emotional reaction to a property.”

Our greatest gift (and responsibility) is to serve people

John, who still attends up to five key listing appointments a week, admits to missing face-to-face selling and auctioning. “I often say to my staff, when you're doing something you love, something that's important, and you're serving people, helping them solve problems, that's the greatest gift. If you take the commissioned dollar signs out of your eyes, and you just do the things you love and add more and more value to the people you serve, inevitably, you're going to be incredibly successful.” He cites McGrath’s number one sales agent for 2017, Mat Steinwede as an example. “Mat’s almost child-like in his passion for the industry and it shows in his results.”

John also emphasises the high level of responsibility that comes with being handed the keys to someone’s most valuable asset. “You can't turn up having a bad day or let something slip through the cracks. Miss a buyer enquiry and it could cost the client 30 to 40,000 tax-free dollars. You have to be on your game. We’re not brain surgeons. We're not saving lives. But we are doing a very important task in the community. So that’s a very good reason to wake up and be great at it.”

Think globally

For some years now the international world has had its eyes on Australia and New Zealand for many good reasons, including our political stability, security, safety, climate, population and space. Until about a year ago, we saw a surge in the number of Chinese residential property buyers, particularly in Sydney and Melbourne. While there is currently a restriction of capital outflows from China in place, John is confident that this situation will eventually normalise. He says, “There are around a billion rising middle class people in Asia who can afford and have a desire to invest in countries like Australia. If we improve infrastructure we should, in my view, embrace an increase in population to be competitive with the rest of the world.” In real estate terms, this means having the cultural expertise in place to accommodate overseas buyers. John says, “You can't be an expert on every culture around the world, but you can identify the three to five cultures within your own communities that are most prevalent and become better at serving them.”

McGrath established a ‘China Desk’ some years ago, headed by Davey Hong, a client liaison officer with the right cultural fit, whose role it is to communicate with buyers and sellers in their own language, generate leads and facilitate the buying and selling process. John says, “Davey has been involved with $286 million worth of transactions in three years, and not in a sales capacity. We simply identified the need for a role like this and it has proven to be a very valuable investment.”

Be authentic and keep it simple

John says Mat Steinwede is a brilliant example of someone who is incredibly authentic and keeps things as simple as possible when working with people. “Simple is difficult. But Mat is a master at simplicity and authenticity. It's the people and brands that care for their customers, tell the truth, look after the environment, and contribute to the community that will rise to the top in this industry.”

Connecting with the right people in your community is equally crucial and directly linked to your ability to show your authenticity when generating leads. Social media data algorithms will help you define this target market. John says, “It’s about attracting people who will want to do business with you by sifting through the community to establish, who are the best people for me to be connecting with right now?”

According to a recent survey conducted by realestate.com.au, people also want a simpler sales process these days. Respondents indicated two main areas of concern when selling – choosing an agent and preparing their property for sale. So, if you can demonstrate that you are not only the standout agent for the job but that you can also take care of the entire process for them, then your end-to-end solution will stand you in very good stead for the listing. John says, “I think going forward, end-to-end solutions will be a critical part of our service proposition. And that doesn’t mean you have to have every service and every answer. You must simply have the ability and the service ethic to say, ‘leave it to me, I'll handle it’ and then find the right solutions.”

Great expectations

Consumers in every industry have higher expectations today than they used to and the desire for “more, faster, for less” is only going to increase. Given that technology will play a major role in meeting those expectations, John says, “You must have a platform that allows you to respond as close to real time as possible. If you haven’t replied back to someone within a few minutes these days, people start to get antsy, and they'll probably speak to your competitor if they're thinking of selling their property. You can’t afford to let that happen.”

Resilience

Lee finished his interview with John by asking him to explain the greatest lessons he has learned during the last two turbulent years. John’s response was simple. "I think it's about resilience, and it's in the tough moments that you actually forge a better you. Watch this space because we’re marching back."

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