Real estate and legal combo REAL is looking to unwind its national network after problems attracting market share.
The group of lawyers and estate agents launched last July, opening a chain of 26 offices in a bid to shake up the industry with a blend of salaried sales staff, low commissions and link-ups with local lawyers for conveyancing. However, an extremely tight housing market through 2000 certainly didn't help the REAL cause and, as early as September, it was reporting financial difficulties in some areas.
National Project Coordinator Warwick Brown isn't expanding on REAL's current woes, but one Christchurch office and up to five more are understood to have closed.
The board of Real Management, which funds the national co-operative venture, is proposing that the separate regions run the business through regional franchises.
That board has now met to go through the response to this proposal. Chairman Ken Jones says: "Conditions imposed on some acceptances have necessitated further discussions with the regions and the company's bankers. These will be continued this week and finality is expected by Friday."
Rex Hadley, National President of the Real Estate Institute (REINZ), said today he felt "dreadfully sorry" for any institute members that have been affected. "However, some serious questions have got to be asked about the REAL business plan."
"February, March, April, May and June (the real estate market) tracked downwards and the signs were there that it was going to be a very tough year. They chose to open 26 offices in July, but it would have been a very brave person who would even open one."
Brave indeed, as Hadley describes the real estate industry as "the most competitive industry in the country, I think, and there are 14,000 motivated sales people out there."
Back in September, REINZ took the unusual step (given that REAL were institute members) of releasing a statement headed "REAL difficulty unfortunate but predictable". This statement said the public appeared reluctant to accept a low cost service.
However, REAL argued at the time that the housing market had been unbelievably difficult since their launch, but they had still been able to gain listings and a percentage of market share.
