First National takes over competitors

Media Release
May 27, 2008
 
Real estate industry consolidates as First National takes over competitors
 

First National is to take over its third competitor in a month, with LJ Hooker in Nelson the latest casualty of the market.
 
By the beginning of June both LJ Hooker’s offices in Nelson will have merged with First National’s under the First National banner, signifying the end of the LJ Hooker brand in the region.

Just weeks ago First National Whangarei took over Century 21, adding it to its stable of multiple offices in Northland.  Earlier in the year, First National Taupo took on LJ Hooker’s staff and some of its business after LJ Hooker in Taupo went under.

First National New Zealand General Manager John Stewart said several other offices in the network were in talks with their competitors regarding similar moves. 

“Because First National is a co-operative and not a franchise, it is cheaper for a business to belong to us than say Harcourts or one of the other franchises.  For businesses looking at the structure of their overheads in periods of lower sales it makes sense to pay your brand one or two percent of your turnover rather than up to 10% that some franchises charge.
 

“Obviously we have to be careful who is joining under our banner.  We are implementing Best Practice across our offices and that has rigorous standards.  Over the past six months we have let go of three First National members whose dealings with customers did not reflect our brand values.
 

“First National is not traditionally a flashy high flyer.  We are a solid regionally strong network of like-minded businesses.  With our increasing focus on bringing in a Best Practice real estate system, we can achieve great results for our customers. Despite a toughening market, First National is enjoying a high degree of customer loyalty because of that focus.”
 

Nelson Tasman First National principal Colin Wilson said his company had taken over the whole LJ Hooker business, including rental management and property sales and given all the sales people jobs.
 

“With the downturn in sales volumes, the market is consolidating.  We are obviously pleased that First National is growing but we do recognize the challenges of the local market and are working to be proactive in these conditions.”
 

Mr Wilson has just marked his 20th anniversary of being in real estate.  He says he has seen tougher times in the industry than what is happening at the moment.
 

“I am yet to see the substance of all this doom and gloom predicted.  I came into the industry at the time when the sharemarket was in turmoil after the ’87 crash.  I was there through the troughs of the early 1990s and late 1990s.  They are cycles.  Despite the doom and gloom people are predicting now, we have seen worse in the past.
 

“I’m not saying it’s not tough out there, We are going through times when physical sales numbers are down.  But prices have never been this high before and people live differently.  They are often more highly geared financially so it takes less to put stress on people’s lifestyles these days.  That may make it seem worse even though there are fewer mortgagee sales and relatively smaller price drops than other low points of the property cycle over the past two decades.”
 

Mr Wilson said the proliferation of agents and new offices during a long prosperous growth period for real estate meant the sudden downturn in sales volume had left a substantial number of firms feeling desperate.

“Some I have heard about have only made one sale for the whole of last month.  You can’t run a business on that.”

His one piece of advice for other real estate companies was to band together and talk to each other.

“To protect the salespeople who work for them they must look internally and talk to their competitors about how best to get through the times ahead.”
 
ends

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