Has Realestate.com.au Become Too Powerful?

Jason · 00:00Welcome back to the Numbers Game. I'm Jace. I'm here with Nick and Marty and Nico, you're in the driver's seat today, mate. What is happening?

Nick · 00:06Oh, uh, well, Jace, as you know, there's a lot of people selling houses at the moment. We've done a lot of this stuff. Um, we've covered a lot of this stuff on the podcast investors, you know, just sick of properties and selling them, and it just got me thinking about a business called [realestate.com](http://realestate.com) and never heard of a, the juggernaut that it is and.

Nick · 00:29I'm wondering, is it too powerful? Because everyone uses [realestate.com](http://realestate.com). Uh, fees keep going up. Agents need to pay more to list people's pri properties, vendors get past that, or sellers get past that cost. And really we're pushing towards a monopoly. And, um, I wanted to have a bit of a chat about the juggernaut and whether or not you guys think it's just too powerful and something needs to be done.

Nick · 00:53Initial thoughts, Jo?

Jason · 00:55Yeah, look, I think, you know, over the years you've heard about, you know, the monopolies or the polies of like the coals and woolworth, that kind of thing. And you think [realestate.com](http://realestate.com) au or REA group. Mm-hmm. And realistically it's them, and then a country Mile before you have any actual competitor that has any market share at all.

Jason · 01:11So when you think about it, if, if they're in this position where they have such a huge market share and they can drive the price up and up and up. It is a bit of a worry and you do wonder, you know, when somebody steps in or when a competitor can actually get a competitive advantage and, and help will, I guess, force them to drive their price down by losing some market share and making them react to it.

Jason · 01:31But yeah, it's a bit of a worry.

Nick · 01:34Yeah, I think so. And look, to give you some numbers on that. You talked about the market share, but the monthly users, um, on [realestate.com](http://realestate.com) is 12.1 million closest competitor domain, which a lot of people will recognize is 5.4 million. So fairly big gap there. Um, I know myself, I don't even have a domain, I don't have the domain app downloaded on my phone.

Nick · 01:55Um. And a lot of people I know don't, so yeah. What are your thoughts, Marty, you a [realestate.com](http://realestate.com) man or domain?

Marty · 02:02Well, it's um, in one way I'm very impressed 'cause I like monopolies and then the unfortunate thing when I have to pay for that, I don't like it so much anymore. So little bit hypocritical. But, um, I used to look at domain in.

Marty · 02:15Just, uh, property price search. They had a really good thing on their app where you could see the pricey property, but now realestate dot com's got that. So I tend to, you know, fluctuate back to [realestate.com](http://realestate.com) 'cause it's just easier and, uh, more functional for me. So, yeah, it's interesting, isn't it?

Nick · 02:30It is.

Nick · 02:31It is. And look what. Got me thinking about this is their 2025 annual report and the numbers that, that, that come out around profitability and, uh, growth and whatnot. And, um, so domains, uh, sorry, realestate dot com's or res, um, report this year, uh, showed $1.7 billion in revenue, which is a 15% jump on the last year, a net profit of $564 million.

Nick · 02:58Which is a 23% jump, um, on last year. There's a few other things in there, but you know, they're, they're the two big ones that we need to focus on and look from a personal point of view, um, I'm selling some investment properties myself, and this is, this is another thing that got me thinking. Both properties I've sold to date, uh, very similar in value, but have different postcodes, um, and not, um, you know, not a hundred kilometers apart, reasonably close to each other.

Nick · 03:30Yeah. Um, one property, the marketing costs, which is basically [realestate.com](http://realestate.com), was $3,745, and the other property was $4,640. So that was to list. On [realestate.com](http://realestate.com) and most of the real estate agents will suggest that you do that. A couple of points I wanna make. First thing is, I think a lot of vendors when they are selling their property will be very surprised by that cost.

Nick · 03:57The things they'll be thinking about is, okay, well I've gotta get some photos taken. Uh, a real estate agent's gonna charge me anywhere from one to 2%, depending on the agent, the price bracket, and where the property is. Um, and then I've got solicitor's fees. I would guess that a lot of people would be very surprised when the real estate agent says to them, oh no, hey, you've also got a marketing fee of anywhere between four to $6,000.

Nick · 04:22Question back to the agent, what's that for? The answer, that's to list you on [realestate.com](http://realestate.com). What I've also worked out on, uh, with [realestate.com](http://realestate.com) is you pay a price based on the postcode. So this is where the ACCC is starting to [look@realestate.com](mailto:look@realestate.com) and, and ask questions and say, well, is there a difference between, you know, you listing, um, in a metro Melbourne?

Nick · 04:46Um, or more, uh, expensive area versus, you know, somewhere in the far southeast, what is real estate com doing different that justifies them paying a different price, um, or the vendor paying a different price. Now if you ask me, it's the same, it goes onto the website. Photos get lodged, um, and people click through it.

Nick · 05:04I can't really see a difference. So it's these kind of practices that are making the ac CCC have a look in and say, Hey, we see you, you are, you've got almost a monopoly here. Are you starting to price gouge just because you can? Mm-hmm. Um, and then just one more thing. What this all comes back to is the power of [realestate.com](http://realestate.com) and their network effect, and that's what I wanted to go deeper on.

Nick · 05:28Particularly with you, Marty, given I know how your business mind works, but. [realestate.com](http://realestate.com) are the beneficiaries of a network effect. So, uh, very similar to Facebook, which means the more people that use the app or the product means that more people that want it. So to put that into really simple terms, I'm a vendor.

Nick · 05:45I need to list my property. Where am I gonna go? I'm gonna go where most of the buyers are. Mm-hmm. Most of the buyers are on [realestate.com](http://realestate.com) au. Then most of the sellers, they go to [realestate.com](http://realestate.com) au, which means that the buyers wanna see all the properties. They also go to [realestate.com](http://realestate.com) au, and you've just got this juggernaut that just continues to build based on network effect.

Nick · 06:05Uh, social media platforms, as I said, are very similar, so it made me think, well, number one, let's unpack [realestate.com](http://realestate.com) and should that. Um, should that be looked into? And number two, are there any other businesses that people should be thinking about where they can almost create a network effect in their own way?

Marty · 06:22Yeah. I love that, Nick. I think, um, you know, all, all credit to them. I still remember the early days of [realestate.com](http://realestate.com) where they were getting, um, you know, they were getting listings on and advertising on, uh, dirt cheap in order to get that market traction in the very early days. And I, I always wondered how it would end up and, um.

Marty · 06:42And I guess the proof's in the pudding, they've got that compounding effect of growth, which is outstripping, you know, the nearest counterpart being what, 40% of what they do on numbers. Um, so incredible. But I, I guess like you said, with great power comes great responsibility and. Like you explained there, if it's certain suburbs is demanding more of a price because of the value of the property, like how is that being executed in regards to, um, you know, somewhere maybe outer east or like, what, what's the dynamics around that?

Marty · 07:16What are the ratios in regards to costing and pricing, and is there transparency around that? Because at the end of the day, it's the consumer that needs to be protected. Protected as well. So it's all well and good to have a monopoly and someone doing really, really well. I think, 'cause I'm, I'm business minded, but I go, I still think it has to definitely come with a level of fairness across the board that everyone can trust when someone has that power.

Marty · 07:42And I don't think that's always the case. Um, you know, there's probably a bit of cloak and mirrors going on to, uh, you know, feed the trough a little bit further.

Nick · 07:50It's, it's, it's a really good point. And, and the thing that we haven't touched on yet is the, the fees to agents. And we've obviously got some, um, some, uh, close networks with well close people within that network, uh, that we work with.

Nick · 08:03And, uh, real estate agents are disgruntled because they also pay, um, monthly subscription fees to [realestate.com](http://realestate.com). And there's rumors out there of, you know, fee fee hikes as much as 110%. Um, and I guess that's probably where the real monopoly is because these real estate agents are getting backed into a corner is, well, we have to use [realestate.com](http://realestate.com) au or we can't provide the service that we need to, to our vendors or our clients.

Nick · 08:31But how do you justify. Even a 50% jump, um, to your, uh, to your client, which is a real estate agent. When your profitability comes out, it's a 23% jump. So if your profitability's going backwards, you could possibly justify that. Um. But the reality is that's not what's happening. And you know, these results are [re.com](http://re.com) au.

Nick · 08:52We re, we need to remember REA have other revenue streams outside of, you know, listing properties and real estate groups. But I would, I would guess that they wouldn't need to be hiking the price by a. Hypothetically 110%, um, in, in any real market outside of, we're doing that because we can.

Marty · 09:12Do you think, Nick, that agents are dropping their internal fees because of this cost?

Marty · 09:18'cause that would be counterintuitive to the real estate agent, like you're saying, uh, in regards to utilizing 'em, but there's just no other option. There's like, it really opens up the conversation of, of, you know, having a strong competitor come in, being really, really aggressive, but they're just coming from such a long way back.

Marty · 09:37Is it a, you know, is it a road to nowhere too?

Nick · 09:41Yeah, possibly. And look, I, I think a lot of real estate agents really just competing against themselves to try and win properties as far as fees go. Like I, I, I wouldn't suggest, um, that is impacting what they charge clients, but. They're all, you know, there's always one or two or however many in an area that are out there trying to undercut the others.

Nick · 10:02Um, but yeah, I, it's, it, they're in, they're in a really difficult spot spot because as much as they would like to, um, deviate and go another way. Whether it's domain or other competitors that are out there, there's another one called Homely. There are a couple of small ones. Um, it's probably just too much of a risk, Marty, um, to, to deviate

Jason · 10:23makes you wonder what the, the domains and the homely have to do to, you know, try and get some of those more eyeballs on.

Jason · 10:29'cause I mean. Like everything, it's, uh, supply and demand. If you've got TWI more than twice the eyeballs, why shouldn't you be able to charge up to twice the price? Um, so there is that argument, you know, the network effect, the power that they've, the power of the business. They've built the reach that REA has.

Jason · 10:45Um, when you compare it to, to other people and other prices, it kind of makes sense. Like I know the ACCC and the, you know. The pricing watchdogs are gonna come in and, and have a bit to say about it, but realistically, they've built a better business that commands a better price.

Nick · 10:58Yeah. And that's, that's always the hard thing, isn't it?

Nick · 11:01You know, because obviously a CCC will come and look at anti-competitive practices. And I, I think all of that is, is really, um, important. But when it's a, when it's a product that you pretty much have to use, so you would almost compare it to the supermarkets and food. You need to go and buy food if you wanna sell your property.

Nick · 11:22And people need to sell their properties, sometimes not by choice. They have to use one of these, um, platforms to make sure they get the results. So I don't know how much is enough, Jace, you know, 525 million in profit. Um. And, you know, profit jumps like that year on year when the property market really hasn't, you know, it's not like the property market's tripled in the last 12 months.

Nick · 11:44Um, so I don't know. There's, um, there's definitely a few questions. You just want things to be fair, I guess. Um, and particularly in regards to, to real estate agents paying the fees. To to subscribe, you know, if those rumors are true, even if they're not true, that's 110% is the rumor. You've gotta assume that there's increases out there of 50% as a minimum.

Nick · 12:04Um, I know we couldn't do that to our clients 'cause I know what the backlash would be. Um, and I know you probably wouldn't do that to your own clients either. So that to me is just purely, we are doing this because we can, uh, not because we have to.

Marty · 12:17Yeah. It's called a. Definitely a competitive moat.

Marty · 12:20There's no doubt about it. And I know I was talking to a guy going back probably three years ago, Shane Wallace, he, uh, has a company called Work App. Um, and basically you can list stuff for free, free on the, on the app, and you can do like job listings, all sorts of different things. Probably bigger in India than it is in Australia, strangely enough.

Marty · 12:38But, um, but. With that app, you can actually download your real estate. Um, listing agents can list directly on there and it's um, you know, his whole concept was how do we promote property for vendors for free and put the photos up, just get photos, but no volume, no traffic, you know, so it's like there's no point.

Marty · 12:59There's like no one knows what it is really. It's not focused and directionalized purely to property. Um, so it's in theory you go, yeah, there are ways, but it almost takes everyone in the real estate, all real estate agencies and, and franchises to come together and create a better way. Um, and wholesale it themselves to get control of the pricing.

Marty · 13:21But that's a, that's a whole different job in itself, and that takes you away from doing what you do best, which is selling property. So it's no matter which way you look at it, I'm not sure, Nick, I'm not sure what the answer is on this one. It's gonna take a, a big play by someone.

Nick · 13:35Yeah. Well, it's funny you say that because, um, what has happened in more recent times is that American business and the names escaped me, but they have come in and purchased domain.

Nick · 13:45Um, so domain, um, has got a big American player, um, behind them now, um, which means more money, which means more money to build and scale. So I would suggest that these, this particular American bus business is probably looking at the market here and thinking, Hey, there's. There's, there's, there's room or there's an ability to have an impact there, just based on the gap between REA and domain at the moment.

Nick · 14:08CoStar, CoStar, CoStar domain for 3 billion. So, so that's, or 17% share. Yeah, that's positive. Sorry, that's, that's positive. That'll just give them access to more capital, I guess. So they continue to do what they need to do. But, uh, you know, I've been obviously in the finance and, you know, uh, mainly home loan industry now for nearly 20 years and.

Nick · 14:29You're constantly hearing this stuff from domain, you know, we're coming a couple of years ago, I think there was a big campaign about it. Uh, and they just can't make inroads and look, maybe they have made inroads. I, I don't have the historic, the historic numbers as to what, what the gap of users is, but I dunno, it's, there's coming from such a long way back and, um, the REA juggernaut just continues to roll on.

Jason · 14:52Sorry, I'm not 17%. Uh, they bought a hundred percent. They started, they started with 17% back in February, and now they've taken over the whole thing from about May 20, 25 onwards. They bought it off, I think nine was the other main shareholder of domain.

Marty · 15:06So a question for you lads. Um. What would make you use domain over [realestate.com](http://realestate.com)?

Marty · 15:12What would need to happen from your own search experience and from your own usage? There you go. Actually, um, this may be a better option for

Nick · 15:21me and I haven't used the domain app to be con, to be transparent, but. It would have to, you know, the, um, the client experience or the ability to, you know, flick through properties would have to be seamless, which REA or [realestate.com](http://realestate.com) is.

Nick · 15:39And I, I dunno if any of you guys have used domain, but I'd struggle to think they haven't got that part sorted. I would've thought we've, that, that's the easy part. Um. But Marty, it's access to the properties. And if, if there's, you know, particularly in this market where it's hard to find properties, there's not many listings.

Nick · 15:59If 20 to 30% of the listings aren't there, then, then why would you go there? Yeah. So the first thing I would say is they've just gotta make sure that every property that's on [realestate.com](http://realestate.com) au is on domain. Um, otherwise, why would you have two? Um, so. And then if you go back the other way, I am not sure if, you know, domain has some that [realestate.com](http://realestate.com) don't, but it'd, it'd have to be one, once, one app where I could get access to all the properties and obviously it'd have to be pretty easy, um, to, to use the app.

Jason · 16:30Yeah. For me, uh, case and I are looking at some properties at the moment and then, you know, just, I haven't even kind of thought about where we go and how we do it. Usually it starts with a Google search. And unfortunately for domain real estate group just seemed to own the first page of Google. Like they're better at SEO, they're better at their listings, and they're better at how things rank.

Jason · 16:47So if you go to a Google search and go, you know, real Estate South Yarra or South Yarra apartment for sale. Generally the, the, the first pages that come up are, are [realestate.com](http://realestate.com) au and bang, you click in and, and away you go. I haven't thought to download a particular app necessarily, like a domain versus a, a real estate, uh, app.

Jason · 17:07And yeah. And then even, um. Property ads appearing on Instagram or Facebook. I mean, I'm not picky or choosy, but nine outta 10 of them are, are linking straight to real estate's website rather than domain. So that also obviously just means that's where the properties are. They, they own the market. It's the monopoly as we talked about.

Jason · 17:25And yeah, just, just not seeing a competitive reason or a reason why I need to go to domain if I'm never being driven there.

Nick · 17:32So Marty, you've got the, the clever business mind. There needs to be a circuit breaker, right, for domain to, to have an impact. Um. What do you think they could do?

Marty · 17:46I think your first step of the match in regards to whatever's on realestate [uh.com](http://uh.com) needs to be on domain, so that needs to be worked out.

Marty · 17:56ASAP, and I would, I would be thinking along the lines of a value add, like what could you give them, even if it's a loss leader initially. What could you give the market that actually is relevant that they will want to take up now? I dunno what that answer is. Is it, is it a free valuation by listing on, um, domain?

Marty · 18:17I, I dunno, that might be counterintuitive to the real estate agent, right? But I'm thinking there's gotta be some level of service that, that, that actually the consumer goes, actually this is, this is very good and they've gotta drive numbers. Like they just have to drive numbers to the website to make it relevant because while those numbers are such at such a discrepancy, you're always gonna go to [realestate.com](http://realestate.com).

Marty · 18:42And I was just sitting back listening to you talking and thinking about, what if there was only one bank in Australia, how. Terrible. Would that actually be the power that that bank would hold? And I, I just go, you look at the choice of, you know, mortgage brokers as to what that brings to the table. Um, I, I just, yeah, I just think that, um, they have to crack the code in a different way if you can't compete.

Marty · 19:07With what [realestate.com](http://realestate.com) is doing, you've gotta transcend it in some way as to what that is. It's gotta be market dictated by the consumer as to what's relevant to the consumer. Uh, that would be my starting point. They

Nick · 19:21need to find a way that the agents are confident that they can tell the vendors that it's the one to use, because that's, that's what will drive the change, I think.

Nick · 19:30Um, and the agents need to be confident that they can get. The right outcome for the vendor by using domain. So how they do that, I dunno. Um, but I, I thought it was. Interesting and interesting topic. And again, I said from a personal point of view, I was kind of surprised and I'm in the industry at, oh, okay, hang on.

Nick · 19:49Now there's four and a half thousand for marketing. So, you know, I would think that most vendors probably wouldn't be aware of that. Um, and until they go down the path and would probably struggle to swallow that, the cost is that much on top of the, the real estate agent's fee. So, um. Yeah, Jace, that's about it for me.

Nick · 20:08But, um, we sit and we watch [re.com](http://re.com) and we will, uh, watch well, uh, REA, sorry, real, which owns [realestate.com](http://realestate.com). Uh, we'll watch the juggernaut. We probably should buy some shares in it. Uh, this is not financial advice. You, you say that as I've got that on my screen. Uh,

Jason · 20:25August, 2022. So just doing a three year snapshot.

Jason · 20:28August, 2022, the share price was $130. August, 2025, the share price is $260. So if you bought a couple of years ago, you've doubled your money over three years. Plus, I think the shares, um, the dividends, sorry, have been quite, uh, lucrative. I think they're up 31% this year versus last year on the, the dividend payout.

Jason · 20:48So $2 48 per share. So lemme tell you not financial advice. Yes, Nico. Let,

Nick · 20:53let me tell you a real funny story. Go on to close it out. And I'm not going to mention names here. But [realestate.com](http://realestate.com) were quite smart when they launched and they went around to a lot of real estate agents and said, Hey, you should invest in our business.

Nick · 21:05Mm, clever. Um, so. At the time, there were, um, this is the story I had from an individual. Uh, they, I think they invested in the business at 50 cents a share or something like that. Um, don't ask me the year. Uh, this particular group, and there was a few of them, um, sold their shares at a dollar 50 Oh, and thought they were absolute geniuses.

Nick · 21:29And so would I, to be completely honest. In hindsight, you know, three times, that's a lot. Um, you know, you've turned 50 cents into a dollar 50 and your time's up by however many shares they had. And then look at the share price. Now, what did you say it was $260 a share. So these guys would be filthy rich.

Nick · 21:45That's just. It's the reality if they just had it held on. So, um, it's a juggernaut. It's definitely one I'll be keeping an eye on as far as investing goes. Um, no doubt Marty's gonna do the same. Um, but um, yeah, watch this space. We'll see what domain can do. Now they have some, uh, have a big backer.

Jason · 22:00It's until next time.

Jason · 22:01Check out REA Watch That space game over this podcast is for educational and informational purposes only. The conversations are of a general nature and do not qualify as financial or tax advice. We recommend before you make any financial decisions, you consult a licensed professional. Individuals on the podcast may hold positions in the companies discussed. ---