RealStar shines amid market gloom

Straits Times: Wed, Jan 11

THE slowing economy and cooling measures are giving real estate agents plenty of sleepless nights, but agency boss William Wong is unfazed. After all, he has seen a lot worse. The 44-year-old said buying interest may dry up but that will be a temporary blip. He has learnt to take the long-term view, a sensible approach given the ups and downs he has experienced during his 16 years in the real estate game. Mr Wong founded RealStar Premier Group in 2001 and managed to break even that year. But the firm had slipped into the red by the third year, squeezed by thinning margins in the highly competitive market. He had to endure some trying days as he began a radical transformation in 2005, turning his medium-sized firm of 700 or so agents selling everything from Housing Board flats to houses into an exclusive niche player focusing on prime landed properties. 'It was a very painful process. I had no choice as I was losing money,' Mr Wong said. He used up his savings, owed his staff their salaries for two months at one point and even considered selling his laptop to raise funds. He also went back on the road as a property agent, selling houses for more than a year. At that time, two big property agencies approached him, asking him to join them, but that would have been too easy. 'We told ourselves that we will try and try until we are unable to make it. We never give up,' Mr Wong said of himself and his wife Pamela Quek, RealStar's financial controller and only other shareholder. They have three children. The switch paid off handsomely, with the Bukit Timah Road firm expanding in tandem with the boom in landed property. RealStar is an active player in the high-end landed homes market and has a share of about 35 per cent of the exclusive good-class bungalow sector. It sold about $945 million worth of landed homes last year, $1.05 billion in 2010 and $540 million in 2009. 'Last year was a bad year but our sales went down by just 10 per cent,' said Mr Wong. It allowed RealStar to register a revenue of close to $8 million last year. While agents at typical property agencies take a 90 per cent commission or more, RealStar agents get just up to 50 per cent or a lot less if they are getting a regular salary. Mr Wong said they are happy to do so as they are dealing with mega deals - some as big as tens of millions of dollars. Their job scope is also smaller than that of agents in typical agencies. Such agents basically do everything from finding the customer to negotiating the deal. At RealStar, agents just source for the buyer and service the client. They will accompany the buyer to view a property, and if there is interest, a RealStar director takes over, negotiating the deal and closing it on behalf of the agent. 'The difficult part, leave it to the company. We'll be the ones to negotiate the deal, manage the expectations of both sides and convince people to sell,' said Mr Wong. 'We break the agents' role into different parts so they can do what they are best at. 'This way, we depend on the agents and they depend on us. It's a win-win (situation).' After running a 700-strong agency, Mr Wong was convinced that less could be more. Property agents are like businessmen; they just use their agency name to ply their trade, so many have little loyalty to their agency. Their mentality is such - 'if I'm not happy with the management, I'll just jump ship', said Mr Wong. It also takes very little to lure them, as he found out. The free use of a table and chair offered by other agencies was the reason his agents said 'no' to his request for help. 'When the company was in trouble, I asked them to stay on for two to three months but they would not... I asked myself what kind of business is this,' said Mr Wong. 'Every now and then, you have to think about how to keep your agents. It is not healthy. You even have to nurse their emotions and stroke their egos.' But that is not for him, he said. 'If you are doing something wrong, you are doing something wrong. I don't want to tell you that you are very important to the company.' Mr Wong is very particular about the type of people working at RealStar. Applicants have to go for an interview and take a personality profiling test. 'We are servicing high-net-worth corporate people and we want to make sure we have the right people to do it,' he said. The firm likes former airline cabin crew and people who have been in the luxury goods line or corporate sales. Last year, he started a good-class bungalow website so his wealthy and busy clients do not have to waste time on unnecessary viewings. 'Now, they can look through the pictures on the portal, and if they like the look of the house, we can then arrange for them to view the actual property,' he said. He is also thinking of new ideas to tap the company's existing customer base, such as establishing a unit to help customers design and build their houses and another that will provide investment advice. The road ahead is likely to be tougher as the Government's cooling measures are expected to lead to a drop in volume done, Mr Wong said. He predicts a fall of 5 per cent in landed home prices and a 20 per cent decline in transactions this year. 'But it's a chance for us to improve ourselves,' he said. 'It depends on who can reinvent themselves to cope with it. I'm all right. I just need to think of ways and means to capture more market share.' [e-mail] Keeping agents happy 'When the company was in trouble, I asked them to stay on for two to three months but they would not... I asked myself what kind of business is this. Every now and then, you have to think about how to keep your agents. It is not healthy. You even have to nurse their emotions and stroke their egos.' RealStar Premier Group founder William Wong Source: The Straits Times