Australia’s real estate industry is heavily steeped in bricks-and-mortar shop fronts and all the antique marketing techniques to match.
For many people who are buying or selling, dealing with the agents themselves is one of the most frustrating parts of the process. They take out glossy colour ads in newspapers to promote both themselves and their houses. They also invest big amounts in signage and most of the online advertising they do is based on the old classifieds model.
It’s an industry which has been slow to adapt to the digital ways of modern clientèle.
But there are a few real estate sector startups emerging which, if the changes taking place in the taxi industry as the result of companies like Uber are anything to go by, are poised to flip the industry inside out.
Head of new $60 million investment fund AirTree Ventures Daniel Petre told Business Insider recently that while they hadn’t committed to any investments yet they were focussing on revenue-generating startups, with a keen eye on ideas for the finance and real estate sectors.
“Real estate is generally an opportunity,” he said, adding the idea of a vendor paying thousands of dollars to list a property on a website is “ludicrous”.
“You’re putting bits on a server,” he said.
“That model is going to go away and it will go to pay-for-performance instead of pay-to-list and the economics of that will change.”
The traditional classifieds space has already been disrupted in a big way. In print it has almost disappeared while online whole websites based on the model have gone down the gurgler – especially after some big changes to Google’s algorithm which drowned a few sites that were merely gaming the search engine. This left the big sites to fight it out for market share and eyeballs.
The likes of REA Group – the parent company of realestate.com.au – and Domain have done a relatively good job developing easily searchable sites and apps which have solid acceptance within the Australian market.
Already this year, REA has picked a battle with some agents when some believed a potential change would not only let owners list their own homes, essentially cutting realtors out of the equation, but also potentially invoke postcode-based pricing.
A spokesperson from REA said the company “has never flagged” the option of owners listing their own homes on the site and is proud of its relationship with real estate agents.
In the year to June REA increased its revenue by 30% to $437.5 million, its EBITDA rose 37% to $225.1 million and net profit increased by 37% to $149.9 million. At the end of June, 696,013 properties were listed online with REA and average monthly visits to realestate.com.au were about 30 million. Both mobile and app traffic recorded big jumps over the period.
“There are disruptive plays that are going to occur in real estate and they will challenge both the REA and Domain,” Petre said.
“It will take time because they’re huge and obviously there is agent inertia there. But if you go back to the basic principle – does it make sense for a consumer, a householder, regardless of the fact it’s only a small percentage of their house price… which is what the agents and the REA tell you. $6,000 to put a few bits on a server is just crazy.”
The argument from some agents and big online listing sites is that you’re paying for audience.
“Is that the only way to get an audience to see what you’ve got? Or if it is truly valuable why aren’t those websites prepared to do pay-for-performance? So only make the householder pay if in fact people click on, visit. Generally in e-commerce you are going to see this shift to pay-for-performance across the board. Job sites, car sites, real estate sites. Over time listers or vendors will say I’m happy to pay if it actually happens, not just the old model of classified which is pay-to-list,” Petre said.
So maybe instead of hiring another receptionist to man the office, real estate businesses should be looking at hiring an inbound marketer.
Part of bringing the industry up to speed is streamlining its internal processes. It’s a sector which still largely relies on desktop software – moving onto the cloud is one way it can be refreshed and use data to drive its marketing, spending, and time habits.
New Zealand-based startups Re-View and Re-Leased are cloud-based real estate software offerings which manage all the regulation, lead generation, marketing and accounting processes which happen behind the scenes at agencies.
Until recently, many agencies have used Rockend’s REST software to look after property management portfolios and trust accounting. Many bigger agencies also spend a lot of money developing and maintaining internal software.
“We haven’t tried to copy anyone, we’ve started from scratch and developed the best for the industry,” Re-Leased national head of customer success David Gillies said.
Re-leased founder Tom Wallace said he came up with the idea when he was working in the industry and it was very obvious the industry needed cloud-based tech to bring it into the 21st century and has boot strapped the software’s development.
Transparency makes for a better market
But it isn’t just the marketing and task-based parts of real estate that is due for a shake-up – the whole model needs a refresh. Many agents are tarred with the same brush – regardless of how good they are at their job, they are stereotyped as arrogant, dismissive, agenda driven and unhelpful. It’s not what people are looking for during what can be one of the most emotional transactions in a person’s life. In Australia buying a home is for many not only the dream but the single biggest financial decisions they’ll ever make – especially when the number of suburbs with million dollar houses has sky-rocketed in recent times.
OpenAgent is one startup which is looking to increase agent transparency, accountability and improve customer service by acting as the TripAdvisor of the industry. The site uses official sales data and user reviews to rank Australia’s real estate agents and help potential vendors locate the best agents in their area.
Founders Zoe Pointon and Marta Higuera recently secured $1 million in funding to develop the idea further.
“The real estate industry is full of data and yet it lacks so much transparency and consumer information,” Pointon said.
“I recognised the need for the industry to be shaken up after my own extremely varied experiences with real estate agents in NSW and QLD. Whilst some were professional and committed, others were poor communicators and unreliable; there was no way of figuring out which agents were good before hiring them.
“In helping Australian property owners through one of life’s biggest financial transactions, OpenAgent aims to provide peace of mind by helping consumers choose the best agent for them, providing unbiased information and honest personal service.”
Consumers’ need for more attentive service in the real estate process is SydStart pitching finalist Nextforsale.com.au. Its founder Liam Austin came up with the idea after purchasing a property only to discover just days after the sale was finalised a better property more suited to his needs came up for sale.
“I couldn’t believe that I had spent months searching for the right property and when I settled on what I thought was the best one, another better option came on the market days later,” he said, adding he wished the agent had told him the owner was preparing to sell the property.
It’s all about ramping up transparency in the industry.
“If a property owner knows 6 months in advance that they will be selling their property, why miss out on 6 months of potential buyers being informed about the impending sale?”
Nextforsale.com.au aims to solve this problem for every other property buyer and seller in Australia.
So with so many new real estate startups breaking through, offering transparency, improved access to data and lower cost options Australia’s real estate sector needs be ready to pull its socks up.
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