Imagine selling a $US14 million New York City apartment entirely through Twitter or SnapChat.
Emma Hao, an agent for luxury-home broker Douglas Elliman has done it.
Well…that’s not quite true. Hao brokered the sale through WeChat, China’s most popular instant messaging app. She does this a lot, and she’s not alone.
“I’ll put up a floor plan and say that a new property is good on the blog and the location is great. Then people will say ‘I’m interested’ and buy,” she said. “It’s really something else.”
An unexpected use
Chinese Internet and gaming giant Tencent launched WeChat in 2011 as a voice messaging app with location services. But it’s grown into a seamless one-stop shop for common apps: users can watch movies, call cabs, share photos, buy clothes, play games, and even offer personal loans.
Lately, it’s turned into something of a real-estate sales platform — specifically connecting Chinese buyers with agents in the U.S.
Chinese nationals are the largest group of foreign buyers of U.S. real estate. Looking for a safer place to park their assets and diversify their holdings, they’re also willing to pay more than all other nationalities, according to the National Realtors Association.
And there are 650 million — largely Chinese — users on WeChat. That’s more than double the US population.
“I would pay $US100 a month to use WeChat,” said Jing Wang, a 36-year-old real estate agent for Lin Pan Realty Group in New York. “It would be much harder to be introduced and reach Chinese clients because many of the social websites, like Facebook, are blocked in China — that’s a lot of time and money.”
Wang, who specialises in serving Chinese buyers only joined WeChat after becoming a real-estate agent. All of his Chinese clients communicate with him via the app. He says he’s sold properties up to $US5 million, with the buyer in China through the entire process.
Tours are given via video and photos, and negotiations are completed solely through the chatting app. A legal representative cements the deal on the brokers end, and an electronic version of the contract makes its way to the new owners. Payments however, are still done by cash.
For the buyers seeking investment properties, the prospect of a 15-hour flight from the east coast of China to New York is reason enough to rely on WeChat.
“WeChat has become essential to consumers’ daily lives,” Xiaofeng Wang, an analysts at Forrester Research in Beijing wrote in a July note. “Marketers the world over must take account of WeChat, which has become so ubiquitous that it has changed Chinese consumers’ mobile behaviours in profound ways.”
Real estate agent Wang advertises his listings via a free blog and leaves voice recordings with clients, so negotiations can be done over days rather than late at night.
But there’s also the issue of trust. Buying a multi-million dollar investment from someone you’ve never met before seems reckless.
But users such as Hao use their apps as a personal blog: she posts photos and write about her food, clothes, makeup and lifestyle — and that fosters an online personality.
“I say what I want to say so they know exactly who I am, and I update my daily life — and people like it. You show you have a personality — that’s what makes a sale,” she said. “Maybe they never comment on anything, and suddenly they will send you a message.”
Tencent’s strategy: Appeal to marketers
It’s certain that the property deals are only a tiny portion of activity on WeChat, but they’re an unexpected area of growth for the app that has been struggling to gain traction in the West. Owned by Chinese Internet giant Tencent, WeChat earlier this year stopped advertising in the West as user growth plateaued.
Overseas user acquisition “has sort of come to an end,” said Tencent President Martin Lau Chi-ping during a press conference in March.
Tencent released third quarter earnings Tuesday, reporting a 32% increase in profits to $US1.2 billion — beating analysts expectations. WeChat alone reported an increase to roughly 650 million active monthly users, up 39% since last year.
The agents don’t pay anything right now to use WeChat, even if they’re able to sell an apartment. If the real-estate firms were to seek a formal presence on the platform, like some luxury brands have, they’d have to pay for that.
Tencent didn’t respond to Business Insider’s request for comment. We’ll update this post if we hear back
Instead of trying to gain more users overseas, Tencent has turned its attention to expanding WeChat’s already vast ecosystem within China and South East Asia — cementing a pool of extremely loyal users that spend on average more than half their time on mobile using WeChat, according to Forrester Research.
“I think it’s crucial to marketers,” said Bryan Wang, a Singapore-based independent analyst who focuses on Chinese internet companies. “It’s the number one option for all brands to get close to the customers.”
The app is already proving to be a destination for companies looking to sell to wealthy Chinese. They have turned into the single largest group of luxury buyers in the world, making up 32% of global consumption, according to a recent Bain and Company study.
Many luxury brands have also begun to tap into WeChat formally — leading to the rise of specialised WeChat marketing agencies that boast clients such as Coach, Lancome, Piaget, Louis Vuitton and Bonpoint.
These WeChat campaigns can range in cost from a thousand to millions of US dollars, said Graziani. But it’s paid almost entirely to marketers — WeChat gets a fraction of the payment — about $US50 a year for the official account.
Increasingly, marketing firms specializing in ad campaigns for WeChat have begun to spring up. These include SameSame in Paris, WalktheChat in Beijing, and Curiosity China with locations in Paris and China.
They help brands develop into the online-to-offline (O2O) market that Tencent has also been pushing to expand in recent months: helping companies grow an online presence that emphasises customer service and the attraction of offline firms.
WalktheChat co-founder Thomas Graziani, a 29-year-old Parisian working out of Beijing, started his firm last year.
“The interactions on WeChat are much more complex,” Graziani said, comparing the application to Whatsapp and Facebook messenger. “WeChat has an absolute monopoly in China, with all capabilities happening in a single window — it’s holistic and connected, true automation, true tracking, with potential for very interesting viral campaigns.”
For Tencent, increased O2O activity helps boost their nascent payment service, Weixin Pay, and heightens the chances of more advertising revenue from companies — which is becoming a increasingly important portion of Tencent’s business.
No broader U.S. surge expected
Tencent shouldn’t expect the unexpected usage by brokers to turn into an overall surge in the U.S., though, because people separate their personal and professional lives, independent analyst Bryan Wang said.
While Westerners may use the platform to reach Chinese customers, few will use it at home.
“In our opinion, WeChat is likely to focus more in establishing a strong ecosystem in China as the competitive landscape in the West seems to be much more challenging,” said John Choi, executive director of at Daiwa Capital Markets. “The user interface of the Asian messaging apps tend to appeal more to Asian users.”
Still, the brokers aren’t deterred.
Maurice Owen-Michanne, 34, is another New York City based agen who who has sold a property worth $US4 million over WeChat. The client had a legal representative who viewed the property, while the buyer relied on photos, blueprints and videos. He speaks almost no Chinese.
“It’s helped tremendously break down the traditional barriers and strengthen my relationship with my clients,” he said.
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