A New Zealand start-up is making its first sale via a live virtual auction room and an Australian lawyer has been busy setting up his website for such sales too. But their approaches to this emerging and lucrative sector aren’t exactly the same.
Former residential real estate agent, Angie Zingel, is CEO and founder of PropFi.auction, based in Auckland. Since April 2014, she’s bootstrapped the venture with her husband, Paul, to the tune of “multi-million dollars” having sold two properties to fund it. And three months ago, they secured a $NZ120,000 grant to have the mark of being “officially powered by Microsoft”.
Agents on trend
“Property portals have the critical mass and power, while agents are operating as silos. They need to disrupt their own businesses or prepared to be displaced … a lot of these conferences and talks in the industry are along the lines of ‘what do we need an agent for, we have the buyers, we can get into the transaction stream’,” says Zingel.
“My goodness, it’s a whole industry you could bring down.”
“And yes, they can bid via smart phone.”
Zingel sees PropFi.auction as “protecting the good work that real estate agents do” by giving them another tool to do the same work they’re already doing. Her business model still relies on the agent to set the reserve, change bidding increments, make announcements, refuse bids and conduct the auction to get the best price for the vendor.
“We’ve had a very collaborative approach getting corporate buy-in first by spending a lot of time and effort with real estate agents, government representatives and lawyers in the room during our demos.
PropFi’s first auction was on 2 November and the house sold for $NZ700,000 – significantly over its reserve of $NZ1 – by a Ray White agency. Of the 90 bidders who registered for the auction, about 10 were active, but Zingel says many probably just registered to watch. And yes, they can bid via smart phone. All bidders had to have their identity pre-verified electronically via Realme. The site also uses Netverify as does Airbnb.
“We’re starting a movement, it’s not just a clever platform.”
The site shows sold listings and how they sold, giving useful insights for property market watchers. No more waiting five weeks or more until the relevant real estate institute releases that data.
“We’re offering real time auctions and the real time sales figure – data that no-one else has,” she says.
“It’s a virtual community we will build it up. We’re starting a movement, it’s not just a clever platform. It’s about positive change and embracing it,” says Zingel.
PropFi has seven staff, is debt free and will officially launch early 2017 with another auction, working with the industry to nail the model.
Meanwhile in Australia
Sydney lawyer Chris Kwan went live with his online property auction site, Violater.com, in September. It’s free to list and sell, but either the vendor or buyer must use Kwan’s conveyancing services for the transaction.
“That’s the only caveat,” he says. Lawyers who also do conveyancing – not real estate agents – are his competition.
He’s been running a similar site for two years in Singapore, but as yet there’s only been property listings; no sales on either site. Kwan developed the Australian version of the site in the hope of increasing his conveyancing work.
“I arrived back in Australia at the end of 2015 and wanted to do conveyancing work, but you need to have contacts – people who trust you. The easy way is to make more friends, but that takes a lot of time going out. I figured the best way for me is to do an auction site to help people get the best price for their house,” he says.
There are always critics
Kwan got a bit of flak after recently being interviewed for a Channel 7 news story, which was “trying to say the idea isn’t going to work because agents hate this idea”.
“We’ll still need agents, but this site is a mechanism for those who don’t wish to use agents or because agents aren’t available 24/7.”
“That’s not true. Real estate agents themselves are using it. We’ll still need agents, but this site is a mechanism for those who don’t wish to use agents or because agents aren’t available 24/7,” he said.
His plans are to focus on the NSW market and eventually sub contract conveyancing work to legal offices interstate “so I don’t have to be in offices all over the place”.
For now, he’s waiting for the “grace of my friends who have properties they want to sell” to generate his first sale.
“People are not adventurous,” says Kwan.
“He’d need six sales via his site each month to make it viable.”
Those using the site to transact can either park the money in Kwan’s trust account, which the Law Society audits, or they can transfer it into a PEXA account.
His conveyancing fee for an average home ranges between $500 and $1,500, so he estimates he’d need six sales via his site each month to make it viable. Kwan sees his site’s traffic as more valuable to banks and other lenders because buyers and bidders are seriously close to purchasing, not just tyre kicking as such.
“If the big online property classifieds such as domain.com.au and realestate.com are smart, they’ll build a better online system than me,” he says.
For now, we’ll just have to wait and see how this potential disruptor may or may not gain traction in the property sector.
Former Sunday Age staff journalist, Margaret Paton (formerly Jakovac) has written widely for corporations/government departments and more than 100 online/hard copy mastheads in regional NSW, Sydney, Melbourne and Europe.