If you come protfrom Brisbane or Sydney you may have noticed the launch of a new real estate portal called www.onthehouse.com.au. Over the past three months they have been running a fairly extensive bill board campaign in Brisbane and have recently kicked off a similar campaign in Sydney. I recently spoke to the Chief Operating Office of www.onthehouse.com.au, Luke Ingham-Myers about how the new site was going. He said that the response was overwhelming and the traffic to the site had exceeded their expectations. A few of the stat’s that he shared with me are provided below:
Over 1.6 million pageviews for the month of April
Average time on site per browser over 9 minutes
80,000 Unique browsers for April to date
The key difference that www.onthehouse.com.au offers to the other portals around is that you can access historical sales data for FREE. So instead of having to purchase property reports from companies such as RP Data or Home Price Guide, you can now get this information for free from their website.
It is a real point of difference, and probably what is required to make a significant impact in the real estate portal business, which is now a quite mature market. Many other portals have come to market with essentially the same offering as realestate.com.au and domain.com.au but have been unable to grab significant market share, even without charging subscription fees. The simple reason is that the major portals attract the vast majority of website visitors, and without a significant number of visitors, even if your portal is free it won’t provide value to the real estate agency and hence will not be successful. A successful portal ultimately needs to attract a significant number of visitors to get advertisers excited. The stats that www.onethehouse.com.au are quoting a very good, and if they continue growing at their present rate then we very well may have another significant player in the real estate portal market in Australia. Something I am sure we would all like to see.
There have been a number of innovations to the traditional real estate sales model around the world in the last few years. There has been a signfiicant increase in the number of agencies that will sell a home at a fixed price, usually mush lower than prevailing commission % scales.
A very interesting model that is starting to gain significant momentum in the USA is a company called Redfin. They have been operating since 2006 and I think many realtors in the US thought that they would be a flash in the pan. They are however still going strong and by all accounts are growing.
The model is quite simple. They reimburse to a Buyer 2/3rd’s of the commission that a buyer would otherwise pay. So in circumstances where a buyer would pay 3% commission, 2% is reimbursed.
Buyers commission you might say! What is with that!
Well in the US it is very common for a real estate transaction to have up to 6% commission paid – 3% to a selling agent and 3% to a buyers agent. It is probably the highest in the world (certainly the highest in all of teh markets that Brightfox is involved in) for a standard real estate sale. You will have instances of higher commission paid on off-plan sales in places such as Spain, France and sometimes even in Australia, however this is always paid by the Seller.
So when looking at Redfin and contemplating the affect of a model like this in Australia you first need to realise that the US is starting from a very different place. I think we would all agree that there is a lot of space in 6% commission for some efficiency improvements / cost cutting.
I find the whole issue a very interesting dilema all round. There is no doubt that all property transactions should have a buyer and seller agent involved to best protect both parties. The concept that one agent can act for both parties is in itself impossible (the term ‘agent’ itself means to act on behalf of another party – with the law providing a fiduciary duty to act in the best interests of that party. So how can a single agent act for two parties!) as well as being commerically unworkable. Both parties actually seek different outcomes (one a higher purchase price, the other a lower purchase price). However a 6% transaction fee on commission alone, not to mention stamp duty, legal fees etc, is simply not workable.
Without question the Internet is making it easier for buyers to determine a accurate purchase price for a property. Only a few years ago access to property sale data was the exclusive domain of property professionals. Now websites like www.onthehouse.com.au give it away for free. So I think that the advent of increasingly sophisticated anlaysis websites for buyers to use is perhaps the future for australian real estate rather than the Redfin model. We just don’t have that much ‘fat to cut’ to make the Redfin models commerically viable on a significant scale.