Crowdfunding Is Set To Shake Up The Real Estate Industry
Uber Concept crowdfunding is making its way into Australia’s property sector, opening up the market to younger investors and those with less cash to invest in the real estate industry.
Crowdsourcing money for real estate is a new direction for what has been dubbed the “sharing economy”, where the power of many small investors come together to fund big developments.
Uber has used the same concept to shake up the taxi industry, while Airbnb has exploited it to overhaul the hotel sector.
Singaporean based crowdfunding platform CoAssets is eyeing Australian real estate as the next big thing.
Some of the people who are looking to crowd-fund for their homes, this could be a way for them to do it.
CoAssets chief executive Getty Goh said he had been meeting with companies in Perth to increase the company’s presence in Australia, to give smaller and younger investors a chance to buy into real estate.
We are really a platform that allows people to put their property deals on the site and reach out to funders, he said.
Businesses that have a lot of potential can put themselves on the site and allow funders to put in for as little as $1,000.
A $1.5 million Sydney project raised the funds needed within an hour, with investors mostly based in Singapore, each chipping in between $100,000 and $350,000.
The Australian Government is working on legislation to allow businesses to crowdsource debt and equity funding.
Some of the people who are looking to crowd-fund for their homes, this could be a way for them to do it. Younger investors want to cut out ‘middleman’ banks
Accounting firm BDO chairman Sherif Andrawes said he believed this opened up real estate investment to the under-30s.
Crowdfunding provides access to a whole new group of investors, this is not the mum and dad investors that the Government likes to talk about, but rather the under 30s,” he said.
The smaller investor may be able to get a bigger bang for their buck than they do at the moment with the banks.
The under-30s have already been disrupted, they are used to organising their life on their smart phone or tablet.
To them there shouldn’t be a jarring change to their interaction with the world when it comes to investing money, most have never even been into a bank, they are used to taking control and find it unusual to need to rely on a middleman.
Property Council of WA executive director Joe Lenzo said that would introduce tight regulations to closely scrutinise companies which wanted to crowdsource.
It will be there, in addition to the more traditional funding that we are used to, so it’s positive in the fact it could stimulate more transactions and help the economy, which is a good thing, he said.
It is a positive way, where the smaller investor may be able to get a bigger bang for their buck than they do at the moment with the banks.
Mr Andrawes agreed. Adding the crowdfunding platforms could steer investment away from banks (banks are nervous), but it won’t be long before they too jump onboard. Five years from now, a lot of these crowdfunding ventures will be owned by banks.
Online Real Estate Agent Killers
Two purely online players are promising home sellers they can save a bundle by cutting out real estate agents.
BuyMyPlace.com.au and Hello.com.au are telling investors the promise of removing agents’ commissions, will see their popularity explode in Australia.
Both businesses are registered as real estate agents, but have a similar business model in seeking to encourage vendors to sell their homes without going through the traditional agency model. Both make big claims about the amount they can save sellers on transactions, by cutting out commissions.
Paul Heath from BuyMyPlace said home sellers often felt like they weren’t getting value for money from real estate agents.
Hello charges a flat fee of $9990 for selling a property through established online channels, with no sales commission.
Whereas BuyMyPlace charges a $650 starter price to list properties on its own website, as well as other websites to attract overseas, largely Asian buyers.
It then charges extra for services such as conveyancing, professional photography, negotiation and auction services.
BuyMyPlace chief executive Paul Heath told The Australian Financial Review sellers saved $15,000 on an average home sale. He said the market was ripe for disruption, with far fewer Australians selling their homes privately than counterparts in other comparable markets.
We believe there is a low percentage of private sellers here simply because there hasn’t been a well capitalised player in the market, developing awareness of the category and the online option for Australian consumers, he said.
They sell their cars online, and their other possessions on eBay and Gumtree, why not sell their house and save a huge amount in agents’ fees?
Mr Heath said his company had compared its own internal data with a recent study by CoreLogic RP Data into the experience of sellers with real estate agents and found sellers believed they were not getting value for money from the traditional real estate agency model.
He said the same proportion of vendors (22 per cent) who sold their property through BuyMyPlace received above their price expectations as with standard agents, whereas houses tended to sell quicker without agents being involved.
In a normal agent model, approximately 12 per cent of properties sell in the first 30 days, we have 46 per cent of properties selling in the first 30 days, which is massive improvement in how long it takes to sell your property, Mr Heath said.
Real Estate Institute of NSW president Malcolm Gunning recently told the Financial Review there was still value in the commission model especially if a property agent was able to “add value and create competition for a property”.
Google Earth plugin visualises changing property prices
google earth real estate plugin
HAVE you ever wondered how much your neighbour’s house is worth?
Now it’s possible to not only peek at their backyard, but also see how much they paid for it, using NSW Globe, a free google earth real estate plugin that works in conjunction with Google Earth as an add-on. but so far the function is only available in NSW.
The new plugin that combines the satellite mapping technology with official property sales data, will let NSW residents and investors drill down into data on historical house prices in their street and suburb, opening up access to 14 years worth of historical data, making it easy for property buyers to visualise detailed stats for free.
In the past, nosy neighbours had to fork out a heavy price for an RP Data search, with interested buyers having to pay the Government or third parties for access to the information, which is fine for a serious property deal, but a hassle for those who merely want to satisfy their curiosity.
NSW Finance Minister Dominic Perrottet said the service aimed to bring property information services into the digital age, in a state where $120 billion worth of property deals take place each year.
The Government recognises that in a booming property market, buyers and sellers are entitled to accurate and accessible land and property information, Mr Perrottet said.
Providing that data for free is just one of the ways this government is making it easier for people embarking on what will be for many, the most significant financial investment they will make in their lifetime. The people of NSW can now make affordable and informed choices when buying and selling property.
Users must download and install Google Earth along with the NSW Globe add-on from the Government’s website to access the sales data, which is based on information provided to Land and Property Information when properties change hands.
When Google Earth is up and running, you can select and deselect different data points to show on the map, alongside the usual Earth’s features 3D buildings and landmarks.