Guest Speakers:
Peter Gibbons – Openn Negotiation
Transcript:
Marie-Anne Lampotang: (00:05)
Hi, everybody, and welcome to the Proptech panel. My name’s Marie-Anne Lampotang, I am the general manager of Stone & Chalk, in Sydney. We’re delighted to be involved with the Proptech panel again, for the third time running, and delighted to be a founding supporter of the Proptech Association of Australia. For those of you who don’t know Stone & Chalk, we were set up in fintech five years ago. Actually, exactly five years ago, today, on the 25th of August 2015. Our goal back then, and still is, now, is to help startups commercialise and grow, and we do this by connecting them with what we believe they need the most, which is community, capital, customers, talent, and expertise. Today, we’ve moved from where we were five years ago, with 40 startups specialising in fintech in Sydney, alone, to over 200 startups in Adelaide, Melbourne, and Sydney, in all emerging tech sectors, including property technology. I’d like to hand over, now, to Kylie, who’s the president of the Proptech Association, to start this panel and introduce all the speakers. Thanks, Kylie.
Kylie Davis: (01:07)
Hey, everybody. I’m actually in the Stone & Chalk office. It’s the first time out of my office down on the south coast, so I’m feeling quite agoraphobic. This panel is all about how digital sales platforms make buying and selling property better. Now, would you sell or buy a home on eBay? Well, we strongly recommend that you don’t, but in this panel, we’re going to introduce you to the disruptors who are digitising the sales and negotiation processes of residential real estate to create more transparent, streamlined, and data-rich experiences for buyers, sellers, and agents.
Kylie Davis: (01:45)
My name is Kylie Davis, and I’m the founder of the Proptech Association, and it is great to see so many people logging in today for our third Proptech panel. And I would especially like to thank Stone & Chalk, who have made the event possible. And we have a new sponsor on board for the Association, too. The Real Estate Institute of Western Australia. Hey to everyone over in Perth. Now, this panel was actually inspired by some comments by [Chris Rowles 00:02:11] in our first Proptech panel, who outlined why he felt that auction technology was not scalable. So we’ve taken it upon ourselves to stress test that with our guests, Peter Gibbons, from Openn Negotiation, Peter Matthews, from AuctionNow, and Dave Stewart, from Market Buy. So Pete, you’re also in the studio. Do you want to come in and grab a seat?
Peter Gibbons: (02:37)
Thank you.
Kylie Davis: (02:38)
So over the next hour, we’re going to explore the factors driving the need for change in sales and negotiations of residential real estate, and whether this is just an Australian thing. We’re going to look at its interest to investors, and if there is any potential for overseas property markets. So to introduce our expert panel. In the yellow corner, defending the value of virtual auction technology, is our first panellist, Peter Matthews, from AuctionNow and Realtair. Peter has had an extensive career in real estate. He is an auctioneer, and has run successful real estate agencies, and been COO at Ray White, as well as head of sales at Fairfax Media. And he’s now the founder of proptech middleware platform Realtair. So welcome, Pete.
Kylie Davis: (03:25)
Our next panellist is another Peter, Peter Gibbons, from Openn, Openn with two Ns, Negotiation. Peter has a degree in property from Curtin University, an MBA from the University of South Carolina, and extensive experience in the retirement home industry before he made the move to Proptech and Openn Negotiation. And in the purple corner, last but certainly not least, I’d like to welcome Dave Stewart, from Market Buy. Dave has a 22 year career in real estate, running his own agency, and has been a Proptech founder for the past four years, starting Market Buy after an unsuccessful attempt at selling property on eBay, which made him think there had to be a different way. So welcome, everybody. Welcome to the panel. Down in Melbourne, and Perth, and here in the studio.
David Stewart: (04:12)
Thank you.
Kylie Davis: (04:14)
So Peter, let’s kick off with you. But just tell us a little bit more about why we need virtual auctions, or why auctions can be done virtually and what that adds to the transaction process.
Peter Matthews: (04:26)
Well, I think the thing that it adds to the transaction process is that the auction process is a transparent process. That’s the first, most important thing. The second thing is that there are clear rules of engagement with an auction. I mean, when you go to buy a property at auction, you’re effectively negotiating, and what you’re given before you start, you say, “These are the rules in which this process is going to take place.” In every other world of negotiation within the Australian market, there aren’t these rules of engagement. There isn’t any clarity. So it is quite murky and muddy in some instances, and even internally, in agency practise, within the same business, there can be a very different negotiation style in the private treaty market. So that’s one thing about auctions, is bringing that negotiation, as the other guys have done, as well, into a space which is clear, transparent, digitised, can be done remotely, and effectively.
Peter Matthews: (05:16)
I look at it and think, well, it’s just taking the auction process that hasn’t changed a lot in… Well, since I can remember. I’ve been doing this for 31 years. Hasn’t changed a lot. The process has been the same. It’s just moving into a digitised format to ensure that you’ve got a greater reach, and you’ve got a greater sense of transactional usability on all sides. Agent, auctioneer, vendor, buyer. I said it had to happen. We’re really proud to be part of it.
Kylie Davis: (05:44)
We saw virtual auctions take off during COVID, especially during the stage three and four lockdowns, when you weren’t able to turn up to an auction, and down in Victoria, that’s been an issue for even longer. Have you seen any evidence yet that virtual auctions get more people to an auction than would normally in a normal kind of space, or is this something that’s only going to happen during COVID?
Peter Matthews: (06:10)
It’s really interesting, because you look at it and you think… Well, I mean, AuctionNow existed for two years before we brought that into our suite of products. There was about 10,000 auctions that had been conducted that way, and there was between one to two registered bidders on each auction. It was a bit of a lolly, really. It was nice to have, but it wasn’t a massive part of the transactional environment. But then what happened in COVID is it became the only way to transact for a period of time. So then the number of buyers that registered went through the roof, and I’m talking like, we had one on the weekend, 60 something registered bidders.
Kylie Davis: (06:45)
Wow.
Peter Matthews: (06:46)
Which is incredible. And hundreds of people watching. Because we record the number of people watching or following the auction, and we had, in some instances, like 400 people watching an auction. It was almost like, “Well, we’re paying for Netflix, so move from Netflix and flick over to AuctionNow,” and they start…
Kylie Davis: (07:01)
Say, “They’re holding. What are we going to do?”
Peter Matthews: (07:03)
Yeah. Becomes a sport. So it’s a little bit hard to say whether there’s been an actual increase, but certainly, as a result of COVID, there’s been an increase because they’ve had to, and then subsequently, as things in New South Wales, at least, have, I guess, freed up a little bit, what’s been really interesting is that a lot of the bigger brands have maintained that using the online platform as a complete offer. Rather than it being something as an extra, it’s an essential part of what they offer to their customers who are thinking of selling. And buyers are still continuing to register online. People are still registering online and turning up to the auction, which they’ve always had the capacity to do. But also, too, I think what it’s done, from a compliance perspective for agents, franchise and non-franchise, and for agencies, it’s enabled them to be able to create all their paperwork and keep it all in one place, and maintain compliance, which is a pretty big issue, and it’s going to get a bigger issue as we move forward.
Kylie Davis: (08:00)
Yeah. And there are Fair Trading offices all over the country, sort of…
Peter Matthews: (08:04)
They were out in force last weekend, that’s for sure.
Kylie Davis: (08:05)
They were. Okay. So it’s the Australian… There’s, what, four or five competitors in just the auction space alone. Is the Australian market big enough? Is that 14% of transactions big enough to sustain all of these startups, or?
Peter Matthews: (08:22)
Look, I think that the answer to that is yes, because I think what we are certainly starting to see is a lot more volume. I mean, when you consider that in the two years, Damien Cooley designed and built AuctionNow, probably one of the most prolific auctioneers in the country. You know, he did 10,000 auctions through the platform in two years, and we’ve done 6,000 in six months.
Kylie Davis: (08:43)
Yep.
Peter Matthews: (08:43)
So I think that yes, there’s going to be more. Will that mean that there’ll be more properties move into the online space versus the private treaty world? I think it’s actually becoming a little bit blurred. Both Dave and Peter have got terrific platforms, as well, that offer solutions in that space. We also offer a solution for a buy now auction, which is… You mentioned eBay before. It’s probably the closest thing that you can say, to eBay. And the cool thing about that was we had a 90 year old lady who, on a Saturday, signed a digital agency agreement, signed up for a buy now auction. On the Thursday, it went to auction. She’s signed the reserve on a digital reserve. She had a… Oh, actually, I shouldn’t disclose her reserve, but she went past her reserve. Sold for 754,000. Quite substantially.
Kylie Davis: (09:29)
She was selling? She wasn’t buying? Very good.
Peter Matthews: (09:29)
She was selling. At 90. Selling at 90. No, she wasn’t looking to invest. Not that there would be anything wrong with that. Good on you if you are.
Kylie Davis: (09:36)
No. No, yeah.
Peter Matthews: (09:38)
And we got a reserve price. Went over the reserve, which was fabulous. There was four registered bidders, and she signed the contracts digitally. And I have people say to me, “Oh, you know, people of that age group, it’s just moving into the digital world. It’s just not that acceptable.” And I beg to differ. I mean, there’s probably… My parents are on Facebook, because they’re friends with me on Facebook, which I’m a little bit embarrassed to say, but the reality is that people who… If you get access to technology, and you can’t get out of your home, what better way to take advantage of either buying and selling property? So I think that to answer your question, in short, yeah, I think that there’s a great opportunity for all of our platforms, here, to transform the way property is transacted. So I think that you’ll find that there’ll be a lot more properties that may still be traditional auctions, but will be done in an online negotiation, but doing that through a digital platform.
Kylie Davis: (10:29)
With all of the paperwork that goes in and the compliance sort of side of it, sitting in that platform.
Peter Matthews: (10:34)
There is so much paperwork, and the guys will know this too. Like, you’ve got so much that an agent has got to do in order to create a compliant sale and be transparent in the process. It’s fair to say, and you know that I’m on the board of the REI in New South Wales, agents do things differently in every business, and you can’t guarantee it’s all going to be done right time every single time. In a digital platform, you can guide them through the process, because you have got mandated screens and you’ve also got mandated processes, so that just changes it to a space where it creates equality, I think, or greater equality between the buyer, the seller, and the agent. Any increase in equality and transparency, I think, is going to be great for consumers, and ultimately I think that’s going to create a digital transformation in the property transaction space.
Kylie Davis: (11:24)
Got it. So is… Chris’s big issue was it’s not scalable and it’s not exportable. What’s your…
Peter Matthews: (11:31)
I reckon it’s both. I mean, you just have to look at the guys and what they’re…
Kylie Davis: (11:36)
Are we going to be exporting Australian auctions to the U.S., or to the U.K., or?
Peter Matthews: (11:38)
You know, Dave’ll talk shortly. He’s already doing that. I mean, we’ve had interest from the U.A.E., from the U.K., Ireland, U.S., Asia. All over the place. I think the great thing about that is because it is topical, because of the viral situation that we’re in. But ultimately, I think this was the catalyst to push us in that direction, but we needed to go in that direction, because as I said earlier, there just hasn’t been any real change in the space. So I’d say to Chris that to just isolate the auction market, and to say that all these platforms are purely auction-based, is a very limited view. The reality is that it’s a way to transact real estate digitally, and it just happens to be that it could be utilising the rules of engagement of auction, or an alternative to that, but it will be that we’ll be moving down that transactional path and definitely, it’s exportable. And we’ve already proven. You know, proof is in the pudding today, that it’s scalable.
Kylie Davis: (12:34)
Fantastic. So I’m kind of disappointed, though, that we’re not going to end up seeing million dollar U.S. auctioneers, because I think that would be awesome. I want to know what Tom Panos’s U.S. equivalent is going to be. So Pete Gibbons, let’s move over to you at Openn. Because Openn is actually often misunderstood as an auction platform. Tell us why you’re not.
Peter Gibbons: (12:58)
Yeah, look, that’s the really interesting one, Kylie. We are and we aren’t. Legislatively, we are, so we fall under auction law, but the reality is we started about four years ago and the only problem that we’re really trying to solve was around private treaty, and I guess the inability to let bidders or buyers know what the price of the other buyers are. You can’t do that with private treaty. So we actually had to come up with a new sales process, which… A bit of a hybrid, I guess, between private treaty and auction, whereby it had the flexibility of offering terms like private treaty, but it created the transparency which we love about auctions, and just sort of bring that all together. We needed to create a world-class technology to sort of make the process run seamlessly. So yes, technically we’re an auction, under auction law, but I guess we mirror many of the attributes of a traditional sales method.
Kylie Davis: (13:58)
So why is the telephone an inefficient manner to manage offers in private treaty? Why do we need these digital platforms?
Peter Gibbons: (14:07)
Look, yeah, I guess you’ve probably got to differentiate between managing offers and negotiating. So managing offers is really important, but is a manual process. I’m sure Dave will speak to it in a moment, but that’s really important from a compliance perspective. Ensuring that… You mentioned Fair Trade around the country. They like to see clearly that the offers themselves are managed well and compliant. Negotiating is the piece that’s done really well on the phone, and with Openn Negotiation, agents to sell, absolutely negotiating, negotiating hard, to ensure that they’ve got their buyers positioned to maximise competition and to ensure that the maximum amount is paid for the property. So the telephone, not so good for managing the offer process, but great for the negotiation piece.
Kylie Davis: (15:03)
And so when we’re moving into this digital space and everything’s starting to become transparent, what’s the potential for that transparency to fundamentally change the industry? Like, what are the benefits of transparency in a real estate transaction?
Peter Gibbons: (15:20)
Look, I guess this is the really exciting bit, and I think probably what all platforms that you’re talking to sort of bring to the game. I think that in economics they talk about efficient markets and inefficient markets. Efficient markets are those ones that create transparency, and you see the stock exchanges, all sorts of areas, but probably real estate’s the last one to catch up. And so it’s the lack of transparency that creates an inefficient market, and so with efficiency, you’re creating a situation where the people who really want to buy the property are the people who will buy the property, and the people who are willing to pay the most will pay the most, so that’s what transparency brings to the table, and I guess human nature is that people love social proof. Transparency provides that.
Peter Gibbons: (16:14)
Someone may have in their head that a property is worth $700,000. Now, with a lack of transparency, they’ll fall back to statistics. And you’ve got to remember that now with technology, statistics available to buyers are so much more prevalent. Probably more than agents had, even five years ago. So the dark art of hiding things from buyers no longer exists, so that transparency provides the ability for social proof. So if I thought it was worth 700,000 but I can see somebody else is willing to pay 715,000, I’m comfortable to offer 716,000, because I’ve got that proof that I’m still in the market.
Kylie Davis: (16:56)
Yeah. Fantastic. And so how does that create more… How does that build trust around real estate?
Peter Gibbons: (17:03)
I guess that’s the real trust piece, because I guess there’s the age-old argument around lack of transparency. You may be able to push people further, but it’s also the lack of transparency that creates the mistrust. Agents are good people, but unfortunately where they’re not able to be fully transparent on price and conditions, it puts them in a position where they are mistrusted and so the ability to use platforms to create a higher level of trust… It’s incredible the agent feedback to us that agents who were going to… Been 30 years in the industry, who were going to leave, all of a sudden, they’re saying, “I can tell people everything, now, and they’re opening up to me, because I can provide that transparency.” So I think the ability to do that is what’s really changing the industry, at the moment, and that’s only going to become stronger.
Speaker 5: (18:01)
If you’re a startup, a scale-up, or an established supplier of technology to real estate, join Proptech Association Australia. The Proptech Association Australia is a new national not-for-profit member association to grow the emerging proptech industry. We champion real estate and property technology and work to grow the marketplace by helping the property and building industry feel more confident about adopting and investing in innovation. We’re building a community of bold-thinking innovators who share their knowledge and share best practise, quality solutions, and consistent approaches, so come and join us. Membership is free until the end of 2020. Go to proptechassociation.com.au or follow us on LinkedIn.
Kylie Davis: (18:43)
Mm-hmm. Okay. So I think what we forget, as agents, is that for every property, especially at the moment with stock so tight on the market, with every property that’s going to market, you’ve probably got three or four or five people bidding for it, or interested in it. And so only one person’s going to win that, and that there’s going to be four other people who think that the agent is a bit of a jerk because they didn’t… Either didn’t make the extra call, or… So I guess that’s where that transparency’s coming from.
Peter Gibbons: (19:15)
Yep. That absolutely nailed it, Kylie. And that’s the one problem that we were really trying to solve. So the agents are telling us, now, and in the situation you described, you’ve got four people who are unhappy with the agent. Now, those four people are buyers for their next property, and indeed probably sellers. So Openn’s now providing itself as being a great listing tool, because those people who are missing out know they only missed out because they weren’t willing to pay a higher price, and they still trust the agent. We had a classic example recently where one of the bidders who missed out, it was a development site and there was, I think, 11 or 12 bidders on it, rang the agent afterwards and said, “Look, I didn’t win because I wasn’t willing to pay what others were willing to pay, but I loved the process and I’m about to sell 10 of my properties. We’ll use Open Negotiation.” So all of a sudden, from a buyer who probably would have disliked the agent for missing out, the agent’s actually secured 10 more listings. So that’s what transparency’s all about, to me.
Kylie Davis: (20:16)
Mm. Fantastic. So is Openn used by an office, or is it used by individual agents?
Peter Gibbons: (20:24)
Look, it’s used by both. Firstly, and I’m sure the guys will understand, I guess, when you start a startup, you’ve got all these visions of how things are going to roll out, and they tend to be completely opposite to what you’d anticipated. So our view, and I guess our naïve view, at the beginning, was we were going to go to the heads of all these agencies and tell them that there was a new way of selling real estate. And we did, and they sort of said, “Look, yeah, that’s great. We get it, it’s interesting, but we don’t need it. Things are going fine the way we’re doing it currently.”
Peter Gibbons: (20:59)
I think then we went to the coalface, to the agents, particularly in the suburbs and regionally, and they were the ones who said, “Look, wow. Yeah, we really need a point of differentiation, and transparency can be that point.” And so whilst we thought it’d be top-down, it was kind of bottom-up. Now, it’s becoming top-down. There’s, I guess, the acceptability, and we’ve gone from startup to scale-up, that we’re doing sort of partnering with major groups, rather than agent by agent, but I guess that’s just evolution of a new technology. Change is something that needs to happen over time.
Kylie Davis: (21:42)
In the Openn platform, do I have to make all of the offers transparent, or is there agent control over that?
Peter Gibbons: (21:49)
Agents are absolutely central to the sales process. It all comes through the agent. So the agents have become really good at negotiating terms. So the way the process works is potential buyers put in, very much like private treaty, put in their terms. All digitally, of course, so it can all be signed off on glass. The agent then speaks with the seller and works out what are the best terms and who is the seller happy to participate. So really, at the end of the day, when it becomes a shoot-out on price, they’re kind of agnostic as to who wins, because they’re happy with all the terms. And so once those terms are accepted, everybody can compete on price, and that’s the transparency.
Kylie Davis: (22:34)
Right. So everyone can see the price at all times.
Peter Gibbons: (22:38)
At all times. So they’re a pending bid until their terms are accepted. Once their terms are accepted, they’re in the game, and they can see what everybody else, knowing everybody else has signed a fully legally-binding contract.
Kylie Davis: (22:52)
And have you had any pushback against that level of transparency around everyone seeing all the prices all of the time?
Peter Gibbons: (22:57)
Look, I guess it’s that age-old argument of by not being transparent, can you push for a greater price? I guess, really, our view is absolutely. The transparency creates the premium in pricing. I think… I mentioned before that the fact is, buyers now have enormous amount, through the CoreLogics and On the House and these sorts of things, they’ve got a great access to statistics and data, and so they know what the property is worth. I guess having access to all of that data, which previously came through the agent, they will probably make a more conservative bid. They’ll fall back to the statistics and data. However, if they can see other buyers willing to pay that price and more, that’s the social proof they need to be comfortable to bid higher.
Kylie Davis: (23:50)
Mm-hmm. Fantastic.
Peter Gibbons: (23:50)
Yeah.
Kylie Davis: (23:50)
So Dave Stewart, you once tried to sell a property on eBay, I understand.
David Stewart: (23:58)
No, I listed a property on eBay and very, very, very quickly withdrew it. So yeah, look, I had a sale, I don’t know, four or so years ago. Good mate of mine. Played footy with him. 10 buyers that wanted to buy it. Went through the normal process. Long story short, nine buyers were really dissatisfied that they didn’t win. Nine buyers didn’t believe me that there was 10 other buyers in the sale. Nine buyers wanted to have another crack at it. Nine buyers all told me that it was just a really unfair process. So in the fit of petulance, I guess, I went home to my wife and said, “The next one, I’m just going to sell it on eBay.”
David Stewart: (24:34)
Had a listing. Couple of days later, I had this big, bold plan, and I was going to sell it on eBay. Had them all geared up for it. We were all ready to run. Had the photos ready to upload directly to eBay. In a moment of clarity and sanity, I thought, “Let’s try and sell something else first, so I know exactly what I’m doing.” And I sold my motorbike on eBay. At the end of the sale, I realised a couple of really key points there. I had no control over buyers. I had no control who was making offers. I had no insight as to whether they were serious, or credible, or qualified. So no, I nixed that idea really, really quickly. I never went through with it. But that was the genesis for what led me to create Market Buy.
Kylie Davis: (25:16)
Fantastic. So tell us briefly about Market Buy and how it’s different to, say, Openn.
David Stewart: (25:23)
Yeah. Look, at the end of the day, I think we’re probably coming at a very similar problem, and I think the end result is very much the same. And the same with AuctionNow and the same with all the online platforms. It’s to ease the process, to create efficiencies, to allow people to engage in property sales from any location. So I think that’s probably a standard, or a constant, across all the different types of platforms. But like anything, we all come at it from our own perspective, and I think we’ve all taken our own view, our own pathway, to get to that end result.
David Stewart: (25:57)
We’re not so much a method of sale. We’re not an auction. We’re not a private sale. We’re not a fixed date sale. We are, at the heart, just a communication device, and we allow the agents to set the parameters of how the sale runs. So we talk to the agents a lot and we say to them that we don’t want them to necessarily change the way they’re selling now. We don’t want them to necessarily have to learn an entirely new process. We just want to apply a layer on top of what they’re doing ,and just increase those efficiencies and allow them to do what they’re doing now, just faster, simpler, quicker, and with more credibility in the marketplace.
Kylie Davis: (26:35)
Cool. And so what’s your adoption rate been like?
David Stewart: (26:38)
All right. What, across the overall marketplace?
Kylie Davis: (26:43)
So in Australia, because I know that you’re expanding into the U.S., and we’ll talk about that in a little bit, but what’s the response that agents have had to you about taking up on Market Buy?
David Stewart: (26:54)
I really relate to what Peter said. We’ve been around about the same time. I remember doing a demo for Market Buy for Peter Clements, in the early days, and he was running over his plans to take what was then called Transparent Negotiation, which was an offline form, and take that into an online form. I think we released within months of each other, and we’ve followed very much a similar trajectory. There’s been others that have come and gone, but I think as far as that space, I think the two stand-outs are very much, clearly, taking out the streamed auctions, I think they two stand-out companies are absolutely us and Openn Negotiation. But I would repeat, very much, what Peter said. You know, at the end of the day, we tried to go to the big networks, and initially we got bounced pretty quick and pretty hard. So we then build our customer-base very much amongst individual agents and smaller operators and independents. It’s only been really over the last 12 months that we’ve caught the attention of some of the larger brands, and we’ve now, much like Openn does with their groups, we’ve got agreements in place with some fairly large franchises, and some fairly large groups. And we’re now starting that process, or have been starting that process, over, particularly since COVID, of taking more of a top-down approach.
David Stewart: (28:12)
But absolutely. I mean, I think as far as uptake, we’ve pretty much had a similar trajectory, as far as that goes. And again, I did smile to myself when Peter said, “You have this idea of how things are going to go, and you have these dreams in your head of how everything’s going to roll out.” No plan ever survives first taste with battle in the marketplace. If I look back at four years as to where we are today, our platform, the way it runs, the functionality it has, it looks nothing like I thought it would have, but that’s just evolution of business and being able to be adaptive, and being able to make those changes as the market dictates. I think what we’ve been really, really good at is we very much listen to our marketplace. We listen to the features and the needs of our agents, and we’re really proactive in making sure that we can… In as far as possible. You know, there are some requests we can’t agree to. Some requests we can’t simply do from a technical point of view. But for the vast majority of that, we’ve been able to really adapt and evolve the process so that it really fits into those requirements.
David Stewart: (29:23)
And again, as Peter from Realtair said, auctions make up a small part. I think where we’ve been really successful is we cover everything from auctions all the way through to private treaty, deadline sales, fixed date sales, so we do have the ability to be able to roll that out and scale that out across the entire gamut of different types of sales.
Kylie Davis: (29:45)
So you don’t force the price or the bidding or the offer level to be transparent? That’s in the hands of agents with you guys?
David Stewart: (29:55)
So we did… Up until about February this year, we weren’t dissimilar in that to Openn. All of our offers were very open and we’d been built on a very transparent platform. And I had requests from agents for years to be able to have the ability to hide offers, and I was dead against it. You know, we built this to create transparency, and it was something that I was really dead against. I guess after a certain period of time, I decided to relent, and to try it on a test feature. And a lot of that came from the U.S. The idea of the concept of auctions in U.S. sales is just alien. And I guess, to an extent, I just got sick of bashing my head against the brick wall and not having people listen, so we relented.
David Stewart: (30:44)
We built in the ability for agents, on a sale-by-sale basis, to be able to either disclose offers or hide offers. We still wanted levels of transparency. People can still see how many buyers they are, and they can still see which buyer holds the highest price, but they can hide the actual price itself. And look, I’ve been stunned. The uptake has just been phenomenal. Not so much in the established markets that are used to transparency, like Melbourne and Sydney, but places like New Zealand and the States, we’ve just had an explosion of interest from those markets, and they have really jumped on board, those deadline-type sales. So it is now purely agent choice.
Kylie Davis: (31:24)
Cool. So look, tell us a little bit more about your expansion into the U.S. Because you’ve recently had a property in New York, in Manhattan, sell, haven’t you?
David Stewart: (31:32)
Yeah. So we’ve completed sales now in New York, Minnesota, and Texas. They’ve been the three states that we used as our test case, or our guinea pigs, if you like, and we just went to them and said… We started this process in probably March last year. I’d already had some connections through our old mate, Peter Brewer, and being over at Inman Connect, and various other sort of places. I had a relative, I guess, connection base or network within the U.S. market, so we just cherry-picked a few people. Andy Reid, a good mate of mine, introduced one of our test cases, Blake, over in Minnesota. And we just said to them, “Look, we understand that this platform is an auction-based platform. We understand that auctions don’t really work in the States. We understand that in your marketplace, it is very much seen as distress sales.” The U.S. market looks at them as though sales where they’re foreclosures, or they’re quick sales, so they kind of have that ideal around them, over there, that the auctions aren’t used for premium type of selling. So we just said to them, “Here’s a blank slate. Go use it. Come back and tell us all the things you need, and we’ll give you a guarantee that we’ll build it for you.”
David Stewart: (32:45)
And that has been an ongoing process, now, for 12 months, and it is now… We have a dedicated U.S. version, so we have a URL, marketbuyus.com. We have dedicated U.S. version of the software that doesn’t exist in Australia. They are two very different products. What the agents see in Australia is absolutely not what the agents see in the U.S. So I think, again, we’ve had to be really adaptable in order to make it scalable, and we’ve had to have a really close look at what the lay of the land is in U.S. sales. What the requirements are, what the agents need, factor in the difficulties insofar as involving buyers agents and buyers agents that don’t necessarily, or in most cases, aren’t connected to the listing agent office, so they’re two completely separate companies. There’s been a mountain of detail that’s had to go into that, but I think we’ve now finally got it to a point where it’s getting a great deal of acceptance. And yeah, we sold a property for $2.4 million, in Upper West Side, in Manhattan, in the middle of their huge lockdown just a few months ago.
Kylie Davis: (33:51)
Fantastic. So in your view, is Australian proptech scalable? In this association space?
David Stewart: (34:00)
Look, it’s scalable if we take the view that we can’t go into other markets and just… Without any consideration for the fact that real estate is different in every market, and the way the people that use those tools are going to apply it very differently. It’s scalable if you have that level of adaptability. I think where Australian proptech sometimes run into dramas is that we expect the real estate transaction to be a standardised transaction across all different marketplaces, and that’s just not the reality. The end result, again, is very much the same. The buyer and seller come to terms and agree on a price, and contingencies, and a sale is completed, but the mechanics of how that happens varies greatly. Like, it varies greatly between Victoria and Queensland. It varies greatly between New South Wales and New Zealand. So the ability to be able to just put a single product out is probably… That’s probably where Chris comes from.
David Stewart: (34:59)
I think Chris Rowles looked at it, and I’ve had a number of conversations with him, and I think he looked at it and just said, “Well, you can’t take a methodology and just flat lay it out into any market and have a large-scale uptake.” And Chris was one of the reasons why we went down the path we went. You know, I looked at it and said, “Well, I think that makes a lot of sense. I think that’s probably a reasonable expectation.” So we then took the view to make a platform that was not a method of sale, but something that was adaptable from region to region. And it’s to the point now where we have different terms and conditions for New South Wales than what we do for Victoria, than what we do for Queensland, so you are, even on a much smaller state-by-state level, roll those changes out and have a platform that is specific to that region.
Kylie Davis: (35:48)
So Peter-
David Stewart: (35:49)
So Chris was right, but he was also wrong. How’s that for anticlimactic?
Speaker 5: (35:56)
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Kylie Davis: (36:19)
Peter, because you also are looking at expand… I mean, you’re focused mainly on Australia, but you’re also expand… Had interest from other countries, as well.
Peter Gibbons: (36:32)
Yeah, look, absolutely. And a lot of that’s been… We certainly had discussions going on prior to, but COVID’s been a big driver of that, and was mentioned earlier. And look, David’s absolutely right. There’s no one-size-fits-all. We’re currently in partnering discussions in U.S., South Africa, Southeast Asia, all being driven by COVID. We’re, in fact, selling properties now in New Zealand, which hadn’t been on the map, but all of a sudden, we’re inundated by agents wanting to use the platform. And as I say, David’s absolutely correct. You need to look at the traditional sales process in any region, and just provide an enabling tool that allows them to do that more efficiently. As I say, that was our roots coming back from the traditional private treaty-type process. And the point was well-made, as well. You may as well have seven different countries in Australia, because each one’s got its own process, its own legislation. It’s all very, very different.
Peter Gibbons: (37:31)
You can’t build a one-size-fits-all. You need that adaptability that David was speaking of, that you can sort of, I guess, morph the platform to do what the local market wants it to do. The ability to be that flexible, has been a great advantage, hence us turning on New Zealand was very easy. Legislatively, we’re looking at four pilots in the U.S. In fact, I think Minnesota is one of them. I know L.A., Florida, and one other, with one of the largest real estate groups in the U.S., and that’s all, as I say, driven by the ability to adapt to those markets. If you go in trying to be the one thing and tell agents to change the way they do things, you’ll get a very short, sharp answer back, I think.
Kylie Davis: (38:17)
Exactly. And there’s a lot of… Well, there’s over a million agents in the U.S., so there’s more than enough agents over there for you guys to both be very comfortable in the market. Pete, have you got any ambitions on going global with the AuctionNow site?
Peter Matthews: (38:31)
Absolutely. Yeah. I mean, look, the thing is, I’ll just say, as well, I agree with the guys. There isn’t a one-size-fits-all. I mean, I’ve been in New Zealand for a couple of years. Also in Australia for 31 years all together. The reality is that different states have got different sort of ways of doing things. I mean, just from a legislative point of view, as well as an actual process point of view. And if you don’t have those flexibilities, then you certainly limit. For us, we’ve got interest overseas. We’ve been dealing with… I mean, even some of the Nordic countries. Similar countries to what the guys have mentioned, so we’re all probably going to be on the same plane when we can all fly. So that’ll be interesting.
David Stewart: (39:13)
Peter, I can’t get out of my suburb, mate. I’m not getting on a plane anytime soon.
Kylie Davis: (39:14)
That’s right.
Peter Matthews: (39:14)
When we can do it, we’ll make a group booking, guys.
David Stewart: (39:19)
That’s good.
Kylie Davis: (39:19)
It might be a while. David’s still tied up in Melbourne.
Peter Matthews: (39:25)
Yeah. I mean, look, I think it’s really exciting, because I think that we’ve got a little microcosm here. I’ve been to Inman like eight times, and it’s amazing how the U.S. market and the Australian market are both slowly but surely coming closer and closer together. Technology has aided that immensely. And I think, also, too, when you’ve got… Dave, and I’m sure Pete’s probably been involved in some of these conferences, as well, you get a really good sense as to what they’ve got over there. And if you can take some of the great things that they’ve been doing over there and bring them back to here, I think that’s what we’ve all done. We can really genuinely create some transformation, and meaningful transformation, to the way that real estate is transacted. For the agents as well as for the consumers, as well. So I think globally, I think, all of our platforms have got a place. And I think that really Chris should maybe reconsider his investment strategies after this…
Kylie Davis: (40:22)
You need to go [inaudible 00:40:22]. It’s been adapted. So look, streamlined [crosstalk 00:40:22] all of these different sales and negotiations and making it more transparent actually gives us a whole lot of other benefits or outcomes from it. What else does it enable us to do when we’ve got this transparency? Like, the data stream that’s coming off it must be fairly phenomenal.
Peter Gibbons: (40:41)
Super exciting, the data stream. And I guess, in some ways, we’re all data companies. At Openn, we’re starting to see this phenomenal depth of market data that’s probably never been seen before. The technology has the ability to capture every bid, every bidder, how many times they bid, what bidding increment they used, what point of the bidding did they drop out, the standard deviation between winners and second and third, and all this sort of information that is in real time, as opposed to backward-looking, I guess, data in property. Median prices from what sold in the past. All of a sudden, you’ve got this real-time data that has the real potential to be used as lead-indicators in the market. If you could see Openn Negotiation had 10 people interested in January at 700,000, well, the median might be 700,000 in June. If there’s two or three people bidding, you’re starting to see the underlying depth of the market which provides that ability to create lead-time indicators. So I think there’s a whole revolution in depth of market data that’s going to be driven by these sorts of platforms.
David Stewart: (41:53)
Yeah.
Kylie Davis: (41:53)
Are you seeing sort of smarter bidding as a result of this, or?
Peter Matthews: (41:57)
It’s interesting when you look at our buy now strategy. If I go back to our wonderful 90 year old lady, we saw, in that example, bidding didn’t actually start until the very last minute, with four registered bidders. And whilst it was a short campaign, and then you see others where we’ve got a longterm bidding strategy. So I mean, everybody’s a little bit different, but it’s really quite exciting to see that. And I agree with Peter, and I’m sure David’ll agree, as well. Like, the insights that can come from this that can help agents in the way that they communicate with their customers, to help, I guess, the industry sort of reshape itself to be a, I guess, a better servant to the community, will be coming from data like this.
Peter Matthews: (42:43)
Because no one would ever complete a property transaction and say, “You know what? That was fantastic. I loved every minute of it.” Because it’s a painful experience. It’s an emotional experience. By the time you work out what you want to do, what you actually want, versus what you need, and then by the time you do all your communication, you’re doing your inspections and all that… I mean, I’ve sold property to people who have been looking for 10 years.
Kylie Davis: (43:05)
Oh, God.
Peter Matthews: (43:05)
And I’ve sold property to people who have walked past. A guy was walking a dog, that I did an auction the other day, in Glebe, he was walking the dog and he bought a place.
Kylie Davis: (43:12)
Now owns a property. [inaudible 00:43:14].
Peter Matthews: (43:14)
Yeah. So I don’t quite know if that relationship sustained that purchase.
Kylie Davis: (43:18)
Oh, no, [crosstalk 00:43:18].
Peter Matthews: (43:19)
But I think the thing is that when people look at the amount of time that they invest in searching for a property, I think all our platforms will provide a lot less stress. Take, I guess, some of that emotional stress out of it, because of the transparency, and because of the rules of engagement. And also, too, hopefully it’ll take a lot of the time out of that process, as well, because if there are these sort of data insights that agents and buyers and sellers can learn from, hopefully that’ll just make that a much, much cleaner process, I think, for everyone.
Kylie Davis: (43:51)
Mm-hmm (affirmative). Fantastic. Are we seeing any questions coming through yet, Sam? Nope. No questions. If anyone’s got any questions, please pop them up in the chat, or in the Q and A section. But one of the… I mean, look, we do see that buyers… There’s that awful saying in real estate that buyers are liars, and I think these kind of platforms are actually putting paid to that awful statement, because buyers hold back from agents because they’re anxious that they’re part of a game that they’re about to lose, aren’t they?
Peter Matthews: (44:25)
Yeah.
Kylie Davis: (44:25)
And so they kind of feel like they have to hold back. But if it’s all out there for everyone to see, and they know exactly what the offers are up to, what they need to do to be competitive, then there’s absolutely no point to them having to hold back.
Peter Matthews: (44:41)
Yeah. I mean, look, I think I agree with you. The only thing I’d say is that there is going to be, always, this tension. And because there is the tension of the seller always wanting to get the highest price they can, the buyer always wanting to make sure they can buy it for as little as they can, that’s the reason why agents exist.
Kylie Davis: (44:57)
Yes.
Peter Matthews: (44:57)
And to go back to the whole premise of all of our platforms, as well, we’re not there to replace anyone. We’re there to enhance the relationship between those parties. And I think that across all of our platforms, if agents actually are using digitised platforms, I think they’ll have much, much better relationships, and it’s been discussed by David and by Peter. And our platform, as well, is that when people miss out, they understand they’ve missed out because they’ve been beaten by somebody with more money, not because they aren’t aware whether there is somebody else that’s interested in the property or not. It’s because the transparency makes it crystal clear. So the tension’s good. Like, we don’t want that to go, because that drives prices, but it also keeps our industry where it should be, and that is in that key important place where agents build relationships with both sides. Their responsibility is to get the highest price they possibly can, and that’s to get that from the market. And I think equally all our platforms can assist in that delivery.
Kylie Davis: (45:58)
Mm. But going forward-
Peter Gibbons: (46:01)
I think… Yeah. I think you’re spot on there, and there’s two sides to every transaction, and Pete’s probably nailed that. The fact that there is the buyer, but there’s the seller, as well. And so by bringing that trust element in that an auction has, which is around instead of an agent coming back and saying, “Look, I’ve searched everywhere in the market, under private treaty, and the best offer’s 950, but the seller wants a million dollars.” They’ll say, “Well, go back and try harder.” The agent’s tried their guts out, but that’s what the market is telling them. In the instance with any one of our platforms, they’re seeing that it’s the buyers telling the seller that that’s where the market is. That under competition, they’re not willing to go any higher than 950,000.
Peter Gibbons: (46:46)
The agent should be the good guy, in this instance, and they shouldn’t be doubted. And I think these forms of platforms put the agent in that position. That they’re the trusted advisor. They’re not the one who’s preventing the sale. They’re just maximising the competitive tension to ensure the person who wants the property gets the most, and the seller gets the best price for it.
David Stewart: (47:08)
And I think the other thing, Kylie, is there’s just an expectation these days, across all industries, that you will be able to transact on pretty much anything online. I think the days of… Well, speaking personally. I shouldn’t speak for the other guys. I don’t know that you necessarily want to change the agent’s role. You just want to make it more efficient. You just want to make it easier, and you want to give consumers what they’ve been screaming for, and that is just easier access to sales. Easier access to be able to engage in sales, and the ability to put their best foot forward in whatever format that is. And if you do that, and you do that successfully, then it’s one of those really rare cases where it’s almost a win win.
David Stewart: (47:50)
There’s always going to be people miss out. Real estate sales, like anything else. It is, by its nature, an adversarial process. Someone has to lose. One person wants the highest price, another person wants to get it for the cheapest price. But it’s bringing those parties together and doing it with the least amount of friction possible, and that’s probably the end goal of what I think we’re all trying to achieve.
Peter Gibbons: (48:07)
Mm-hmm (affirmative).
Kylie Davis: (48:13)
Well, look, ladies and gentlemen, we could probably discuss this all day. [inaudible 00:48:15].
David Stewart: (48:14)
Oh, no. I couldn’t.
Kylie Davis: (48:23)
And Dave’s locked in Melbourne, so he’s got all day to do it. But we’re going to have to wrap it up there. So I wanted to thank our panellists. Thank you Dave Stewart, from Market Buy, Pete Gibbons, from Openn, and Pete Matthews, from Realtair and AuctionNow.
Peter Matthews: (48:32)
Thank you.
Kylie Davis: (48:33)
I do also want to give a bit of a shout-out, because this is quite a competitive space, so to the other auction platforms out there. Gavl… I’m trying to think of some of the others.
Peter Matthews: (48:41)
SoldOnline.
Kylie Davis: (48:46)
SoldOnline. Zillow. And [Meso 00:48:46], which is another negotiation platform. So there’s some great work happening in this space, and if you’re an agent, really encourage you to check out the three here and the other that are working in this space. I would also like to thank the Proptech Association committee. Simon Hayes, Jennifer Harrison, Marie-Anne Lampotang, AJ Chand, and Kylie Dillon, for their help with the event. And we have got another one set up already for last Tuesday in September, where we are going to be talking about alternative property ownership, and whether millennials will ever be able to afford property again. So a very big thanks so Stone & Chalk for getting behind the event again. Thank you to REIWA, and thanks for everyone for your support and your time.
