25 May Investors flawed assumptions + Murky behavior revealed + Technology’s impact on property
Highlights from this week:
- Why flipping does not work in all markets
- Watch out for properties with price ranges
- 20 largest urban areas revealed and what they offer investors
- Property deals done digitally
- A futurist’s view of property
Murky behaviour of agents – Darren Piper
Kevin: One buyer’s agent is sounding a note of caution about a possible downturn in the market and the fact that this is bringing out some pretty murky – his words – behavior on behalf of some real estate agents. Joining me from Universal Buyers Agents is Darren Piper.
Good day, Darren.
Darren: How are you, mate?
Kevin: Very good, thank you. Darren, you’re a bit concerned about some of the murky world of pricing tricks. Tell me what’s happening.
Darren: Yes. What we’re seeing in the market at the moment is more agents putting stock to market on the major portals without pricing on. So, what’s happening is it’s starting to confuse the buyers even more with methods like “by negotiation,” “for sale”, obviously “auction” is a pretty standard one.
What’s happening is the buyers who are actively looking to purchase are getting confused with where actually value or price points lie within the market.
Kevin: Always when you see agents do that, it’s always an indication to me, anyway, that the seller is probably are asking too much.
Darren: It’s a very interesting topic at the moment. The other one that we’re seeing is “offers over,” but it doesn’t mean that the vendor’s expectation is necessarily close to that, so to speak. So, it just goes to show the importance of doing your due diligence.
Kevin: Absolutely. That’s probably one of the things that we should cover for buyers, too, is that if they’re not real sure, they should get a valuation done.
Darren: Yes, that’s exactly right, or even look at getting a buyer’s agent on their side or a professional of some sort to guide them through the transaction and let them know where value lies so that they don’t over-pay, because in this market, in the market conditions at the moment, it is very easy to over-pay, and unfortunately, we are seeing that.
Kevin: Of course, the Office of Fair Trading really clamped down on this fairly heavily. They don’t like that practice. And I think they actually scrutinize a lot of agents, don’t they?
Darren: Yeah, they do. Unfortunately, it has been happening far too often, in my opinion. There was an agent recently that was fined for similar tactics, if you will. So, yes, it is happening out there, unfortunately.
Kevin: It’s been clouded a little bit further too by the fact that auctions don’t have prices on them, and that’s clearly been a debate that’s raged even between the states. You were in New South Wales. The McGrath Organization were in favor of price ranging. Whereas in Queensland, it’s actually been banned.
Darren: Yes, that’s exactly right. Queensland is the only state that the agents can’t quote a figure when their particular property is going to auction. So, going back to my earlier comment, it does make it hard for buyers to understand not only where the expectations of that particular vendor are but where it sits from a price point. So, they’re really just going to do their homework and be comfortable with what they’re paying.
Kevin: Is it any value at all, when you’re talking to an agent and they have a price range on it, to try and get a handle from them as to what would be acceptable?
Darren: Yes. I think the same thing is a lot of people get caught up in pricing. It probably sounds like a funny comment to make, but what I mean is a property might be listed, whether it’s a price range or “offers over,” whenever we sign a client, I always say to them, “The way we approach it is the pricing that is on the property publicly is secondary for us. First and foremost, it’s about understanding where we see value in it.”
Then that comes back to just really doing your homework, looking at comparable properties, square meter rates, understanding the vendor’s motivation, and then putting a plan in place to purchase it within those goalposts.
Kevin: One of the things we recommend when people go to auction is that they set themselves a limit and then make sure they don’t exceed it no matter what happens, because when you become emotionally involved, that’s when you run the risk of over-paying.
Darren: Yes, most certainly. There’s no doubt about it. Emotion is that the highest driver when it comes to price point. Especially in auction conditions where it’s tense on the day, there is a lot of pressure, you’re there, you’re bidding in front of everyone, so you can put your hand up one or two more times and you’ve paid another $25,000, $50,000, or $70,000 in some cases.
Kevin: Your comment, too, about a downturn in the market, Darren, is that actually what you’re seeing?
Darren: We’re seeing a bit of a correction. From a downturn point of view or lack of inquiry point of view, we’re seeing buyers actively looking to purchase but anything that has “by negotiation” on it or even “auction,” they’re not even making inquiry on it, which is an interesting conversation in itself.
I recently had a client who had been looking for a number of months. There was a property on the market that had no price on it, and they completely ruled it out because they thought it was going to be out of their range.
Kevin: Darren, great talking to you. Thank you so much for your insight. Darren Piper is a buyer’s agent.
Darren: Thanks, Kevin. Bye-bye.
Why flipping does not work in all markets – Cate Bakos
Kevin: Quite often, I receive e-mails from people with what seem like fairly basic comments or questions, so we’re going to deal with a few of those today as I talk to buyer’s agent Cate Bakos from Cate Bakos buyer’s agency.
Good day, Cate. How are you doing?
Cate: I’m good. Thanks, Kevin. How are you?
Kevin: Good. One of the flawed assumptions that I see investors make is that they think that property value will always go up. What’s your reaction to that?
Cate: That is, indeed, a flawed assumption because we can’t anticipate that properties just go up on a linear curve and without any kind of bumps. The first thing to state is that property markets do have movement. When you scan right in on the chart, you can see that there’s up and down. And that can be cyclic or it can just be seasonal.
There are other reasons why property values don’t necessarily always go up. One might be that you over-paid for the property at the start, which is a bit of a disappointing thing to find out, but if that was the case, then you need time in the market for that over-payment to erode.
The other one that people often overlook is when we have a brand new property and the component of the price tag that you paid that relates to the dwelling itself was over-represented. In other words, the building is brand new and it’s quite expensive and the land is not as valuable.
So, if the depreciation of that building eclipses the appreciation of the land growth, then we’ll have some negative movement for a little while there as well.
Kevin: Once again, it highlights the fact that there is no one market around Australia. They’re all different, and they call change and move around from time to time. You have to stay on top of it.
Another one of the things that I’ve heard quite often is that renovations and flips always pay off. I do know that that’s not true.
Cate: No, it’s not. I’ve seen people do it very successfully, and I know that there are a lot of programs out there and there’s lots of support for people who want to take that strategy on board, but assuming that every renovation and flip pays off is really naïve, because you could be working against a market that’s moving downwards or you could have some cost blow-outs or some time blow-outs. So, people have to factor in the holding costs of the property a well.
If they have some time delays or they have an issue with planning or whatever they’re doing, they can be holding their property without any [2:18 inaudible]. And without a tenant paying them any rent, it can really bite.
Kevin: Another one that I’ve heard from time to time… And this one is very personal because this actually happened to me. All of our investments have always been 600 square meters plus – 620, 800. And that is that a block of 600 square meters plus with side access – in our case, we bought it on a corner – is going to be sub-dividable. But I do know that that’s not true.
Cate: No, it’s not a golden rule to rely on at all. There are so many moving parts to this process. And it relates to town planning. You have to look at the title as well and understand if there are any restrictions there. You could have covenants. You could have easements. You could have a really restrictive council with neighbors who might object to what you’re wanting to do.
There are that many things to take into account about the side clearance and sub-dividable minimum rates. Most councils will say that it’s a case by case basis, and 600 is not a guarantee to be able to subdivide.
Kevin: Yes, once again, do your due diligence right at the start. We talked about values not being uniform in markets all around Australia. That brings me to my final point that I want to discuss with you, Cate. My guest is Cate Bakos, buyer’s agent. That is that rental yield and rental demand is consistent in the capital cities.
Cate: Not at all. It’s a really good one to myth-bust, because our capital cities have very different rental yields from each other. Being Melbourne-based, I often field phone calls from interstaters who are a little bit aghast at the rental returns that I cite them from the Melbourne market. And we are a market that doesn’t boast our rental yields; in fact, are some of the lowest out of the capital cities.
But also assuming that rental yield is consistent across dwelling types and across cities themselves. It’s not the case at all. So, demand and yield is obviously a factor of supply and demand, that you have areas that are over-represented – it might be apartments – then you could have a bit of a hard time getting the right amount of rent straight-away for your apartment because it will be competing with other apartments.
So, again, due diligence and talking to people who can genuinely cite you a rental return is really important, and that should be a property manager rather than the sales agent who is selling a property.
Kevin: Very good. We’ve covered four really good points here with Cate Bakos. Cate is a buyer’s agent out of Melbourne and always very reliable with her information. Next time we have a chat in a couple of weeks’ time, there are some misunderstandings around finance I’d like to catch up with you on as well.
Cate: I love this one.
Kevin: Yes, good on you. All right. We’ll talk to you about that in a couple of weeks’ time. Thank you.
Cate: Thanks, Kevin.
Large urban areas ripe for picking – Jeremy Sheppard
Kevin: Towards the bottom of the homepage on Real Estate Talk, you’re going to notice a badge there for a product called Location Score. I want to dig a little bit deeper into this because there was a really interesting release that they put out this week that had a look at the 20 largest significant urban areas around Australia. Some great lessons coming from this and now that Location Score has the ability to look back a little bit and track where the property markets are going, we’re getting some really good data.
Joining me to talk about this is Jeremy Sheppard, from Location Score, LocationScore.com.au and as I said, use the button on the homepage at RET to tell you a little bit more about it.
Jeremy, tell me about Location Score. How do you write these areas? What sort of data do you use?
Jeremy: The whole idea about it is supply and demand. We’re trying to score supply and demand, so we’re looking at things like auction clearance rates, vacancy rates, percentage of stock on market. That’s obviously a very good indicator of supply.
We munge all of these statistics together into a single score out of 100, because that’s just easier to digest. The higher the score is, the more demand exceeds supply, so it’s that simple really.
Kevin: Let’s have a look at one of the hot markets recognized around Australia, and that is the Sydney market. What have you noticed there, and what has Location Score picked up?
Jeremy: As the report shows, over the last few years, the Location Score has been steadily declining in Sydney. It was at a peak somewhere in middle of 2015,and since then, it’s just been gradually coming back. And you’d expect that; sky-high prices subdue demand like nothing else.
It’s come back down from about 73 to 60, which is quite significant, but that was over about a three-year period. But that obviously reflects where the market is right now. We’re seeing very low growth, if any at all, and that’s because the demand has been balanced with supply.
Kevin: Speaking of balance, what would you score a balanced market at?
Jeremy: The theoretical balance point is a Location Score of 50 because it’s scored out of 100. But what we’ve found historically is it’s probably around about 55. About 55 seems to be where the figures lie for a market that’s in balance.
An example of that might be Brisbane at the moment. It has a Location Score of 56, so that’s about balanced. And of course, Sydney is still just a little bit higher than that, so you’d still expect it to have some sort of growth. But of course, it’s come down a long way.
Kevin: What are some of the high achievers that you can nominate for us?
Jeremy: Actually, one interesting one is Melbourne. Despite the fact that we’re hearing that there’s been little growth, I’m just wondering whether that’s seasonal – perhaps, Christmas, New Year’s, and Easter, and so on – because we’re seeing that the Location Score is still reasonably high. It has come back a bit from last year where it was quite high, around about 68. But it’s still tracking about 65, and to me, that means there’s still some growth left in the Melbourne market. I don’t think that this year, it’s going to be such a flat year for Melbourne.
But the standout markets, I think, are Geelong. Geelong had a very high Location Score. Let me just flick through the report and find out where that was. I think it had the second highest Location Score. This is data finishing March 2018. It had a location score of 66, which is quite healthy – very healthy – and that’s a natural response of the Melbourne growth, that it’s starting to ripple out towards the nearest regional markets. Of course, Geelong being within a stone’s throw of Melbourne.
Kevin: We’ve heard some horror stories about Perth. What are you noticing there? What’s it telling you?
Jeremy: It’s still no good news for Perth, but it appears that it has bottomed. The Location Score for Perth has been pretty much constant over the last two years. It’s been tracking around 50, 52, 51. There’s a little bit of volatility there, but the good news is that it isn’t going any further south.
It’s decline probably finished towards the middle of 2016, so since then, it’s just been smooth sailing. But that doesn’t mean it’s about to enter its growth phase. It could just sit on the bottom there for who knows how long?
Kevin: I was going to ask you at what point do you say maybe the Perth market has turned around. Is that over 55?
Jeremy: I personally would like to see it go above 60 before I’d show any interest in it, in fact, 62. To me, 55 is still just balanced; it’s business as usual. Most markets are in a state of balance. There’s this tug of war between supply and demand. Every market wants to be in balance, and so the vast majority of them are around that 50 to 55, mid-50s. So, it doesn’t get our interest unless it’s getting up above 62. That’s when it triggers some attention from us.
Kevin: I guess we have to be pretty careful here too, don’t we? We’re talking in general terms here about capital cities, but even within capital cities there are markets within markets.
Jeremy: Yes. Actually, an interesting point there. I’ve noticed there are a couple of markets in Perth that have caught my eye. And this is usually the case. When you see a boom starting off, it’s usually affluent areas where the property prices are quite expensive. People are looking at them and thinking “That’s really good value for money. I know we’re in the middle of a flat period.” And that’s what triggers the start of the boom, and then it ripples outwards. Then you have this flight to affordable locations towards the end of the boom.
We’ve noticed just a couple of those exclusive sort of areas in Perth, their individual Location Scores have just started to climb up into the interesting range. It’s no signal yet, but like you said, there are markets within markets, and so people in Perth probably have a few opportunities coming their way soon.
Kevin: Go to Real Estate Talk. Look for that button. That’ll take you to LocationScore.com.au. It will tell you a lot more detail. You can dig into that. You can subscribe to it, and then you can go and have a look at any suburb you like and get all kinds of information we’ve been talking to Jeremy about today.
You can get a bit more information, too, by going to RET, Real Estate Talk, and putting in “Aussie swingers reveal future rises,” and that’ll take you straight to the article that actually gives you a lot more detail, a lot more suburbs, and actually looks at the markets of Sydney, Melbourne, Brisbane, Perth, Adelaide, Gold Coast, Newcastle, Canberra, Sunshine Coast, Central Coast, Geelong, Wollongong, and Hobart, to give you a really good insight.
Jeremy Sheppard has been my guest, and we’re talking about a website called LocationScore.com.au. Jeremy, thanks for your time.
Jeremy: Thanks very much, Kevin.
A futurists view of property – Michael McQueen
Kevin: Time is running out for credit cards, iTunes, car parks, call centers, and service stations according to futurist Michal McQueen. As disruption continues to upend industries, to change employment opportunities, and alter the way the world communicates, what lies ahead and how do you stay relevant?
We’re going to look at that today in the show as it relates to real estate because in Michael’s new book, How to Prepare Now for What’s Next, he draws on a decade of research into future trends. He joins me now as our guest.
Michael, congratulations on the book and welcome to the show.
Michael: Thanks so much. Good to be part of it.
Kevin: We’re going to work through a number of things that you say are going to become redundant – we’ll ask you why – and we’ll look at trends in real estate, too, and how our living may be changing the way we build houses, I guess.
Michael: Definitely, yes. It’s an amazing time, I think, for every industry, but real estate, we’ve talked a lot about disruption over the years but I think we ain’t seen nothing yet. It’s going to be a very interesting next few years for the real estate sector.
Kevin: You say that car parks are the top on your list in terms of what’s going to become redundant. Tell me why.
Michael: The big thing driving this is driverless cars. It’s autonomous vehicles. A lot of my time is spent working with and speaking to the people who are in this space and who are even developing the technology. The smartest minds right now anticipate 2027 is when driverless cars will become somewhat mainstream.
At the moment, we’re seeing some pretty advanced testing happening in Phoenix, in Arizona, and other pockets around the world, but that’s the epicenter of it. This is going to be a gamechanger once it hits mainstream roads for a couple of reasons.
It would impact on industries like the auto insurance industry, for instance, roadside assistance, all of those businesses. But from a car parking perspective, the need to park your car will disappear the moment an autonomous vehicle can, say, drop you at work or drop you at dinner, then go home and wait for you to finish or come back and pick you up, or drops you and then goes in the pool of other driverless vehicles Uber-style earning you cash while you’re at work or at dinner. So, that’s the world we’re looking at in the next five to ten years, certainly in the next ten years.
I think the impact on real estate will be interesting. People will be able to move further and further away from city centers. We’ll see the design of homes change. The need for a car port, for instance, potentially disappears within the next generation. Even the whole notion of car ownership will disappear as we move into using Uber-style driverless vehicles as the norm.
The interesting impact just from driverless vehicles is one to watch.
Kevin: Surely, these cars, even though they’re shared, will have to be parked somewhere, won’t they?
Michael: They need to be parked somewhere? Where they’ll be parked is the cheapest, easiest spot and it won’t be in CBDs. This is an interesting thing. You look at most CBD areas and we’re clogged up full of these multi-story car parks in really high value real estate. And the reality is that this is a poor use of resources and space, so we’ll see a lot of that free up.
But we’ll also probably see a lot of these cars will run almost all of the time, and so the need to be stored and parked somewhere… They may be stored and parked for a certain amount of time in the day, maybe between 2:00 a.m. and 4:00 a.m., but realistically, they will all be used throughout the day continuously because there’s no need for them to have a rest, unlike having a driver in a vehicle.
It’s going to be very interesting to see the knock on impact of how cities are designed. In fact, we saw in Chicago just a few weeks ago, a building opened, a new apartment block, with a car park built into it, and they actually built this car park with the express desire to create it so it can be repurposed in the next decade when the car parking space is no longer required.
And so even developers and architects have got this on their radar right now.
Kevin: I notice, too, one of the other things you say will disappear will be service stations. Understandable, I guess, because we’ll probably move toward electric vehicles.
Michael: Yes, that’s exactly right. That’s a more interim one. In fact, that’ll be one will see really bite in the next five to seven years. The impact on that from electric vehicles is huge, and we have a long list of car makers who are frantically working to get electric vehicles into the mainstream.
At the moment, we have a fairly low adoption if you look at Australia against other benchmark countries around the world. But we’ll catch up very quickly as soon as these vehicles become accessible pricewise. Tesla has still pitched itself as a luxury vehicle, but we’re seeing a flood of vehicles – in the next few months, even – coming onto the market from GM. We’re seeing Mercedes, Volvo, each focusing on this area.
Electric vehicles will be a very interesting one to watch because there will be no need to fill your car up at the petrol station the moment you charge it overnight at home. And there’s an interesting flow-on effect on a whole lot of other industries – mechanics, for instance.
In the world of mechanics, electric vehicles have 10% of the moving parts of an internal-combustion car. That’ll have a massive impact on the whole supply industry for mechanics and the professionals in that space.
Kevin: Let’s talk about technology and the impact in houses. You only have to look at things like Google Home, and I saw Google develop a chat bot just this week, in fact, that talks and can actually make apartments for you.
It makes me wonder about the design of houses in the future. You talked there about having no garaging, but are they going to become almost remotely controlled, our houses, so things can be done when we’re not even there?
Michael: Yes, that’s already happening. That’s definitely a feature, already, of home design. We’re seeing a lot of homes being built with remote control capabilities, so you turn the oven on from an app on your phone, change the lighting, change the temperature, thermostats. The company Nest has been a big part of that in the last few years and has been at the forefront of that technology. That will continue to grow.
Our homes will be far more connected and that line between the digital world and the real world will become increasingly blurred. The idea of opening your computer to go online, for instance, that being something you have to delineate – “I’m going to jump online now and do something” – that will disappear. It will be a seamless interaction.
You’ll be just going about your daily life and you’ll talk to your Google Home speaker and just ask her to do something and it’ll do it instantly. That’s already a reality. It’ll become far more embedded in daily life in the next few years.
Kevin: Yes, we have Google Home. We’re already doing that. It is wonderful technology. It freaks me out a little bit when I can see that she’s listening to me when I’m not talking to her, though. But anyway, that’s a whole different thing.
iTunes, you say, also will change. And I think, too, this is going to be one again with houses, a lot how we get our news. Even television news is changing, and I notice out of America some new sites that are developing that are delivering news to us when we want it.
Michael: Yes, definitely. I think the media space is really interesting to watch. And the iTunes shut down in the next 14 months of digital downloads will be very interesting – very telling, I think, of a change in the times.
Apple Music now has 38 million subscribers, so that’s a lot of people no longer purchasing music to download and own. And so, in typical form, Apple cannibalizing their own business and they are shutting down what had been their own disruption to the music business a few years ago.
That’s probably very indicative of how technology and media is changing, and we’re seeing the same thing in the real estate space. When you look at an app like Snaploader, for instance, and Snaploader is often described as the Shazam of real estate, with its ability to drive down or walk down the street and snap a house, hold your phone up, get advanced digital recognition of what you’re looking at, identifies where you are, gives you viewing times, auction times, status of the listing, 3-D image of the internal structure of the home, all using augmented reality on your smart phone.
And across a whole lot of different areas, that digital devices prices in our pockets, that’s the thing that’s the biggest game changer still. Apple watches have been great – and smart watches, generally – but still, it’s the smart phone that’s driving a lot of the technology change.
Kevin: Yes, the changes in how we build houses, we’re going to have to become a lot smarter, because councils all over the country are calling for more infill. Our houses are going to have to become a lot smaller so that we can fit people into them, so therefore, we’ll have to use all of this technology to save on space, I would have thought, Michael.
Michael: Yes, definitely. And it’s interesting, too, saving on space, but even the functions of the rooms we’re in will change. Not only will we find in the next few years that homes not have garages but you’re seeing the whole purpose of different rooms changing.
One of the trends in the last few years has been the emergence of every home having a media room, which is something that was unthinkable 15 years ago. And so, the design of homes is always changing. We’ll probably see that continue to change over the next few years as this technology becomes embedded in daily life.
Kevin: Obviously, architects are behind all this. They’re keeping up with it. What are some of the other trends you see that we’re going to see in the next decade with our houses?
Michael: I think with our houses, specifically, we’ll probably see that the way we use land will be one of the biggest things driving house construction and the changes there. Even in Sydney, my hometown here, within a solid 10K radius of where I am, the lower north shore in Sydney, we’re seeing now zones being re-zoned plus blocks being re-zoned so that anything over a certain size, you can actually get permission much more easily. They’ve streamlined the process to be able to do townhouses on the traditional large-scale blocks in suburbs like Ryde and Gladesville, for instance.
This is a very deliberate push by the state government to try and increase density population, because we all know that property is expensive, and that’s going to mean that not only is it just a case of put a granny flat at the back of your house to try and subdivide your land, but actually, you can in a far more easy way, use your land in different ways. And we’ll probably see a lot of new, very innovative approaches to building homes in that townhouse format because the cash incentives will be there to do so.
So, that streamlining of the process for development applications, that’s going to be a game changer, certainly in Sydney, Brisbane, and Melbourne. They will be the three big cities that we’ll see that impact the most.
Kevin: Wow, some big changes on the horizon. If you want to catch up on that, the book is called How to Prepare Now for What’s Next. My guest has been Michael McQueen. He is the author of that book.
Michael, thank you very much for your time.
Michael: My pleasure. Thanks for having me.
Property deals done digitally – Lisa Dowie
Kevin: I want to talk about PEXA now. The name PEXA means Property Exchange Australia. It’s Australia’s online property exchange network. It assists lawyers, conveyancers, and financial institutions to lodge documents with land registries and complete financial settlements electronically. PEXA was formed in 2010 as an initiative to deliver a single national e-conveyancing solution to the Australian property industry.
Let’s find out a little bit more about PEXA and what’s happening online with conveyancing. Lisa Dowie, who is PEXA’s Chief Customer Officer, joins me.
Lisa, good morning and welcome to the show.
Lisa: Good morning, Kevin. Thanks for having me.
Kevin: The shift to e-conveyancing, you guys have been around for getting pretty close to a decade now. How is it progressing? Is there more confidence in the marketplace about it?
Lisa: There certainly is. Yes, we’re really starting to see the momentum shift towards e-conveyancing. Some of the numbers, I think, are quite telling. We’ve now processed over one million transactions on the platform, so I think that gives people a bit of a sense of the scale and the reliability of the platform.
We have more than 6000 legal and conveyancing firms registered as PEXA members, so again, that really is a large chunk of the market that are now actively on the platform. And about 90% of all refinances are completed on PEXA too, so that really is starting to show that the shift is definitely moving from paper to electronic transactions.
Kevin: Is this largely being driven by the banks, or are you finding that the solicitors are behind it?
Lisa: No, it’s definitely a whole of industry shift because the very nature of the transactions being that it involves banks, lawyers, and conveyancers, and also land registry and state revenue offices, those particular transactions really do demand that the whole network works together to make this shift. And that’s really what PEXA has been driving for the last few years.
Kevin: What’s the difference? I know that e-conveyancing is online, but what’s the basic, core difference between e-conveyancing and the traditional manual process?
Lisa: It all comes down to really what happens at settlement. Rather than traditionally in the paper world, on the day of settlement, you would have lawyers, conveyancers, and bank representatives meeting up in settlement rooms across Australia.
They would get together and bring all of their documentation together on that very day, having not seen it before, and then they would hand over bank checks and swap documents and then take those back to their bank or a land registry, for them to be lodged and then eventually processed.
What PEXA does, it does all of that activity online now. And you get to see a lot more of the preparation, so you get to see a lot more transparency in the lead-up, so any differences or anomalies can be worked out during that process and then once the day of settlement hits, nobody actually has to attend and the file will complete online.
Kevin: I can understand how it’s a major benefit for solicitors, conveyancers, and financial institutions but the average consumer very rarely attends a settlement anyway. They probably really wouldn’t notice much of a difference, would they?
Lisa: It depends. For a vendor, they will definitely notice that they would get their funds a lot quicker, so they don’t have to wait for bank checks to clear. And for the purchaser, it’s a great sense of surety in that their name is registered on title within minutes, whereas in the past, that could be a lot longer. They’re the main benefits for our buyers and sellers.
Kevin: Is this just the start of digitizing the property sector, Lisa, or is this the major part of it?
Lisa: It’s the major part if you think about your moms and dads buying property, but I think when you look at the whole industry, it’s definitely changing from right at the very beginning of the process from when you first list your property. I know contracts of sale are definitely moving to the digital space, and now settlement is another part of that.
The next part people are thinking about is what happens post- settlement and what could be more digitized in that space? You hear about drones and getting robots to move your furniture into your house. Who knows what the future looks like further down the track?
Kevin: Even though, Lisa, PEXA has been around since 2010, as I said at the outset, it is still relatively new technology. What are you learning? Are you having to adapt it at all?
Lisa: Yes, definitely. The really good thing is now that we do have so many firms registered and using the platform, we really are getting an opportunity to hear from the users themselves about what they would like to see on the platform.
More and more, we hear that lawyers and conveyancers want to be able to do more on PEXA. They want to be able to do every single transaction type. So, we definitely have a plan to 100% digital for property transactions. That is our initiative that we’re driving, and it was really the original purpose of PEXA to be a national platform and 100% digital.
So, getting feedback from our members and even small things – they would like to see the button in a different place, to be able to do different sorts of functionality – is really a benefit now that we’re tapping into, listening to our members and prescribing changes into the platform based on their feedback.
Kevin: Just go to the website would be a good start, wouldn’t it? That would tell you a lot about it and maybe give some feedback from that area, Lisa.
Lisa: Definitely, yes, our website. And we also have an e-conveyancing community. I’m sure if your listeners were to Google “e-conveyancing community PEXA,” that would come up. And that’s where all our members actually are live on there chatting to each other about their PEXA experience in sharing our ideas, asking each other questions, so yes, there’s a wealth of information on there also.
Kevin: Lisa, thanks so much for your time. The website is PEXA.com.au. Talk to you again soon, Lisa. Thank you.
Lisa: Great. Thank you, Kevin.