Technology is posing quite a challenge to the conventional way of doing business, including real estate buying, selling and renting.
Make a few taps on your mobile device and you would have access to thousands of property listings around the world. Make a few more taps and you could, if you wanted to, put down a deposit on a property or rent one. For the consumer, the benefits are obvious — the easier, quicker and cheaper the process, the better.
For real estate agents, technology is a double-edged sword. You could use it to your advantage or lose out if you can’t deal with the competition. The main concern would be, one would presume, that technology could easily cut off the services of an agent.
For instance, Asia Capital Management, the creator of Speedrent, a mobile application that offers a platform for landlords to find tenants and vice versa, has also introduced its first tenancy agreement mobile signing app, Speedsign, which allows landlords and tenants to sign the tenancy agreement online.
The Board of Valuers, Appraisers and Estate Agents Malaysia (BOVAEA) is taking note of such developments. BOVAEA estate agency practice committee member K Soma Sundram told TheEdgeProperty.com that there is no harm in using websites or applications to promote a product for advertising purposes, but if transactions are made and commissions are received, then it means the law has been broken.
“I have been in the industry for about 30 years. In the old days, the only marketing tool and source of property information was the newspaper. Today, the buyers have so many avenues to source for information. Social media also plays an important role,” he said.
He concurred that the emergence of property websites and web application technology has transformed the industry, making the transaction process faster and easier as buyers can now get the desired information through the Internet and on mobile devices. For real estate agents, there are more avenues for them to promote their properties.
However, Soma stressed that buyers have to be cautious when using new media technologies. For instance, although there are some parties offering online services to help developers sell their projects, buyers must bear in mind that these providers are not registered real estate agents who could provide them with quality services to them.
“Only registered real estate agents as specified in section 22C of the Valuers, Appraisers and Estate Agents Act can act as agents in selling, purchasing or letting any property,” he added.
The Malaysian Institute of Estate Agents (MIEA) president Erick Kho told TheEdgeProperty.com that the changing rules of the game may form a threat to real estate agents but he believes they attract only a specific group of customers.
“I have spoken with MIEA members on this issue. Most of them say they are not affected by online property marketing portals or mobile apps as they too use existing mobile applications such as WhatsApp, Line or Wechat or social media platforms such as Facebook to promote themselves and their listings to potential customers,” he remarked.
Although some agents feel threatened by these new media players, they believe that good service is still the key to sustaining their business. “The critical quality that homebuyers or tenants look for, and this is something that online portals or mobile apps cannot give easily, is service,” Kho said.
Globally, there is a wider range of websites that offers innovative services that are changing the way a deal is closed.
For instance, feeDuck in Canada is an online service that allows real estate agents to bid for new listings by lowering their commission rates, thus providing property owners and landlords a platform to select the agents that suit their requirements.
Meanwhile, Hello Real Estate of Australia, marketing itself as the Uber of real estate, charges a fixed fee for selling properties. It also offers independent home valuations, and conveyancing and legal services to see the sale through to the end.
If you can’t beat them, join them
MIEA recently decided to invest in upgrading the organisation’s website to include more services to its members.
“We [real estate agents] know that almost 80% to 90% of property seekers look for potential investments through the Internet or mobile apps. So instead of seeing this trend as a threat, we should turn it into an opportunity,” Kho remarked.
MIEA plans to invest RM1 million in the next two to three years to revamp the website, adding more functions, such as property listings and accounting or calculation apps, thus making the website a platform for agents to expand their business.
Kho hopes these additional services and online tools will encourage more real estate agents to join MIEA as members.
“Currently, the association has 2,000 members, but there are about 20,000 real estate negotiators (REN) and real estate agents (REA) in the industry and we look forward to seeing them join MIEA,” he said.
MIEA is the registered professional body serving the needs of real estate agents and negotiators in Malaysia.
Targeting different segments
Meanwhile, Asia Capital Management founder and CEO Wong Whei Meng said real estate agents and related technology services could co-exist as they target different segments of customers.
“There are three types of landlords: people who are too busy and too rich, people who want to do it themselves and people who just want to rent out their property as soon as possible,” he said.
The first group (the rich and busy) will definitely engage with agents to take care of their renting process. It is the second group - who want to do things themselves - will try to find other ways .
“It is the third group that we will have direct competition with,” Wong commented.
Speedrent allows landlords to put up the listing themselves while potential tenants can choose the preferred houses based on their budget, location or property type.
No fee is imposed on the landlord, but the landlord is required to give a 50% discount on the first month’s rent.
“We are not targeting those looking to rent a room or commercial properties,” Wong remarked.
Speedsign is a mobile app that complements Speedrent. It allows the tenancy agreement to be signed on the spot, saving time and money for both parties.
“Since launching Speedsign in November last year, we have received overwhelming response from the public. Currently, we have 500 users for this online agreement service,” he added.
Is it legal?
Chur Associates Sdn Bhd managing partner Chris Tan said there is a need for technology in agreement signing to cater for the needs of the IT society.
People nowadays cannot do without their mobile phones and they tend to access everything through the Internet or designed applications.
“Technology can help to enhance and improve the transaction process and even raise the number of transactions. Technology that allows buyers and sellers to deal directly with each other means that lawyers will have more opportunities in finalising and concluding agreements.
“The usage of technology also removes the boundaries of communication, especially at the international level where the respective parties need not be present physically to sign the agreement,” Tan said.
He noted that signing the agreement digitally or online saves time because obtaining signatures in person is so cumbersome when people are on the go or in a rush. Furthermore, it helps to save postage and courier cost and promotes a much greener solution.
However, there are certain drawbacks. Although online agreement signings constitute a valid contract under the Digital Act 1997, there may be problems in stamping the agreement as required under the Stamp Act 1949 — as the Act requires a hard copy of the tenancy agreement to be submitted for stamping.
“Furthermore, there could be problems such as a forged digital signature, or complications which may arise when there are amendments to be made to the clauses in the agreement after signing, or the possibility of the online application or system being hacked,” Tan said.
He noted that in property transactions, if the buyer takes a loan, the bank will require the purchaser and borrower to initial on each page of the physical original copies of the SPA and loan documents for security reasons. This means that there is still a need for the physical agreement.
To make online agreement signing viable, Tan emphasised that confidentiality issues need to be addressed, such as in controlling the disclosure of information. “Although the firewall or software can be strengthened or improved to lower the chances of information leakage, undeniably, the possibility still exists.” - The Edge Property