West Australian property tech player ServTech is about to land on the bourse this week, the latest illustration of software eating into the foundations of traditional businesses and online platforms turning existing models on their head.
ServTech, which owns the state’s top-ranking real estate agency Sell Lease Property, is taking aim at the real estate industry with a platform that promises to help estate agents get more bang for their buck. It is a particularly persuasive pitch at a time when the industry is having to cope with lower listing volumes and a bevy of online disrupters taking bites around the edges.
Founded by real estate entrepreneur Brett Quinn, ServTech is chaired by former Fortescue mining executive Nick Cernotta and both would be relieved to see their recent exertions with the investment community pay off. ServTech will debut on the ASX on Friday after raising $6 million through its offer of 30 million shares at 20c each.
The offer was heavily oversubscribed, with the likes of 708 Capital, Asenna Capital, Bell Potter, Shaw and Partners, Pac Partners and Peleton Capital all picking up a slice.
With a market cap of about $21m, ServTech is aiming to shift gears and further extend its presence beyond the West Australian market. And Mr Quinn is betting big on the software platform that takes care of all administrative and back office transactions for agencies for a fixed cost of $700 per transaction.
According to Mr Quinn, the platform has already proved its worth with the 180 or so property consultants who are on it, and the prevalent market conditions are likely to attract more agents.
The entry in September of Britain’s Purplebricks with its fixed-fee model is seen as a sign of things to come, with costs associated with using a traditional real estate agent widely expected to continue their downward trajectory.
“There’s ongoing pressure on commissions and fees and we help agents become more competitive,” Mr Quinn told The Australian.
But it’s more than just about giving agents cost efficiencies, according to Mr Quinn; the ServTech platform also gives them a chance to fundamentally shift their value proposition.
“We only charge the agents a small fee to take care of their admin work for them. Not only can they compete on price but more importantly on the level of service they provide.”
With evidence that less than 3 per cent of sellers are choosing the agent based on the real estate agency they are attached with, ServTech is looking to build a viable distribution model for its technology. This would give individual agents a bigger piece of the pie, incentivising them to lift the service they provide by removing the administrative burden.
“The reward to effort ratio still isn’t in favour of the agents and a lack of processes and systems can be a real hurdle,” Mr Quinn said.
He added that real estate agents will have two roles in the future; they will have to be efficient networkers and great negotiators, capable of squeezing the most out of a deal for their clients.
“At the moment they just seem more like the messenger and are not that outcome driven,” he said.
As a transaction management business ServTech’s long-term prospects could potentially lie beyond just the real estate market. The platform, which optimises workflow and centralises service management, can be tweaked and put to use in the legal and financial services industry.
“We are looking for opportunities in other verticals, today its real estate tomorrow it could be patents and trademarks, which is a very A to B business,” Mr Quinn said.
However, Australia’s anxious love affair with property and the growing stress on the architecture that underpins it is likely to provide ServTech with plenty of room to grow, with the technology ready to cater to the evolving needs of the public and the agents.
The big players in the real estate market may not have had their “Uber” moment, but Mr Quinn warns it just might be around the corner.
“I love the fact that Selleys have made a billion-dollar business out of filling the gaps and for me that’s what technology does,” he said.
“It doesn’t matter how the industry changes, the opportunities are going to be there for our platform that’s designed to deliver greater efficiencies.”
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