Q&A: Will new site Home Open challenge Domain and REA?
Information technology company Applabs Technologies is working on a mobile application that aims to rival established real estate search websites. Applabs Australia director Patrick Glovac talked to Property Observer about the product, called Home Open, and the Australian Securities Exchange-listed company’s plans.
Why are you launching Home Open, and why now?
The internet completely disrupted traditional media such as print. We have seen this in many sectors from real estate, the car industry, the jobs market and even to tourism. Companies such as Realestate.com.au, Carsales, Seek and Expedia now have market capitalisations greater than the traditional print media companies which they took on. For example, REA Group - $6.7 billion, Carsales - $2.8 billion.
These companies took on the traditional media outlets and took their market shares. What this has meant is that those industries are now dominated by one or two companies. In the real estate sector specifically, realestate.com.au own 80% of the market and Domain 18%, leaving only 2% for all the other small players.
What we believe you will see over the coming two to three years is the next wave of technology companies taking on these traditional internet companies. Any market which is a monopoly or duopoly we believe is under threat by the next wave of the technology boom.
Funding for technology companies was non-existent for the past 10 years, however given the likes of Facebook, Twitter and Whatsapp the next big investment push in technology start-ups seems to be on. All these companies have one thing in common, and that is they want to disrupt the market and take on the bigger guys – Home Open is no different.
What gaps do you see in the competitor offerings in the market such as Realestate.com.au and Domain.com.au?
Realestate.com.au was built as a web-based product and has since been adapted into a mobile based application. Home Open is the opposite: we are a mobile-based product, which will be adapted into a web based product - through our domain www.homeopen.com. This has allowed us to build a unique application which was designed from the start as a tool which puts the information directly into the hands of the consumers.
The feedback we continually receive is that estate agents are held to ransom by the big players.
The feedback we continually receive is that estate agents are held to ransom by the big players and they would be happy to use an alternative product if it meets their needs, produces results and is priced competitively.
How is the content of Home Open different from the other websites?
Our main point of difference to our competitors is that we are focused on homes which are open for inspection. Our application will take the hassle and time out of finding and viewing a home to rent or buy.
Our back-end will still provide all the traditional features of a real estate product such the property’s price, photos and details. We will come to market with a product which is easier to use for the consumer but, perhaps even more importantly, it will provide greater benefits for the estate agents. It will put the power of information back into the hands of the listing agents, reduce the cost to list a property and allow for direct interaction between the agent and the consumer.
How does the Home Open revenue model work?
Our product will be free for estate agents to use the app and advertise all their products. It will also be free for the consumer to use. We want to make sure that we don’t have any barriers to entry to ensure we get mass market appeal.
The problem this model can cause is that it forces you to cover the product in advertising, which can easily turn the consumer off. Home Open will offer a completely different form of paid advertising which will be incorporated into the application. Currently, no competitor in the real estate sector is using this method, even though it is being used successfully in other industries.
Our second stream of income will be from in-app purchases which can be made through the application. This will cover information similar to that which is available for purchase through RP Data, however will be available in our application in a much more efficient manner.
Thirdly we will offer individual estate agents, for a set fee, a unique add-on product. This will allow them to capture even more data about the consumer and increase the communication channels currently on offer.
When do you expect the product to launch?
Our anticipated launch will be mid-2014 for Version 1. This will cover the iPhone, Android, iPad and web applications. We will look to provide regular updates to continually roll out new features in the application.
Our timeline is to be at Version 1.6 by the end of 2014. That would see some unique and exciting features incorporated into the application.
Your company recently ran focus groups with real estate agents on the apps’ branding. What are the next steps for development?
Our iPhone product has been built and approved by Apple.
As announced to the share market, the team is currently working on the Android and website versions.
As announced to the ASX [on March 10] we have just raised an additional $3.86 million, this will bring our cash balance to around $6.5 million. This means we are well funded to bring Home Open to market.
We had originally forecast in our prospectus to spend around $850,000 over the first 12 months marketing Home Open, however we have significantly increased that after the latest capital raise. We are now forecasting to spend closer to $2.5 million over the coming 12 months. This will include a large nationwide advertising campaign.
