by Lee Yen Nee, Published in Today Online on 18 Aug 2016
SINGAPORE – After being hit by a lean spell that saw the number of licensed agents in the Republic fall to its lowest since 2011, the real estate agency business is set for another shake-up, with the entrance of a mobile application that seeks to eliminate hefty agent commission fees.
Ohmyhome, founded by sisters Rhonda and Race Wong, provides a platform for Housing and Development Board (HDB) dwellers – sellers and buyers, landlords and tenants – to transact directly with one another without going through an agent.
If they require help with paperwork or prefer the full services of an agent, they can choose from either a S$1,688 or S$2,888 package – significantly lower than the 1-2 per cent commission typically paid in a HDB resale transaction.
“Eighty-two per cent of Singaporeans live in HDB and this is (a market segment that) our other companies are not serving,” OhMyHome’s executive director Race Wong, the elder of the two, told TODAY in an interview. The sisters are also behind Anthill Realtors, a real estate consultancy firm serving investors.
“HDB dwellers often don’t transact as much as private property owners and because of that, they probably have less information and less access to the best agents,” added Rhonda, the company’s chief executive.
The idea behind their latest venture is hardly new in an era where technology and innovation are disrupting the traditional way of doing business. In Malaysia, Speedrent was birthed as a platform to cut out the middlemen in the housing rental market and in the United States, Allre allows buyers and sellers to handle real estate transactions completely online.
Mr Lyon Poh, head of digital + innovation at KPMG in Singapore, said that while all start-ups aspire to disrupt the “inefficiencies in the market”, few have been able to replace existing market participants entirely.
“In the case of property agencies, the role of such intermediaries extend beyond just ‘matchmaking’ but will also include the ‘trusted adviser’ element of the agent-and-client relationships,” he said, adding that incumbents’ expertise and experience can continue to be relevant if they become more innovative and agile as well.
However, some agents told TODAY their livelihoods may be negatively impacted given that disruptors such as OhMyHome are entering the scene at a time when transaction volumes are hit by cooling measures and loan curbs.
“I think the app will attract some market share because of the no or low fee. In this market when there are fewer deals to go around than before, it can be tougher for us. There are already people leaving the industry because of the tougher competition these days,” said a property agent, who asked to be known only as Adrian.
Mr Marcus Chu, chief operating officer of Singapore’s largest real estate agency ERA, said the emergence of start-ups in the industry underscores the need for existing players to re-invent and future-proof existing business models to serve today’s savvy consumers.
“Over the years we have seen many new start-ups trying to tap into the property market. Some are targeted at consumers and some are targeted at real estate professionals … Today’s tech-savvy consumers expect to be more informed in a transparent market and they want ease of access to genuine property listings and data,” he said.
Since Ohmyhome was made available for download in May, it has seen its listings grow to more than 300 and facilitated around 10 transactions so far. The Wong sisters hope that as the business gains greater traction, they can double the company’s headcount in a year from the current 10, which includes management, agents as well as design and IT staff.
But attracting agents to join the company can be an uphill task, especially when the commissions they currently earn are significantly higher than the fixed salary that OhMyHome can offer.
Mr David Ng, a senior real estate adviser at the company, is a veteran property agent that took the plunge despite having to take home 40-50 per cent less income.
“I’ve been around since 2003 and I’ve seen people having to pay their agents even though services were not up to par. There were also people who have difficulty footing commission because it can be a lot of money. I don’t think Ohmyhome will eliminate agents, but I hope it can play a part in improving service standards of the industry,” he said.