Real Estate Transactions in the Cyberworld
By Sam R on Dec 09, 2014
More and more retailers are jumping on the United States’ post-Thanksgiving shopping frenzy called Black Friday — the first “official” day of stores’ Christmas shopping season — and its follow-up, Cyber Monday — when the shopping stampede starts to run amok online.
Black Friday apparently has its roots in Philadelphia, where police referred to the chaos of shopping traffic on the Friday between Thanksgiving Thursday and the annual Army-Navy football game the following Saturday. More stores began to take advantage of the increased traffic and started offering outrageous deals (usually on high-profit items, such as electronics) and the term gained nationwide acceptance toward the end of the last century.
Cyber Monday started to take hold with the increase in online shopping and was officially nicknamed as such in the middle of the last decade, when online retailers noticed a marked rise in online sales on the Monday following Thanksgiving. It is traditionally an event for smaller retailers (most notably in the fashion industry) that can’t compete with the big-box stores’ Black Friday mega-surge.
Despite the U.S. holiday association, Black Friday and Cyber Monday are now observed by retailers in other countries around the world, with subsequent scuffles and some violence in places such as Canada and Britain.
But what does that have to do with real estate? Well, for the first time, some consumers took advantage of some Cyber Monday blow-outs at HomeSearch.com, an American real estate auction site. According to an online report in Canadian Real Estate Magazine, some of the purchases resulted in prices far below market value (some reportedly as low as 25% of their market value).
It resulted in HomeSearch.com disposing of all the properties listed in just three days, and proved a big boom to buyers who may have ended up with a prime vacation home for a fraction of the price it would run them in traditional real estate transactions.
This “cyber” selling scenario is probably going to take a great leap forward with the expansion of online money transactions, which look poised to make a splash in the real-estate industry as early as 2015.
Scene from Canderel's YC Condos video
Traditionally, if your offer on a property is accepted, you had a set period in which to organize the funds, get a certified cheque and file the deposit with the selling parties. Failure to accomplish all that within the time-frame (usually 24 hours) means the deal falls through.
Now, a startup is offering realtors the chance to set up invoices online as the deal is signed, have the buyer forward money electronically and the deal finalized within a matter of hours, if not minutes.
The online product is the brainchild of Chris Ryan, an award-winning realtor in the Halifax area, and Kevin Kline, a long time technology and telecommunications professional and consultant. With input from experts in the technology, real estate and finance industries, the pair set up ExactDeposit to handle such real-estate transactions.
The technology is being adopted by Royal LePage for its Nova Scotia operations (along with other brokerage firms in an Atlantic Canada pilot project) and is expected to expand countrywide by the end of 2015.
The ExactDeposit directors say the service is a benefit to consumers, who can be certain to get the property they want without the potential of losing their purchase due to finance-confirmation glitches, as well as to realtors, who get another tool with which to quickly close deals and then the ability to closely monitor their transactions through an online dashboard. As well, investors will have the option of using credit card deposits, at substantially reduced interest than the current cash-advance rates. There are fees to be paid by both the buyer and the realtor, and everything can naturally be done through a smartphone.
It’s great to see the real estate market embrace new technology, which will ultimately mean more people getting the properties they desire and potentially more real-estate deals being quickly closed. Will we see GTA builders and developers outfitting sales centres with quick deal making tech? We'll have to wait and see!
