It has been reported that real estate portal business Domain Holdings Australia Ltd (ASX: DHG) is bringing buy now, pay later to the real estate sales sector.
What’s happening?
According to reporting by the Australian Financial Review, real estate agents will be able to collect property marketing costs upfront from vendors that ‘pay later’ with a new product called MarketNow through a partnership with instalments business Limepay.
Limepay is a white label instalment payment service that allows the merchant to control the user experience and have the ownership of customer data, which some merchants may prefer.
Domain believes this could allow the product to increase basket size spending by up to 20% whilst also improving the efficiency of receiving payments to real estate agents.
Domain CEO Jason Pellegrino said: “For the vendors it provides them with more choices and better outcomes. It will put an end to credit card details flying around unsecured and will allow agents to put forward a more valuable marketing schedule.
“We know that marketing works. Most people trying to sell a $2 million house just don’t have $20,000 in cash sitting around. We think its a compelling offer.”
It will mean that property marketing costs of up to $25,000 can be handled by agents and processed through MarketNow.
The service is currently in the testing phase and will be offered to agents in 2021. The charge for vendors who use the service will be 5%.
Domain and Limepay believe that being able to bring cashflow forward, combined with insights from customer data and the seamless experience, should appeal to any agent who has ever been texted credit card details from a customer and run them through an EFTPOS terminal.
Summary thoughts
This seems like an innovative move by Domain, I can see how it would make the real estate marketing fees less of a hindrance to property sellers and this could help increase revenue for the company.
Both Domain and REA Group Limited (ASX: REA) have performed strongly in recent months, so I’m not sure they’re good value at the moment.
Instead, other ASX growth shares could be better ideas such as Pushpay Holdings Ltd (ASX: PPH) in the payments space and Brickworks Limited (ASX: BKW) in the real estate-related space.
