The founders of Homes.co.nz may have “raided the kids’ piggy banks” to buy the first property value data sets which underpin the business, but today’s sale to Trade Me will allow it to accelerate its growth, co-founder Jamie Kruger said.
On Thursday night the Commerce Commission granted clearance for Trade Me to acquire the property valuation portal.
Initially Kruger said he and co-founder Michael Gibbs seeded the company with a "not sizable chunk of money" and then spent “an enormous amount of time” knocking on council doors to get the data sets that would become the basis for the Homes.co.nz proposition.
“Even though it was public data, they still wanted a lot of money,” Kruger said.
Before Homes.co.nz property information was fragmented, Kruger said. To have a site that showed all the data points in the property market made sense to him, for consumers – buyers and sellers – and real estate agents.
“The data wasn’t freely available, it was behind paywalls, so it wasn’t effective for a user.”
Kruger said he was excited by the prospects for the business now that the sale had been approved and said there would be more innovation to come, with new products to be launched in the near future.
“It’s a relief that we have a great runway of opportunities for Homes.”
It had recently altered how often it updated property valuations for its users to twice a month which “drives a lot of traffic” and it had also introduced a new filter feature which allowed users to search for how many $5 million sales on Waiheke Island, for example.
“The people who use those are our super users,” Kruger said. “We should probably put a health warning on those filters.”
He said Homes had its biggest month for unique browsers last month.
The owners
PropertyNZ, the owner of the property site, has 14 shareholders including Spark, which owned 22.52% of the business.
Kruger owned 17.77% of the business, co-founder Michael Gibbs held 14.91% while tech entrepreneur and co-founder John Holt owned 10.28%. The sale to the online giant Trade Me was for an undisclosed sum.
Holt said he hadn’t been involved with the business for a number of years, which had “probably been good for it” but he was pleased with the successful sale and the reward for the people in the business.
Trade Me head of property Alan Clark said Homes.co.nz’s services would be coming to Trade Me, including valuations, property histories and home expense estimates.
The deal had been held up by the commission after it said in late June it had some concerns.
Online marketplace group Trade Me is the country's largest online property listings site under Trade Me Property. It is the only platform that can both charge fees for base listings and allow private sellers to use the site.
The commission said in June Homes.co.nz's rapid expansion in the listings market would likely make it a "significant competitor" to Trade Me, so the proposed acquisition would "eliminate that potential competition and raise barriers to entry".
However, on Thursday the commission said in a press release it was satisfied the proposed acquisition was unlikely to substantially lessen competition in any NZ market.
“We are aware of the harm to competition that can arise when a larger firm buys a growing competitor, and we thoroughly tested whether Homes would develop into a significant competitor. However, evidence received since we issued our statement of unresolved issues has satisfied us Homes is unlikely to become a significant competitor for real estate listings."
Homes.co.nz said it had 1.8 million houses on its site and 400,000 monthly users.
Kruger was previously involved with property portals in the UK before setting up Homes.co.nz, which went live in 2015 with a soft launch and Wellington property data sets. In 2016 the business had a "more full noise launch".
"We are still quite young. But we seem to have created a loyal and successful following of users in NZ."
He said Homes.co.nz’s presence had accelerated innovation in the industry from its rivals, NZME-owned One Roof and realestate.co.nz.
“We are looking forward to competing against them,” he said.
It was also getting more opportunities for commercial deals as it got bigger. A tie-up with First Gas which served users an ad to First Gas’s services won a recent advertising award.
“We’re not a massive company but we are innovative and successful. And this is what happens with innovation around data. Once we set it up these commercial opportunities come across your desk.”
He said the commercial deals justified the expense and effort it had gone to to get the property data sets.
While it was business as usual in the office today, Kruger said the 30-strong Homes team might be heading out for a celebratory lunch later.
Trade Me will take full ownership of Homes.co.nz by the end of August.
