Odds are you’ve heard of PurpleBricks by now. The UK online real estate portal set up shop in Australia last year promising to shake up our market and save Aussies nearly $6 billion in agent commissions.
PurpleBricks launched in the UK in 2014 with analysts predicting they’d take 10% of market share. Today, there are conflicting opinions about their success in the UK, with some news outlets reporting mounting losses. Despite these claims, PurpleBricks remain positive about their move into Australia with co-Founder, Michael Bruce, telling the AFR,
“We talked to thousands of people across Australia and we found Aussies were far more vocal about the need for change. They’ve been paying far too much, for too long, for too little, and want a credible alternative.”
How are PurpleBricks different to traditional real estate agencies?
PurpleBricks operate entirely online partnering with local real estate agents and referring to them as ‘local property experts’. Purplebricks’ agents are assigned postcode territory and can recruit other agents to work under them.
Unlike the commission-based structures of traditional real estate agents, PurpleBricks charge a flat fee of $4,500 for private sale or $5,500 for sale by auction. This fee includes,
- Support from a local property agent (according to their website, PurpleBricks currently have approximately 55 agents across Australia)
- Property appraisal
- Photography, property descriptions and floor plans
- Advertising across realestate.com.au and Domain
- Viewings are an extra $550 if you want PurpleBricks to conduct them for you
You can choose to pay up front or later down the track, but this requires a separate agreement with RateSetter, their peer-to-peer financial partner.
Their biggest benefit over traditional real estate agencies is their flat fee structure and the opportunity to save expensive commissions (approx. $12,500 on a house that sells for $500,000). However, unlike traditional agents this flat fee is payable whether your home sells or not.
The property agents employed by PurpleBricks don’t have a physical office as such but work remotely visiting you at your home. It’s unclear how many postcodes each agent covers, which could be something to consider against your traditional real estate agent who’s based within your community with local connections and an understanding of your local market. One other difference is that PurpleBricks don’t hold open viewings; prospective buyers need to make an appointment to view your property.
How are PurpleBricks different to ‘for sale by owner’ platforms?
In Australia, 5-6% of total property sales listings are with for sale by owner platforms like PropertyNow.For sale by owner bypasses the real estate agent, meaning you’re in control of selling your own property.
Each for sale by owner platform works differently. If we compare the PropertyNow model with the PurpleBricks model –
- Both use a ‘flat fee’ structure saving agent commissions
- Both fees include marketing costs and exposure across the major real estate portals like realestate.com.au and Domain
- While PropertyNow’s flat fee is cheaper at $694 (compared to $4,500 at PurpleBricks) we don’t provide a physical real estate agent as such. You’re in control of selling your own home.
- PropetyNow is a licensed real estate agent, but our support and assistance is offered online and over the phone.
Could PurpleBricks be of value to you?
Here at PropertyNow, we know Australians are ready for change. We’ve conducted extensive research questioning over 200 Australians, which has taught us –
- 73% believe agent commissions are too high
- 41% want greater control over selling their own home
- 81% who have sold via private selling platforms would do it again
- New disrupters like PurpleBricks will challenge current real estate practices opening up new opportunities.
PurpleBricks have said they’ll spend $17.4 million setting up in Australia over the next few years. Will they have a big impact in our market? Some real estate professionals are skeptical including McGrath executive, John McGrath, who told the AFR,
“It’s a different market in the UK,” he said. “Commissions are higher and property values are lower once you take out Central London. PurpleBricks will find a small niche in the market and I wish them well.”
But PurpleBricks have even faced skepticism in the UK with a leading equity analyst, Anthony Codling, blasting their claimed 77% sales success rate. When he analyzed the properties marked as sold on their website, he stated the “arithmetic does not add up”. [https://www.estateagenttoday.co.uk/breaking-news/2016/7/purplebricks-blasted-over-sales-totals-and-speed-of-completions]
He went on to note in correspondence with investors, “We hope that for their [PurpleBricks] customers the saying ‘all comes to they who wait’ is true. The lucky 14 per cent who have sold their homes waited on average around 4.5 months between selling subject to contract and actually selling. For the rest the wait has been around 6.5 months so far and the clock is still ticking.”
PurpleBricks aren’t the first of their kind to launch in Australia. Their model is similar to Hello Real Estate, which launched in September 2015. But Hello recently abandoned plans to list on the stock market and has dropped from 41 to around 30 licensees, which could suggest they’ve had problems gaining traction.
Here at PropertyNow, we’re one of the very first for sale by owner platforms in Australia. We’ve both witnessed and been a part of the market evolving. We’ve faced opposition from traditional real estate agents and fought off attempts to shut us down from some of the giant real estate portals. We’re proudly Australian. And our goal has always been to offer cheaper, easier, more honest real estate practices for buyers and sellers.
With this in mind, we welcome new competitors who can open up the market giving you access to greater choices and flexibility.