PAYING THE ULTIMATE PRICE. PURPLEBRICKS’ EXIT HIGHLIGHTS AUSSIE AGENTS’ STRENGTH

Every so often a company will come along attempting to shake up the real estate industry, however very few innovators actually succeed in turning the industry on its head. You may have heard the news that British real estate start-up Purplebricks has exited the Australian market last month after less than three years, citing difficult market conditions.

If you’re not familiar with Purplebricks, the company heralded itself as a market disruptor – the Uber of the real estate industry if you like – implementing a fixed-fee structure rather than commission to make the process of selling supposedly more transparent and cost-effective. According to the company’s own announcement, the UK business is continuing to “outperform the market” and the Canadian operation is also faring well.

Purplebricks Chief Executive Vic Darvey said that while the decision to pull out of the Australian market was not taken lightly, “with market conditions becoming increasingly challenging, we do not believe that the prospective returns in Australia are enough to justify continued investment”. Purplebricks’ original model also saw vendors paying the sales fee whether their property sold or not, however this was later changed when it became apparent that it was detrimental to business, but the damage was already done.

However, according to Matt Hayson, the market isn’t solely to blame for the company’s lacklustre reception, but rather Australians’ belief in the knowledge and expertise of our real estate agents and the strength of the traditional real estate model.

(Matthew Hayson Director of Cobden & Hayson)

“Australian agents are extremely market savvy, skilled at preparing homes for sale, experts at dealing with buyers and talented negotiators. People turn to us for an all-encompassing end-to-end management of their sales experience. While the Purplebricks model may work in the UK, when it comes to real estate in Australia, we equate ‘budget’ or ‘discount’ with second-rate service and second-rate results. Any agent worth their salt and with confidence in their ability to achieve top prices wouldn’t discount their fees. If agents are getting a set fee rather than a commission, you reduce their incentive to strive for that premium price.”

(Nigel Dalton is Chief Inventor of REA Group. He is an expert at all things digital and knows what it takes to stay ahead of the curve with future technology)

“Our marketing, systems and training are some of the best in the world and people rely on us for expert advice. Especially in a competitive environment such as the Inner West, it’s the intimate insight and detailed understanding of the market that clients look for, because they know that this is the key to a successful sale. Ours is a model that works, and if a company is going to come along and really shake things up, they’ll have to come up with something far more innovative and beneficial than simply offering set sales fees.”

(Josh Phegan is the internationally renowned go-to speaker, trainer and coach for high-performance real estate agents and agencies)