Purple Bricks was a 'dressed up private seller': REIA deputy president

Purple Bricks was a 'dressed up private seller': REIA deputy president
Purple Bricks was a 'dressed up private seller': REIA deputy president

"Really they were a dressed up private seller platform that was purported to be something else."

That's the view of REIA deputy president Hayden Groves, who told Ross Greenwood's 2GB last night that the exit from the Australian market confirmed yesterday, was good news.

"It hasn't worked here," Groves said.

Its Australian website had about 1400 property listings.

It had 3,600 verified five star reviews.

"They were really trying to take the real estate agents out of the process of real estate professional transactions, purporting the fact they were real estate agents which was curious.

Groves said in actual fact they were a dressed up private seller platform, pretending to be something else.

"It's great news for consumers of professional real estate services in the country because they were duped by false and misleading advertising by Purple Bricks purporting to be something they're not.

"They were saying that real estate practitioners in the traditional sense were nothing more than commission collectors and not undertaking their role correctly.

"They were saying they were real people and real real estate agents that they were going to be holding the hand of the consumer, seller, client in the selling process the process

"But of course their model, their agents weren't incentivised to get an outcome.

"Effectively these poor consumers, who were expecting something else, were left without any of the proper services and support services they needed to get the job done.

Purplebricks dubbed themselves a low commission agency, having had previous success in the UK property market, they entered Australia just two years ago.

The group sought to disrupt the old fashion way of paying an estate agent commission of between two and three percent of the sale price. 

The saving on a $900,000 sale was put at $11,300, given an all up fee of $8,800.

There were around 30 agents across New South Wales who will find themselves out of work, and 30 o so in Queensland. 

Purplebricks sponsored House Rules last year, however a cost-cutting measure saw them hand it over to Century21 for the current series.

The NSW have 240 properties for sale, having sold 1,038 in two years, buoyed by an advertising campaign for listings by the celebrity builder, Barry Du Bois.

Their revised so-called 'first-class package' was priced at $4,400, which pays for the marketing, with a further $4,400 payment when the sale of the property is successful.

It was pitched towards typically outer-suburban and regional listings.

Its most upmarket listing was in Vaucluse, albeit a dump, which belonged to the socialite mortgage broker Lizzie Buttrose. 

Vic Darvey, the London-based Purplebricks Group CEO said after much consideration it had "made the difficult decision to close the Australian business."

"We’ve been operating here for two and half years and, unfortunately, we have been unable to make the progress in the Australian market that we’ve wanted, despite the tireless efforts of our employees.

"We will take no further listings in Australia, but intend to engage with our customers to finalise all existing agreements.

"This is not a decision we have taken lightly, but with market conditions becoming increasingly challenging, we do not believe that the prospective returns in Australia are enough to justify continued investment."  

Only last week UBS said the company was not likely to make money in Australia until 2022.

It was forecast that Purplebricks would potentially have to close its Australian operations to save the UK mothership.

Michael Bruce, the group's founder and chief executive officer is stepping down from the business with immediate effect.

 

Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and the economics and finance behind buying and selling real estate.

Tags: 
Purplebricks Low Commissions

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