Real estate disruptions: Purple Bricks
Looking at the effect Uber has had on the taxi industry, it is common sense to wonder why there haven’t been the same sort of real estate disruptions as in other sectors. This is probably due to both Australia’s particular real estate model and the fact that the move of the real estate industry to online has been a smooth one.
Core values of bricks-and-mortar agencies and face-to-face customer service are still key to its success. For those selling properties, this has meant little has changed. You still employ an agent who meets with you, prepares your marketing, runs your inspections and auction and then takes commission on the sale price of your home. The average commission? About 2-2.5% or $10,000 – $12,500 if your sale price is $500,000.
Hybrid real estate agencies
And this is where Uber comes in. Well, not Uber. But in Australia’s case, Purple Bricks.
As a possible of future ‘real estate disruptions’, they are one of the first ‘hybrid’ real estate companies, maintaining aspects of the traditional service of an agent with online services at a much cheaper rate.
With Purple Bricks leading the charge in this new form of real estate management, it is worth looking at their specific Pros and Cons.
Hybrid agencies Pros/Cons
|Interaction: as the vendor you can change your listing's photos, your details and selling price at any time.||Interaction: the fact that vendors can change their listing price when they like is somewhat a pro but it can also be a con when considering new laws regarding underquoting.|
|Legal help: Purple Bricks claims to support the handing over of your property following its sale.||Legal help: you are responsible for providing a Contract of Sale, something which real estate agents often do. Purple Bricks have a limited involvement in settlements. This means more work for you.|
|Open agreement: you are not locked into a contract with Purple Bricks.||Payment: regardless of whether you sell your property, Purple Bricks requires payment before the listing even goes up. This risks a lack of incentive from agents who you have already paid.|
|Accessibility: buyers have the freedom to book inspections 24/7 via the Purple Bricks website as well as you having access to data about your property listing.||Viewings: Purple Bricks charge extra for open homes if you have opted for a private sell (an additional $385). Inspections are also by appointment only, which doesn't consider how Australians tend to prefer going to organised viewings.|
|Communication: buyers and sellers can communicate directly through the Purple Bricks website.||Cooling off period: only 1 day before you are locked into paying for your agreed service.|
|Agent experience: traditional agents know the inspection process backwards. You may not feel comfortable doing it yourself. Agent experience is also an issue for such a young and relatively small company where agents need to sign on clients before they can get paid.|
In the industry
Purple Bricks states that it has over 10,000 positive reviews but these stats are from the UK, not Australia. Jefferies, the Global investment bank, went further and recently questioned PB’s sales figures. Their report suggesting that some listings waited for over six months without a sale. Meanwhile the report traced successful listings being as low as 14%. With Purple Bricks service a fraction of the cost (upfront cost of $4,500), there may be a sacrifice in quality. For those who see traditional agents as being too expensive, hybrid management services such as these may be an answer. However, this is not without its risks and drawbacks.