Purplebricks Australia – Who Are They & Should You Use Them?

n 2014, Purplebricks opened their online doors in the UK and shook up the real estate industry as we know it.

Now they are trying to replicate their success in Australia.

But what does this mean for Australian real estate agents and real estate firms? It’s definitely going to be an exciting period for the industry as a whole.

Online websites have failed to make a dent in the Australian real estate industry to date. Will things change with the emergence of Purplebricks?

Let’s look at the situation in more detail.

The emergence of the hybrid model & Purplebricks in the UK

Tradition is something which is upheld in England in all aspects of life. But one company with a particularly colourful name is leading the way for change.

Where traditional agencies once focussed on street presence, Purplebricks now relies on Local Property Experts (LPEs) to make their sales.

Purplebricks has no need for the expansive offices or the glossy brochures that large real estate agencies are known for.

And:

Because they don’t pay large sums in rent, they can afford to spend their money on the marketing and widen their customer reach.

Purplebricks claims to spend upwards of $1.7 million a month on advertising.

And in exchange, they offer the latest in digital technology and 24-hour service, something that again, traditional agencies cannot yet compete with.

While online providers have been around for some years, it is only since the emergence of Purplebricks, supported by a sophisticated IT platform, that a tipping point may have been triggered.

Now:

  • Some consumers appear willing to change their real estate selling habits
  • Investors are okay with funding initial losses until companies such as Purplebricks achieve profitability

Former lawyer Michael Bruce joined forces with his real estate agent brother Kenny about five years ago when they realised something was wrong with the way people sold their homes. And from their various meetings and brainstorming sessions, Purplebricks was born.

But why does this affect the industry so much?

The ability to operate on an IT platform allows the real estate agent model to charge a significantly lower agent fee, in some cases, for high value properties, up to 10 times less.

Purplebricks supports the owner with open homes, the owner manages buyer inquiries and receives offers all through the online booking engine.

So exactly how does Purplebricks and the hybrid model work?

After a customer registers with the website in question, they can then book a valuation online. The LPE appraises the property, takes photos and advertises it online.

So how much does it cost to list a home with Purplebricks?

In Australia it costs $4,500 inc. GST (Private Treaty) or $5,870 inc. GST (Auction). This is paid, even if your property doesn’t sell.

If you want Purplebricks to manage your open homes you pay a one off fee of $770. If do not wish to use their conveyancer/solicitor ($800) and wish to use your own you are required to pay $300 extra.

Why is it referred to as a hybrid?

The term ‘hybrid’ refers to the fact that a real estate company cannot operate purely online.

It works alongside a professional network of agents who:

  • visit the property
  • provide a valuation
  • take photos
  • produce a floor plan
  • offer telephone assistance during the sales process
  • meet clients face to face to close the sale

Some hybrids also offer to conduct open homes and other more traditional services for an additional/optional charge.

The hybrid model offers opportunity for change in the industry

Since its inception just under two years ago, Purplebricks commands a massive 62% share of the online real estate market and is now UK’s third largest estate agency. They were valued at over £1 billion in 2017

Founder Michael Bruce believes that once Purplebricks enters the Australian shores, profit won’t be too far behind. He hopes to break even in approximately two years.

Traditional real estate agencies are only now just understanding the threat caused by these advances in technology and changes in consumer behaviour.

However:

The numbers speak for themselves.

Purplebricks sold and completed on $4.8 billion from April 2015 to April 2016 with a further $2.9 billion sold subject to contract. And their instruction to sales conversion sits at approximately 77%, well above industry norms.

While Purplebricks currently covers around 5% of the UK market, experts predict that the number will rise to 20% by 2020.

As the most reviewed estate agent in the UK with a rating ofexcellent on Trustpilot, it is clear that their customers are enjoying the break from tradition.

In light of their evident success, other companies are starting to follow their lead.

Here is a list of some of the other hybrid models in the UK. These companies may offer some insight to what we can expect to emerge in Australia.

Easy Property

Prices vary on Easy Property from $812 to $2,567.

They offer:

  • free market appraisal
  • professional advertisement creation
  • for sale boards
  • standard listings on professional property websites
  • negotiation management

Other services are offered depending on the payment level selected.

Yopa

Yopa charges a similar flat fee starting from $1,345. In a similar hybrid model, YOPA instructs a property expert to carry out a valuation and guide you through the process. They will also help you negotiate the best price for your home.

Emoov

For $1,170, Emoov offers:

  • an expert valuation
  • listings on all the major websites
  • an expert photographer to take photographs
  • an expert to design your floor plan
  • seven-day-a-week expert support.

Tepilo

 After verification, Tepilo:
  • takes photos
  • creates floor plans
  • produces an EPC report.

They then advertise the property on all the major portals and guide sellers through the sale process. Tepilo will liaise with all the solicitors and estate agents up and down the chain to ensure a successful sale.

House Simple

House Simple charges varying price options from $162 to $1,530.

Their service includes:

  • a home visit by a property expert
  • one-week free trial
  • a personal account manager
  • a for sale board
  • professional photography and floor plans
  • advertising on the major property website
  • a ready book of buyers
  • professional negotiation
  • legal setup and management to completion.

Time will tell whether any of these hybrids will manage to achieve as much success as Purplebricks.

It is clear that the rapid change in technology means that consumers now have more information at their fingertips and more options than ever before.

And, more importantly:

Consumers can now make more well-informed decisions that suit their particular needs.

What does this mean for Australia and its consumers?

Similar to that in England, Australia currently operates on a more traditional method of home sales. Agencies maintain a face to face full outsource model; the very same one which is now being taken over in England by the hybrid online/telephone model.

Australia’s agent fees vary a lot, as does the quality and experience of the real estate agents who offer this service.

Current average percentage fees range from 2.1% in NSW up to 3.25% in Tasmania.

On a property valued at $500,000, homeowners can expect to pay between $10,500 and $16,250 depending on the state.

While Purplebricks Australia charging between $4,500 and $5,8750 depending on method of sale there is potentially a large difference for home sellers!

Should the three top agencies, Ray White, LJ Hooker and McGrath be concerned?

How will this affect the smaller real estate businesses?

What options does Australia currently have for cheap or DIY home sales at present?

Many sellers have already taken the plunge and moved away from traditional real estate agents by opting for the ‘for sale by owner’ option.

Why?

They don’t want to spend thousands of dollars on an agent who may not be up to par.

However:

There is the risk that these DIY sellers may not get as much for their home as they lack the property experience.

These for sale by owner options will, in all likelihood, be affected by Purplebricks presence.

Let’s take a look at Australias current online counterparts from a price comparison perspective.

Real Private

Real Private offers three packages, all of which include listings on the leading Australian real estate websites.

  • Gold ($299, plus $99 per month after 30 days) – assistance with sales process, email, and phone support
  • Silver ($399 upfront, no ongoing fees) – email and phone support
  • Bronze ($99 per month, no setup fee) – basic support only

For Sale By Owner

For Sale By Owner offers a Sell My House package which costs $699 (excludes 1200 x 900 photo board) or $969 (includes 1200 x 900 photo board).

Their packages include:

  • Listings on realestate.com.au, domain.com.au, and other portals
  • For sale sign
  • Three property reports and weekly campaign reports
  • Printable brochure
  • Phone support

buyMyplace

BuyMyplace packages start at $650 and include:

  • Listings on all major real estate websites
  • Professionally installed for sale signs
  • 12 photo spots for online listings (taken yourself)
  • Printable brochures
  • Free home value estimate report
  • Automatic email forwarding

They have also recently introduced a hybrid service, similar to Purplebricks.

No Agent Property

No Agent Property offers three packages.

Classic ($295):

  • listing on its website
  • for sale sign
  • 20 photos with every listing
  • guide to selling your home
  • email alerts
  • reports
  • online account manager
  • customer support

Premium ($675):

Similar to the classic package, plus listing on realestate.com.au and RP Data property report.

 Ultimate ($965):

Similar to the premium package, plus listing on Domain and other property portals.

Agent In A Box

Agent In A Box has three packages, including one free option.

  • Free – List your property for sale on AusHomesForSale.com
  • Essentials ($379) – List your property on realestate.com.au and other sites
  • Ultimate ($699) – List your property on realestate.com.au, Domain, and other sites, as well as a website and full support

Real Estate Your Way

Real Estate Your Way has three packages:

  • Silver (free) – listing on Real Estate Your Way
  • Gold ($219) – listing on realestate.com.au
  • Platinum ($709) – listing on realestate.com.au and Domain, for sale sign

Sell My Property Now

Sell My Property Now offers two packages:

  • Gold ($508) – claims to be the lowest price to list on Domain and realestate.com.au
  • Diamond ($888) – same as Gold, but with upgraded featured ad placement

For Sale For Lease

For Sale For Lease offers two packages, which both include listings on all the major real estate websites.

Note:

Advertising on Domain costs extra.

  • Monthly option – $299, plus $99 per month until sold
  • Until sold – $695

Private Property List

Private Property List offers two packages:

Sales package ($649):

This package suits private sellers looking to list their property for sale online.

It includes:

  • listings on realestate.com.au and other portals
  • a for sale sign
  • unlimited support
  • weekly report
  • Core Logic market assessments
  • brochure templates

Monthly package ($169):

This option suits professionals looking to list their property for sale online.

This package includes:

  • a one month listing on realestate.com.au and other portals
  • email forwarding

They then charge an additional $99 per month after the initial month ends.

Cubbi

Cubbi offers three for sale by owner packages:

Lite ($399 until sold) – Listing on realestate.com.au and Domain as well as basic support

Professional ($499 until sold) – As above, plus:

  • premium support
  • property valuation reports
  • discounts on professional photos
  • for sale sign

Executive ($1599 until sold) – As above, plus:

  • speed dial support
  • 12 professional photos
  • floor plan
  • large for sale sign
  • professional copywriting
  • upgrade to featured listing
  • 100 professionally printed brochures

Your Hot Property

Your Hot Property packages start at $449 to advertise on realestate.com.au and other websites, or $699 to include Domain.

Property Now

Property Now charges a flat fee of $499 for all residential, land and rural property sales. This fee includes:

  • Advertising on realestate.com.au and others
  • Unlimited support
  • For sale sign
  • Email forwarding
  • Printable brochures
  • Access to a members’ only guide to selling

However:

Despite this seemingly long list, the ‘for sale by owner’ market only accounts for 1% of the entire industry.

Currently:

For Sale By Owner seems to hold the majority share of the DIY market.

The importance of a real estate agent assisting in the sale process is reflected in the statistics.

What’s in it for the agents?

Of course, things will not only change for sellers but also for estate agents. Current estate agents choosing to remain in the traditional model market will have to ensure that they are offering value for money and going over and above client expectations to achieve a sale.

In terms of the Purplebricks Australia hybrid model, licensed and experienced estate agents will be employed solely by the company. These LPEs will assist vendors through the sales process receiving a flat fee per instruction. There is, however, the ability to earn additional money through conveyancing, referrals, and insurance.

Ultimately a house seller is only going to feel confident with an agent who has their best interests at heart

Whether this is one from the traditional or hybrid market. After all, selling a home happens only once or twice in a lifetime, and it is important the sellers make the right choice regardless of cost.