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Looking to sell your NSW property and tempted by the flat-fee approach of Purplebricks Australia?
You wouldn't be the first, especially when you stack up the savings you could be banking over using a traditional real estate agent. Purplebricks Australia has reportedly sold some $1.15+ billion worth of property since 2016, while in the UK it claims to be the country's biggest real estate agents by listings.
But does their by-line and business model - "everything you would expect from your traditional real estate agent but the commission" - hold up in Sydney and NSW?
Let's take a closer look at what you get with a Purplebricks listing, and what consumers are saying about the flat-fee service.
How does Purplebricks work?
The Purplebricks business model is based on paying a set, fixed fee - as opposed to the traditional approach where a real estate agent gets a commission based on the percentage of the final sale price. The fee you pay Purplebricks includes the services of a 'Local Property Expert' or LPE, who appraises your home and recommends a sale price, as well as provides you with a basic marketing package.
If you choose to sell via auction, there is a slightly higher fixed fee to cover the cost of the auctioneer.
In terms of support for the duration of the sale, your point of contact is your LPE and the Purplebricks call centre. And if your property does not sell? You typically forfeit the fee after a specified period.
"The Purplebricks model is based on paying a set, fixed fee - as opposed to the traditional approach where a real estate agents gets a commission based on the percentage of the final sale price."
Read more about it: How does Purplebricks work?
Purplebricks fees explained in New South Wales
So what Purplebricks fees can you expect to pay in Sydney and NSW?
The key with any fixed-fee agency, or real estate agent for that matter, is to know what is and isn't included in the fees. Purplebricks fees in New South Wales are currently:
- $4,400 inc. GST upfront fee on the listing and publication of the property for sale
- $4,400 inc. GST success fee on the settlement of the sale
- $660 inc. GST auction fee (should you choose to sell via auction)
That's a total cost of $8,800 for a successful private treaty sale and $9,460 for a successful auction sale.
This covers the costs of:
- A dedicated 'Local Property Expert' for processes such as negotation and property viewings
- A Purplebricks signboard
- A property advert, including the copywriting and floorplan
- A premier listing on realestate.com.au and a standard listing on Domain and Purplebricks
- A professional photography package
- The services of a professionally qualified auctioneer and management of proceedings on the day of the auction
- Phone support
- Access to Purplebricks' online portal
- Post-sales support
Your package does not include any additional upgrades to the marketing campaign.
Let's take a closer look at the payment options, and Pay Later in particular.
How do Purplebricks payment options work?
You have two payment options - Pay Now or Pay Later - if you choose to sign an agreement with Purplebricks in NSW.
Pay Now is fairly straightforward and involves providing your credit or debit card details with their fee amount debited immediately or soon after the transaction occurs.
Pay Later is a little more complicated, as it involves a third party who collects the payment when your property sells, on the date you decide to withdraw your property from the market, or after 6 months of signing with Purplebricks.
As their website states, "Once you have agreed to appoint us and acquire the Purplebricks services, you will be liable to pay Purplebricks the agreed upfront fee, whether you choose to pay now or pay later." The success fee, on the other hand, will only be payable if the property sells and the settlement has been finalised.
Purplebricks' reach in New South Wales
After much fanfare, which some in the media described as real estate's 'Uber moment', Purplebricks has had mixed success in NSW and Sydney since launching in late 2016. This was when the property market was booming, and many homeowners opted to pocket the extra cash by using the flat-fee service instead of a 'full service' agent.
Fast forward two years to a rapidly cooling NSW property market, and Purplebricks agents are reportedly struggling to meet targets. This is due to tighter market conditions with falling prices, fewer listings and homes spending more time on the market.
"After much fanfare, which some in the media described as real estate's 'Uber moment', Purplebricks has had mixed success in NSW and Sydney since launching in late 2016."
The AFR reports that agents are disillusioned and struggling to make ends meet. They found that Purplebricks agents make in the region of $1000 per sale, out of the overall $6,769 - $7,369 fee they charge in NSW. The downturn in the market means that for some agents the fixed fee is simply not sustainable as a viable source of income.
In terms of raw performance data, Purplebricks current profile on realestate.com.au suggests that the company has sold 783 properties in New South Wales, out of a total of 3600 properties sold nationwide since launching in late 2016.
Purplebricks reviews: what are consumers saying?
The most obvious drawcard for homeowners selling via Purplebricks is the saving over using a traditional real estate agent. This is reflected in positive comments and feedback on ProductReview which include:
"A lot cheaper than other agents, yet the same service." - user Kylie Canning
"Selling with Purple Bricks was simple and value for money." - user Lisa Purves
As of August 2018, Purplebricks Australia had 3167 independent reviews of the service on Trustpilot, with a five star rating. This does need to be taken in context, however, as the company has come under scrutiny in the UK for manipulating reviews.
On the flipside, one of the most obvious drawbacks of the model is that if your property does not sell you forfeit the fixed fee. Not all sellers have been made aware of this, and Purplebricks was fined $20,000 in Queensland for misleading customers about how it charges its fees.
Some sellers have also found that after paying the fee, their property ends up languishing on the market. This obviously becomes more of an issue in a cooling market, where a combination of fewer buyers and the limited reach of a Purplebricks standard marketing campaign can only compound these conditions.
Negative comments and bad reviews for Purplebricks on ProductReview include:
"Very hard process dealing with everything on line no personal touch or service would not recommend using this service cheaper is not always better…" - user David Bolger
In the UK, the Purplebricks Pay Later package has been scrutinised for using a separate company - called Close Brothers - to handle payment collection after the sale, or if the property fails to sell. Some consumers there felt this was misleading. In Australia, the payment provider is Ratesetter Australia, who describe themselves as a "peer-to-peer lender" - this is who you'll need to deal with should you choose the Pay Later package.
Another common criticism that consumers often have suggests that the flat-fee model doesn’t encourage your agent to work hard to get the highest sale price. In fact, they get their fee even if your property doesn't sell. Some consumers have also complained of overworked LPE's who have not been able to give them, or their listing, the attention they expected.