Here are the pros and cons we compiled for you:
PROS of this model:
- First and foremost they stand out as being an extremely affordable option. We believe is a good thing, particularly for homeowners who need to keep as much money in their pockets as possible. Real estate agents can charge commissions around 2- 2.5% cent of the sale price in Australia. Purple Bricks, on the other hand, charges a flat fee of $4,500, including GST. The fee includes photography, writing of the property description and getting a listing on realestate.com.au and domain.com.au
They’re making agents nervous (or at least the ones that deserve to be nervous). Most agents who work hard know they will add huge value in the sale process and still in DEMAND. Australian real estate agents have a bad reputation when it comes to trust, credibility and client satisfaction. This sort of competition helps to keep improving industry standards. Recent data indicates that around 20-30% of properties fail to sell the first time they’re listed on the market. That means roughly 2-3 out of every 10 Purplebricks clients could potentially walk away from $5000 out of pocket and with a home still for sale.
- Communication: buyers and sellers can communicate directly through the Purple Bricks website.
CONS of this model:
- This entire business model and service are built around incentivising agents to list your property for sale with them, not to actually get your property sold! This is the biggest drawback.
- The most people don’t realise that YOU WILL pay Purplebricks their full fee even if you don’t sell your home! Regarding payment, they offer two options, either upfront or a deferred option of 12 months later, or on settlement if the property sells. The price is the same for both options. Unlike most real estate agents, you do not have to make an exclusive agreement with Purple Bricks, but whether you sell the property with them, or through another agent or you decide not to sell the property, you still have to pay the fee.
- However, my biggest PROBLEM with their model is the fact that there is no real incentive for the agent, who’s looking after your property sale, to get it sold. There is no drive for them to actually work hard as they get paid when they list your home, not when they sell it.
- Cooling off period: only 1 day before you are locked into paying for your agreed service.
- 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.