Launched by Michael Bruce with his brother Kenny, UK business Purplebricks is turning the traditional real estate model upside down with its new low cost real estate agency business.
Purplebricks is dubbed a hybrid agency, operating off a low-cost model that charges a fixed fee to sell a property instead of a percentage of the sale price as a commission, according to The Australian Financial Review.
Currently in Australia, current real estate commission charges vary widely - factors depend on the cost of the house, the suburb's features, the agents themselves and the location of the property.
By contrast, Purplebricks charges one fixed fee to sell a property of either £798 ($1435) in Britain or £1158 in London. The fixed fee is regardless of the value of the property. Purplebricks is not saying yet what it intends to charge in Australia, but the fee is likely to be similar, according to The AFR.
Purplebricks and other hybrid agents are abandoning the traditional model of showy offices and glossy brochures for digital technology and 24-hour service. In Britain it spends £1 million a month on advertising and marketing but has no bricks and mortar offices, saving the company money.
Similar to Uber or TripAdvisor, clients who use Purplebricks rate the service online so it becomes clear if an agent isn't doing their job.
Speaking to The AFR, Michael Bruce said it is unfair that Sydney estate agents have effectively been getting a 20 per cent "pay rise" given the city's surge in property values, even though it is the mortgage-holder who takes all the risks.
Purplebricks says sellers don’t have to pay anything upfront, including the cost of an EPC (sales only) if required. Your 'expert' will take the photos, create your advert, and it can be live in seconds.
The dedicated 'expert' takes the photographs, creates a floor plan, writes a description and prepares the advert for all the leading property websites such as Rightmove and Zoopla. A property can be on the market and available to 10 million buyers or tenants instantly. Purplebricks says the sales support team guides sellers and buyers through the post-sale process including conveyancing for sellers, which is included in its fixed fee.
Bruce told The AFR the company's decision to expand into Australia came after researching the local market, which found people were more vocal than those in Britain about the need for change and even more unhappy with the amount of money they pay in estate agent fees.
Purplebricks floated on London's Alternative Investment Market last year, backed by star British fund manager Neil Woodford. The company's revenue and market share have surged, giving it a market value of £340 million, up from £240 million when it listed, according to The AFR.
The McGrath real estate IPO has been one of the worst-performing floats in Australia over the past year, said Fairfax.
Purplebricks was criticised in the UK for not revealing how many homes it has sold, unlike most other real estate agencies.
According to The Telegraph, for the first time in May, the company revealed it sold a total of £2.8bn of property during the year. By comparison, Savills, the large and long-established agent, sold a total of £5.9bn worth of residential property in 2015.
The Purplebricks app allows users to manage viewings, receive push notifications on their property, direct messaging with a buyer, marketing and property performance indicators, negotiate offers and agree a sale and adjust property details.