Purplebricks has rolled out to a second territory in Australia, while claiming that in the UK people are paying too much in commission to high street estate agents.
Property TV presenter Amanda Lamb, an ex estate agent who now presents A Place in The Sun, backed the claims, including UK’s ‘commisery’ campaign by Purplebricks. She accused traditional agents of ‘hiding’ their fees until the last moment.
Lamb, a former estate agent, said: “This campaign will open people’s eyes to commisery – the misery you feel when you’ve forked out thousands on commission and haven’t got anything more for your money.
“Research shows that 95% of people don’t realise exactly that they are paying in commission, until the bill hits and this needs to change.
“It is virtual money because it isn’t paid up front and in some ways the amount is hidden until the last moment. Factoring in VAT is something people forget to do as well, so what starts as a low percentage on paper adds up into a considerable sum in commission paid.”
Purplebricks claims that estate agents’ commission in the UK has rocketed 15% in two years, from an average of £3,449 to £5,750.
In London, the Standard has reported Purplebrick claims that sellers pay almost £9,000 in commission to agents.
The paper reports that the average fee paid by London vendors rose 7% last year to £8,860, with a total of £521m collected by agents.
Bruce told the Standard: “People too often engage an estate agent without realising or thinking about whether there is a better alternatve.
“The service they receive is the same whether the house is valued at £100,000 or £1m, and therefore the fee paid for securing the sale should be the same.”
Independently, yesterday’s launch in Sydney, Australia, drew strong media interest, with one publication saying this was the Australian real estate industry’s “Uber moment” – a reference to Purplebricks’ potential to disrupt the estate agency sector in the way that Uber has posed a business threat to traditional taxis.
The Australian Financial Review said that Purplebricks’ critics were mostly rival estate agents arguing that Purplebricks “low-cost model offers poor customer service, a charge the company firmly rejects”.
The publication quotes Purplebricks’ CEO Michael Bruce, saying that the firm is playing a major role in changing the way property is sold in the UK “and would do the same in Australia”.
Bruce said that its major UK rivals were struggling, with the share price of Countrywide, the UK’s biggest estate agents, tumbling last year and Foxtons issuing a profit warning.
In Australia, the country’s only listed real estate group, McGrath, has endured a torrid time since debuting on the Australian stock exchange just over a year ago, with its share price down nearly 60% from its $2.10 offer price. Sounds familiar?
The Australian press also report that Purplebricks already has a competitor in Buymyplace.com.au – suggesting that Australian estate agents will find their commissions coming under pressure.
Purplebricks launched in Melbourne and south-east Queensland in September with 50 Local Property Experts. In the Sydney and Central Coast region, it has 20 LPEs.
It is next due to roll out to Perth and Adelaide.