Purple Bricks Packs its Bags

Budget real estate service model Purple Bricks has announced this week that they are winding up their Australian operations. This is welcome news for consumers of professional real estate services no longer to be lured by an extensive marketing campaign that denigrated traditional real estate agents, promised “no commission” and claimed outstanding results. The news comes after months of grandstanding claims that they were expanding their Australian operations and were on target with their plans. They now say “…we have been unable to make the progress in the Australian market that we’ve wanted.” This flip-flopping rhetoric captures the very essence of their business operations; they promised much and delivered little.

The Purple Bricks system was fundamentally flawed because it promised to provide the full suite of real estate services but only paid its representatives $1000 upon listing out of the $4400 up-front fee (this was changed in recent times to $2000 when their fee was doubled to $8800). When a seller employs an agent to professionally facilitate a property sale, it is entirely appropriate that the agent receives payment when the job is complete. That’s why the success fee / commission model works so well.

A Purple Bricks employee was incentivised to list and, on the whole, had no interest in ensuring a successful outcome. Those Purple Bricks employees who tried hard for their sellers told me they were working 75 hour weeks and going broke earning under the Award wage. Purple Bricks were never going to attract competent agents willing to work in such conditions. Hence vendors who believed their bull-shit found themselves stuck with Purple Bricks (after paying $4400 up front) only to have a constant churn of rookie agents, fail to achieve a sale and then need to employ a proper agent to get the job done.

Purple Bricks misled the public with claims they provided the full suite of agency services when in reality they were a private seller platform dressed up as real estate agents. Their model may have worked better here if they had been up front about what they were realistically able to deliver.

Purple Bricks has been under significant pressure in recent times with their share price in the UK falling 65 per cent since its peak, their advertising spend in Australia at 84 cents per dollar earned, a revolving door of employees, changes to the industry Award, poor customer experience, investigations by state regulators and heavy criticism from professional bodies such as REIWA.

The rise and fall of Purple Bricks is an endorsement of real estate practice in Australia, that agents are not merely “commission collectors”. It is also a reminder to agents that they must continue to strive to deliver service beyond expectation, grow their knowledge, be a reliable expert and delight each and every client.

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