Brighter Selling

Why I wouldn’t shop with the “Aldi of real estate”

by Justin Watt, CEO 30 April 2018

They’re called disruptors for good reason. Uber, Airbnb, Aldi – the list goes on – they’ve all come into an established market and turned competition on its head.

In the real estate market a lot of new players and online platforms are providing new ways for buyers to sell their homes. One of the most talked about new players is Purplebricks, which came into the Australian market last year.

They claim no commission and one flat fee to sell your home – either $4500 for private treaty or $5870 for auction. It’s cheap right? That’s probably why they’ve been called the Aldi of real estate.

But personally, I don’t think they’re as good as Aldi.

We’ve had discount mobs in the market before. Just think back to Go Gecko. They charged a capped cost model too but at least they provided a full service real estate agency.

The Purplebricks business model is different, with a focus on online operations so vendors typically end up doing some of the work an agent would normally do, or you pay for it. For example if you want to book an open home you will pay an extra fee.

We’ve taken over a number of listings from Purplebricks when the property hasn’t sold. Aside from the service model, the other main criticism we hear from clients is that they had to pay the fee even if their property didn’t sell.

I understand the enticement of a capped fee – it’s a carrot dangled on commission. But sometimes you get what you pay for. If you give me a start and I don’t sell your home – I don’t get paid.

Commission is one very important part of a real estate deal, along with the marketing costs and, above all else, the sale price for your home.

If an agent can sell your home for a higher price than someone else, it makes sense to pay a higher commission. You pay more to earn more.

But don’t just take their word for it. Look for proof. Don’t just look at their last good sale, look for 10 good sales they’ve had in your local area with comparable properties.

I’ll have a hypothetical conversation with potential clients where I offer to charge no commission, halve marketing costs and sell their property for $20,000 more than the highest valuation.

No one will ever sign up based on that promise. Why? Because at that point, I’ve offered no evidence. That opens up the chance to talk about what’s really important in choosing an agent – can you trust me, can I bring the best value?

I’m passionate about educating people about real estate. Even if someone doesn’t sign up with me I hope I’ve pushed them to think more commercially so they can push their agent that bit harder. Then I’ve still positively contributed to their deal.

So, back to Purplebricks and its hybrid real estate model. Is it for you? That’s your decision. All I’m saying is – do your research. Reviews are mixed.

In my opinion, if you don’t want to pay for full service, and you’ve got the chops for DIY real estate, then you might as well go 100 per cent for sale by owner. You might be more effective and save yourself even more money.

Got a question about real estate? Contact us for a chat.

Got a different view?

Let me know what you think.
Reach Out