June 27th, 2017
The rise of real estate robots and automation
It’s hard to believe that Purplebricks only launched in Australia one year ago. Since then, they’ve sold over 1,100 properties and saved Australians over $12 million. Now that they’ve officially launched in the US, it’s evident that fixed fee real estate will only grow bigger and bigger. Let’s dive into what Purplebricks is and the state of fixed fee real estate in Australia.
Launched in the UK in 2014, Purplebricks is a fixed fee, “hybrid online” real estate agency. This means that the scope of their service is greater than that of an online agency but less than that of a traditional agency.
As the woman in the above video says “they’re proper real estate agents, they’re real people…they just don’t charge commission”. Instead, Purplebricks charges a flat fee of $4,500 for sale by private treaty and $5,870 for sale by auction in Victoria, Queensland, Western Australia and South Australia. For those in NSW, this fee increases to $5,500 and $6,870 respectively.
The fixed fee includes professional photography, floor plans, online marketing costs, the services of a dedicated “Local Property Expert” (local real estate agent employed by Purplebricks) and sales and conveyancing support. Traditionally, sellers would pay a commission of 2 to 3 percent of the sale price and an additional marketing fee.
When Purplebricks launched in Australia in September 2016, Stephen Koukoulas of Market Economics reported that “Australians could save $5.75 billion by moving to a flat fee of $4,500” and that “on average, Aussie homeowners will save $11,500 under [the Purplebricks] model”.
These enticing savings coupled with Purplebricks’ memorable television commercials (video above) have catapulted the brand to success. After just one year, Purplebricks is the third most recognised real estate brand in Australia after Ray White and LJ Hooker.
Michael Bruce, CEO of Purplebricks says that “Australian people are taking to Purplebricks quicker here than the UK” where a home is sold every nine minutes.
This reflects the changing landscape of the Australian real estate industry and a shift in the way people search for agents to sell and manage their properties. As a result, the past year has seen the launch of many fixed fee real estate agencies in Australia.
While the concept of fixed fee real estate is nothing new, the model had trouble gaining traction prior to the introduction of Purplebricks.
Hello Real Estate launched a year before Purplebricks with a fixed fee of $9,900 and plans to go public. However, these plans were soon abandoned as “public interest had been below expectation”.
Phil Horan, founder of Hello Real Estate told News.com.au that the agency was “tracking well” and that Purplebricks’ entry into the market was a “very positive development for real estate in Australia”.
Since then, Purplebricks’ successful shakeup of the market has led to a series of fixed fee agencies launching in Australia. These include Appraisal Now with fees starting from $6,600, Upside Real Estate with fees starting from $7,500 and Sello with fees starting from $7,550.
While it’s too early to say what impact the fixed fee model will have in Australia, it’s certain that the market will face increased competition from fixed fee, hybrid agencies.
If you enjoyed this blog post on Purplebricks Australia and the State of Fixed Fee Real Estate, you might also be interested The Rise of Real Estate Robots and Automation, How Virtual Reality is Transforming the Real Estate Industry and 12 Ways to Attract Quality Tenants.
What do you think about Purplebricks Australia and the State of Fixed Fee Real Estate? Please let us know in the comments below.