<\/a>Kevin:\u00a0 <\/b>Purplebricks, the UK-based online real estate agent that charges homeowners a flat fee to sell their property, is promising to shake the local market and save Aussies nearly $6 billion in commissions. There has been a lot of news and a lot of talk about this in the last week or so.
\nPurplebricks, of course, has launched. They launched in the UK in 2014, where they charge homeowners a flat fee \u2013 as I said \u2013 of $4500, including marketing costs, to sell their homes. Joining me to get a bit more detail on this, the CEO and co-founder, Michael Bruce, for Purplebricks.
\nMichael, thank you for your time.
\nMichael:<\/b>\u00a0 It\u2019s my absolute pleasure. Thanks for having me on.
\nKevin:<\/b> \u00a0That\u2019s okay. The Purplebricks concept has been very successful in the UK, as I said. But attempts in Australia to run a similar concept in the past haven\u2019t really worked. Why do you think this is going to work as opposed to others? What\u2019s so different about Purplebricks?
\nMichael: <\/b>\u00a0I think what\u2019s absolutely clear is that people have tried to do things along the journey, but they haven\u2019t done anything like Purplebricks.
\nWhat Purplebricks does is it takes great local property experts, licensed real estate agents, and gives them the tools in order to provide a first-class service for customers. They give them technology. We\u2019ve spent nearly five years now perfecting that technology, that makes them much more productive, so they can spend more time with homeowners, chatting to them in living rooms, helping and supporting them through each settlement.
\nAt the same time, it gives the homeowner a much better experience, much more transparent experience, because they\u2019re able to interact with the market. They\u2019re able to see everything that\u2019s happening 24 hours a day. They\u2019re able to get to know who\u2019s arranging viewings, what their feedback is, and when offers are coming in, the second an offer is made, it\u2019s instantly with them.
\nIn terms of all the things that traditionally, the perception of the industry has been it\u2019s not quite as transparent, not as much communication, etc. With Purplebricks, what we\u2019ve tried to do, and the reason why we\u2019ve been successful, is because we\u2019ve built a model that encapsulates all of those things and delivers them back to the homeowner but for a fraction of the cost that they would pay a traditional real estate agent.
\nKevin:<\/b>\u00a0 Of course, the Internet\u2019s made everything much more transparent \u2013 a lot more information for consumers. I\u2019d challenge you on the point there about transparency. I think one of the things that we have seen in the industry is a lot more transparency over the years. No one denies that\u2019s a good thing for consumers. But I just wonder if we\u2019re discounting, here, the amount of work that goes into selling a property.
\nYou\u2019re asking here for consumers to take a big lot of that load on. In the past, we\u2019ve seen private sale, for sale by owner, a lot of those people actually go back to a traditional agent because they simply can\u2019t handle what needs to be done.
\nMichael: <\/b>\u00a0I don\u2019t disagree; I think you\u2019re absolutely right. The only difference is that doesn\u2019t apply to Purplebricks. When you talk about in the past, those for-sale-by-owner type propositions, they haven\u2019t worked. They didn\u2019t work in the UK. They\u2019ve been around for eight to ten years. There\u2019s only a particular type of homeowner who\u2019s willing to participate in that type of service. And they haven\u2019t seen any material growth in the UK, unlike Purplebricks.
\nPurplebricks has grown massively over the last two years because it does everything that a real estate agent does. It provides you with the whole support, the whole process, right through to settlement.
\nWhat we have to be really clear on is that the process of selling a property is the same anywhere in the world. It\u2019s about getting a property onto the market. It\u2019s about presenting it in the best possible way. It\u2019s about making sure that you market it in order to engage as many people as you possibly can so that market forces does its work alongside the agent to help support that customers get the best possible price. Then once you get the best possible price, it\u2019s about supporting them through to settlement.
\nWhat we\u2019re doing is all of those things, but what we are doing is cutting out stuff that is ineffective, that doesn\u2019t help and support customers achieve those objectives. Our customers end up getting a light-bulb moment. They get a moment whereby they say, \u201cI\u2019ll get a full real estate service, a meta local property expert, a licensed real estate agent, who\u2019s promised a particular type of service, who\u2019s delivered on that service, got me the best possible price, sold my house, and assisted me through to sale.\u201d
\nThat is just fact of what real estate agents do, and that\u2019s just fact of why Purplebricks is so successful, because we do all of those things.
\nKevin:<\/b>\u00a0 Which parts will you actually be cutting out, Michael? You said there\u2019d be some parts that you\u2019ll cut out that\u2019ll be irrelevant, that\u2019ll cut back on the cost. What are those things that\u2019ll be cut out of the process?
\nMichael: \u00a0<\/b>In terms of the process, the process will be exactly the same, but it will be different in the sense that it will be instant, convenient, and transparent. For instance, it\u2019s not a matter of people trying to engage with real estate agents during office hours.
\nI understand that here in Australia, people put their mobile numbers in and things like that so that they can communicate more after hours \u2013 and that\u2019s fair and that\u2019s good \u2013 but reality is with Purplebricks, people can arrange a viewing at any time 24\/7 instantly.
\nThey\u2019re instantly requested you for feedback, chased for feedback. The second they provide that feedback, it\u2019s instantly with the seller. The second that an offer is made, that\u2019s instantly with the seller. The seller can see the offer, they can see the nature of the offer, they can see who\u2019s made the offer, and the position the person\u2019s in.
\nThey can go through the whole auction process at whatever time of day or night. They can get access to information about their marketing. They can contact and speak to someone 24 hours a day, so if they have an issue, then that issue can be quickly resolved. They get a local expert who helps them through to settlement.
\nThey\u2019re getting absolutely everything; nothing\u2019s cut out. But what we\u2019re doing is taking technology and people and delivering in a better way.
\nKevin:<\/b>\u00a0 I understand that. Michael, in terms of the local experts, you say these are licensed agents. What will be their role in that? Will they assist with negotiations? Will they assist with open homes or anything like that? Or do they very much just take a\u2026?
\nMichael:<\/b>\u00a0 They will assist with all of those things. They\u2019ll be the first port of call in terms of undertaking the appraisal. They will then undertake all the process of getting and supporting the customer onto the market. They will, if the customer so chooses, take all the viewings for the customer. They will, if the customer so wishes, negotiate with all of the offers, and they will be heavily involved in assisting and supporting the customer through the whole journey.
\nKevin:<\/b>\u00a0 Is all that done for the flat fee of $4500, or are there add-ons there dependent on what the consumer would want the agent to do?
\nMichael:<\/b>\u00a0 The only additional add-ons that we have are if you want us to undertake the viewings for you. There\u2019s an additional fee of $385. That covers you for every viewing, no matter how many there are.
\nThe reason why we offer choice for consumers in this respect is because of the thousands of homeowners we spoke to across Australia, the majority said they felt they were better equipped to do the viewings themselves. And 79.7% of people said that if they could undertake the viewing and save some money, they\u2019d like to do that. What we do is give choice: the 80% who want to save money great, and for the 20% who want to have the comfort of having that support, we\u2019ll provide that as well.
\nIn relation to negotiating offers, and all of those things, that\u2019s all part of the service. There\u2019s no additional fee there.
\nThe only other additional fee is if you want to undertake an auction, then it\u2019d be $850, but that would include the auctioneer and all of the viewing service covered, all of the open houses, everything like that. If a customer takes any of those options, they can have as many viewings as they wish, they can have as many open houses that they desire.
\nKevin:<\/b>\u00a0 Of course, I do understand what you\u2019re saying, and I can see there\u2019s a need for a model like this. The only question I would ask is the quality of the agents. I would question why good agents would be attracted to your model and have to work as hard as what you\u2019re saying to earn about one-third of what they would earn ordinarily. Isn\u2019t that then going to impact the quality of the agents you attract as these local experts?
\nMichael: <\/b>\u00a0I\u2019ve been involved heavily in the training of these people over the last few weeks, and I have to say the quality of the people has been great. I take your point of what you say, but the reality is these people will not be earning less. These people will be earning as much, if not more, than what they would otherwise earn. They\u2019ll be far more productive.
\nWhat we do is give them the opportunity to run their own business. We don\u2019t charge them like a franchise. We give them advertising and marketing on a scale never before seen in the industry. We give them technology that makes them more productive and ensures that the promises they make their customers, they know can be delivered.
\nAnd we\u2019re saving people loads of money, so in reality, it\u2019s easy to take a look at the quality of our local experts and say, \u201cWell, they\u2019re not earning $1 million dollars\u201d, but that\u2019s a very small fraction of the market who earn that amount of money.
\nKevin:<\/b> \u00a0Of course.
\nMichael:<\/b>\u00a0 They will be certainly earning as much, if not considerably more, in relation to others in the market, who are providing a great service for customers on a day-by-day basis.
\nKevin: <\/b>\u00a0How does Purplebricks make money out of the transaction? Do you get a portion of that $4500 flat fee?
\nMichael:<\/b>\u00a0 Absolutely. The real estate agent will receive a proportion of the fee, and Purplebricks will receive a proportion of the fee. Obviously, we will earn revenue off other things, such as mortgages, etc., and other things that we can offer services to customers if they decide they want those.
\nKevin:<\/b>\u00a0 There you go. So, there\u2019s an insight as to how it\u2019s going to work.
\nMichael, I want to thank you very much for giving us your time, and we\u2019ll watch with interest how Purplebricks develops in Australia. Thanks very much for your time.
\nMichael:<\/b>\u00a0 It\u2019s my pleasure. Thanks for having me.<\/p>\n","protected":false},"excerpt":{"rendered":" Rarely do I see a startup company ruffle as many feathers in the real estate industry like Purple Bricks has in the last few weeks. Purple Bricks, if you have missed all the hype, is a UK based company that claims to be a…<\/p>\n","protected":false},"author":176692471,"featured_media":9435,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[10,11,13,17,22,23,25,27],"tags":[101],"class_list":["post-9433","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment","category-research-topic","category-selling-a-property-topic","category-sponsored-channels","category-trends-topic","tag-podcast"],"yoast_head":"\n
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