Purple Bricks is back under the microscope, as the Real Estate Institute of Western Australia (REIWA) calls for more investigation.
According to Purple Bricks CEO Michael Bruce, their company “takes great local property experts, licensed real estate agents, and gives them the tools in order to provide a first-class service for customers.”
However, REIWA president Hayden Groves has a different opinion. REIWA has taken the position that Purple Bricks’ business model misleads customers.
While apparently he did not use the exact words “not real agents,” that is certainly the impression we got from his statements:
“What we were seeing is that Purple Bricks has been advertising for a long time comparing themselves with regular real estate agents … the reality is it is quite different.
“I think that what’s deceptive about their advertising is that they’re claiming to be proper real estate agents, and that goes to the heart of it.
“They are not acting like a professional agent should be doing in terms of seeing the transaction through to settlement, ensuring they’re getting the best price for their client and ensuring that they are promoting the property.
“Purple Bricks are simply not delivering that service.
“They’re advertising they’re proper agents and they’re doing everything else that a proper agent does.
“It’s not the same model, it’s as simple as that.
“That’s fine to have different model or methodology – we welcome them in that regard – but not to claim they do the same job as us.”
Mr Groves said the flat up-front fee model does not motivate them to sell properties, but to merely gain listings.
“I think a real estate sales person should be remunerated upon discharging their responsibility which is to actually facilitate the sale of the property in a professional way.
“If you don’t sell it you shouldn’t get paid. Purple Bricks is getting paid whether they sell it or not.
“We would like Purple Bricks to be held to account for the false and misleading advertising campaigns that they have been running on television and other areas. We would like that to cease.”
In another media statement, Mr Groves said:
“Their agents have no fiduciary interest in ensuring the vendor achieves the best possible result because they’re not renumerated by achieving a result other than listing. This in itself is not a problem other than that’s not made clear to consumers.
“A reliable source in WA tells me Purple Bricks ‘Area Experts’ are not employees of the company, and are required to sign management authorities under their own company, in violation of WA laws unless the ‘Area Expert’ is a holder of an Agent’s Licence; which I am told is often not the case. I am also informed that they exclusively sign up vendors for 12 months. A quick scan of those associated with Purple Bricks in WA reveals almost all of them have received their sales representative registration in 2017. Only four of the list of 22 held a full agent’s licence.
“There is certainly room for Purple Bricks and other models like them in Australia but they need to come clean with the public and cease comparing themselves to proper agents. REIWA calls on our regulators to look at the Purple Bricks’ model and hold them to account; just like they do for proper agents.”
Mr Groves has apparently formally asked the WA Department of Mines, Industry, and Regulation to investigate the company’s conduct.
A spokesman for the department declined to confirm or deny whether an investigation is ongoing.
Chief Executive of Purple Bricks Australia, Ryan Dinsdale, unsurprisingly disagrees.
“REIWA is an association funded by traditional real estate agents and it is understandable that they are nervous about the introduction of new competition.
“We believe there is room for all types of models and we are here to simply offer choice to consumers. Australians are starting to question why they pay tens of thousands of dollars in commissions when they sell their homes.
“It is abundantly clear to our customers the deal we offer them – that’s why we are seeing such demand for our services. The lifeblood of an agent’s business is the positive word-of-mouth that comes from delivering great sale results.”
And indeed, a brief look at review websites does seem to suggest many customers are very happy with their service. But it must also be said that every one of the reviewers this author saw was people whose property sold.
Mr Dinsdale said the assertion that Purple Bricks employees were not actual real estate agents is not correct. “All agents that work for Purple Bricks are covered by the appropriate licencing, as is required by WA legislation.”