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Is the real estate industry being disrupted?
March 22, 2017
Look out real estate world: there’s a new kid in town.
Rebel ‘hybrid’ sales agencies like Purplebricks and BuyMyPlace – where the seller takes on a big chunk of their own marketing in exchange for paying a lower fee – have popped up onto the scene, and they’re ruffling a few feathers.
Experts are speculating about the potential disruption to our safe, traditional model of property sales.
And, of course, they’re wondering if these new ‘self-serve’ sales agencies will turn real estate agents into an extinct species.
Big savings in property commissions
The first drawcard of online self-selling is the cost. Depending on where you are in Australia, you’ll pay around $14,000 commission on a $500,000 property sale – something that plenty of sellers will tell you rankles when it comes time to paying the bill.
This is where Purplebricks and BuyMyPlace are winning new fans in the market.
They both charge a fixed fee, rather than a commission. In real terms, that means that whether you sell your place for $100,000 or $2 million, you’ll only pay $4500 to Purplebricks. BuyMyPlace is even cheaper at $700, but with them you’ll need to do more work yourself, or pay for extras.
For example, extras might include professional photos; an agent attending your inspections (otherwise, you’re on your own when prospective buyers come to view the property); and an auction fee.
Purplebricks is now the third-largest agency in Britain, where it was founded, so clearly this new self-serve approach to property sale is gaining traction.
But is it really going to disrupt our long-established real estate industry?
Online property sales here to stay?
Some experts are likening the Purplebricks invasion with that of Uber to the taxi industry. But there are some big differences here.
Firstly, catching a car from A to B doesn’t cost hundreds of thousands of dollars. Secondly, the kind of car you sit in isn’t of great consequence during the trip – it could be a Toyota or a Tesla, and it’s still going to travel the same journey in the same length of time.
And thirdly, catching a ride is a transaction of opportunity. Most people need transportation at one point or another, so finding your next client is as easy as hitting the road. Finding the right buyer for a specific type of property? Well, that’s a different matter altogether: to be successful in real estate, you need a rich contact book so that you’re plugged into buyers from all walks of life.
With property, we’re talking about big bucks. We’re talking about selling the most expensive asset most people will ever own. It’s not something to take lightly, or skimp on when it comes to using an industry professional.
If you’re in a hot market, then using a hybrid agency may be just the solution you need to offload your home as affordably as possible.
Just make sure you carefully consider both sides of the equation. If you’re saving money on commission, but you have a lack of experience in negotiating, which means you ultimately sell for less than you wanted – then was the commission saving really worth it after all?
Maybe the best thing to come out of this is increased competition. Real estate agents may want to up their game, going to the extra mile to ensure property owners see the value in the advice and experience offered by a quality real estate agent.
Translation: the consumer ultimately wins.