Wannabe disrupter Purplebricks has come under criticism since its soft launch in parts of Australia. Things are not likely to get much better for the British online estate agent, according to one of the industry’s most vocal commentators.
Well-known industry personality Tom Panos believes Purplebricks’ DIY model will not work in the Australian market.
“Why would an owner take the risk of spending $5,000 on an experiment that might not work when they know that the experiment of paying an agent between 2 per cent and 3 per cent might get them an extra 5 per cent to 10 per cent in the price of their property?” Mr Panos said on Sky News’ Your Property Empire.
Mr Panos compared Purplebricks to taxi service disrupter Uber.
“Going in an Uber from the city to the airport is quite a different project than actually selling a family home that is tax free,” he said.
“And $100,000 tax free in your pocket because you have a great real estate agent negotiating for you is a big deal in the world of mathematics and commerce and the net worth of people.”
Purplebricks has succeeded in the UK where it is tipped to become the third-largest agent by the end of the year, with a full 10 per cent market share.
“So in the UK, what we clearly know is that a lot of people have listed using Purplebricks,” Mr Panos said.
“But here is the interesting issue, they charge and you pay when you list your property, not when you sell your property. So it is not a results-based business.
“With real estate agents, you pay once they have sold the property. So I think in the UK they have actually made a market in getting people’s listings, but less so in selling them.
“And I think that at the end of the day, the connection economy and consumerism of 2016 and beyond is a result-based economy, where people are prepared to pay if there is a result.”