Commission has long been the word associated with how a realtor is paid for their services, and being a ‘Fisbo’ (for sale by owner) was the only way a homeowner could avoid paying a commission on the sale of their home. Sure, there was 1% realty in select major areas of Canada, but even then you would be paying a small commission and that number would be determined based on the final sale price for the home.
That’s no longer the case, as we are very much living in an age where the trend is to create ad deliver business alternatives that ‘disrupt’ – as they put it – the long standing status quo of some facet of an industry. Now here in Canada that extends to the real estate industry as well, as an international online property powerhouse has purchased one of the world’s top web-based, commission-free real estate companies in a bid to deliver a similar shake up to the Canadian home-selling industry.
Prospective clients aren’t easy to come by for realtors these days, and our online real estate lead generation system here at Real Estate Leads is a great way to continue to prospect successfully in these more challenging times. It’s an increasingly competitive business. An exclusively commissions based business model meant that realtors pursuing ‘bigger fish’, so to speak, would be able to earn more for their efforts, but this recent development puts another notch firmly on the side of the consumer in as far as leveraging themselves in the quest to make the most out of the sale of their home.
Purplebricks has made a successful $51-million bid for Quebec-based duProprio and signs bearing their name will soon start popping up across Canada, with some major advertising campaigns to go along with them. Now it should be said that Purplebricks and its flat-fee realty service system isn’t expected to make a major disruption to the business from coast to coast, but it will be interesting to see to what extent some homebuyers migrate to it.
Do note though that since starting in 2012, Purplebricks has taken over about 5% of the British market and has since expanded to Australia, the U.S., and now here to Canada as well.
Growing Appeal
By buying DuProprio and its considerable market share, Purplebricks has bought is itself a global leader in discount real estate services. 20% of the market in Quebec is commanded by duProprio. Both Purplebricks and duProprio have their appeal in the way they allow a homeowner to avoid the 5% commission traditional brokerages charge. That is significant considering the average Canadian resale house now goes for $481,000. At that number, a homeowner would stand to save in the vicinity of $27,000.
All of this of course should be tempered by the fact that for-sale-by-owner transactions earn significantly less on the market, and many will say that this fact will pair with concerns most conscientious homeowners will have about the quality of the service. So in this sense Purplebricks will have to build up its reputability as would any business newcomer on the scene.
Getting What You’ve Paid For
It’s a fair concern, and the old adage ‘get what you pay for’ will be ringing in the heads of many who’d even consider Purplebricks. But when comparing an import sports car to a domestic hatchback, it seems many people would prefer to pay for the hatchback if the hatchback will do. And in many places in Canada where it is a seller’s market and the market itself is perennially hot then that hatchback will do because often times homes pretty much are selling themselves and often for over asking.
Purplebricks is a flat-rate, fairly-costed, full-service real estate agent and the company is focusing on marketing and driving new clients to its website. Then licensed real estate agents are sent out to provide these clients with their professional services, with everything from initial pricing to helping with purchase / sale negotiations.
The Model
Purplebricks promotes itself by saying that by taking the marketing component out of the realtor’s realm of responsibilities, it frees up some 85% of that realtor’s time for other initiatives that can be undertaken to sell the home. Purplebricks believe their company is efficient and can offer discount services because it has little office space and its agents spend their time doing what they do best; being a ‘people person’ and focusing on unique and creative ways to put buyers in touch will sellers – and vice versa.
Further, they insists that they sell houses faster, get more money for their customers than competitors, and that’s what’s made them the most positively reviewed real estate agent in the world.
The company has, however, also been accused of misleading the public with its advertising. Those allegations are nothing more than that though. Look for Comfree signs in Quebec to be among the first to be replaced by the Purplebricks brand, but they’ll be spending a lot of money expanding outside Quebec.
Discount services in the financial and insurance sectors, as well as familiar names such as iTunes, Uber and Airbnb, have all caused noteworthy ‘disruptions’ their industries and made things trickier for the traditional players, so it will be interesting to see if Purplebricks can do the same for real estate services in Canada.
