Hybrid real estate agency Purplebricks has announced its exit from Australia after two and a half years of trading, citing “challenging” market conditions and “execution errors” as the reasons for its decision. Via The Real Estate Conversation.
In a statement released on the London Stock Exchange, the Group said the Australian business had “not delivered the progress the Board expected”, and had subsequently “been put into an orderly run down with immediate effect, pending closure.”
Purplebricks Group CEO Vic Darvey described it as a “difficult decision”.
“We’ve been operating here for two and half years and, unfortunately, we have been unable to make the progress in the Australian market that we’ve wanted, despite the tireless efforts of our employees,” he said.
“Our present intention is that, over the next few months, we manage the process of closing down the Australian business in an orderly way, attempting to minimise disruption for both our people and our customers.
“We will take no further listings in Australia, but intend to engage with our customers to finalise all existing agreements.
“This is not a decision we have taken lightly, but with market conditions becoming increasingly challenging, we do not believe that the prospective returns in Australia are enough to justify continued investment.
“The business remains committed to our current customers.”
Purplebricks model ‘always going to prove unsustainable’
Purplebricks’ exit from Australia is a “win for consumers of professional real estate services”, according to Real Estate Insitute of Australia Deputy President Hayden Groves.
The hybrid real estate agency announced it was leaving Australia on Tuesday, having “not made the progress the board expected” in the country.
While Mr Groves sympathised with those who had “been duped”, he said the news was not surprising.
“Purplebricks agents were encouraged were incentivised to list, with little interest in the outcome for the client,” he said.
“This was always going to prove an unsustainable model given PB’s claims of being ‘proper agents’ and their employees needing to list dozens of properties each year to barely make a living.
“Purplebricks was essentially a private seller platform pretending to be real estate agents.”
It’s not the first time the Dethridge Groves Director has been critical of the Purplebricks sales model.
In September last year, he said the agency was blurring the lines “between the offering they are providing the community and what a proper professional agent does” after it unveiled a new service involving an all-inclusive fee of $8,800 including GST when selling with the company.
Mr Groves also accused the agency of misleading the public with advertisements which read “they’re real people, they’re proper real estate agents”.
“We contend that it’s entirely appropriate that if an agent fails to complete the job they’re employed to do,(to successfully negotiate the sale of the vendor’s property), then they shouldn’t be paid,” he said in June 2018.
“This is a fundamental principle of an agents’ fiduciary responsibility at common law and by statute.”
