Purplebricks has allegedly run a competition in Australia where its local agents were incentivised to pressure sellers into cutting their asking prices by between 5% and 20%.
The agents, in New South Wales, had to secure reductions on three properties in order for their names to go into the NSW Raffle, which offered a $500 prize “generously supported by Kenny Bruce”.
Any further reduced properties secured the agent another raffle ticket.
The claims are in the Australian Financial Review, which says that an email it has seen described the promotion as an “awesome opportunity to get our customers’ homes realigned with the market place and make sure we get the job done for them”.
The publication reports also seeing a spreadsheet showing how one vendor agreed to cut their asking price from $1.2m to $1m.
Altogether, over 100 vendors cut their asking prices.
The Australian Financial Review says that Purplebricks “battled an increasing number of unsold homes and angry vendors who paid between $5,500 and $7,000 upfront”.
It also quotes a former territory owner who said: “We were told that they wanted to clear residual stock ahead of Kenny Bruce coming here and bringing in a new way of working.”
Bruce, co-founder of Purplebricks along with brother Michael, is in Australia following the departure of its sales director.
The Australian Financial Review alleges that it was threatened with an injunction to prevent publication of the vendor-discounting competition.
However, COO Neil Tavender later said: “[It is] entirely normal for any professional real estate agency to incentivise and reward their people to achieve realistic sale prices in a fast moving and ever-changing real estate market.
“At Purplebricks, we constantly assess market conditions and continuously review every house on its merits. The seller is involved and engaged in these conversations and ultimately it is their decision.
“More broadly, what’s clear is that we have a small group of disgruntled former agents looking to sensationalise and paint the company in a negative light at any opportunity.
“This minority has a clear agenda and are using the media as a vehicle to publicise their views, but we will not let this distract us from offering Australians a cost-effective way to sell their homes that cuts out commissions that are in place to benefit traditional agents, not sellers.”
EYE did approach Purplebricks for comment on the claims in the story.
PB are struglling in UK, Australia, USA and Canada.
Hatched is the first casualty and other Vendor DIY businesses like PB, Emoov etc will suffer and close too. Just a matter of time. The pie is not big enough.
These models are not sustainable.
Interesting read, search:
Why I’d still dump Neil Woodford favourite Purplebricks at a share price under 300p
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$5,000 cash prize! Maybe it’s time now for Bruce to move on playing Ceasar to his hungry LPE.s Scrolling through the LPE’s listings in Oz it seems that only 2 or 3 have manged to hit the target of 8 new instructions per month The $5,000 must have been keenly contested. The vast majority below 5 and they are becoming increasingly hard won as it’s plateauing . Maybe the money has gone to his head thinking that valuation of customer homes by raffle is appropriate
They can spin this any way they want but it’s sheer contempt Axel are going to be very unimpressed .It sounds as if they need some grown ups involved.
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$500
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$5,000
Called the “NSW Raffle” agents had to secure a minimum 5 per cent reduction on three properties to go into the raffle which offered a $5000 prize “generously supported by [Purplebricks co-founder] Kenny Bruce”.
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“However, COO Neil Tavender later said: “[It is] entirely normal for any professional real estate agency to incentivise and reward their people to achieve realistic sale prices in a fast moving and ever-changing real estate market.”
Oh dear…
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10,000+ listings and 9558 properties reduced in price for PB uk according to one portal yesterday.
It only displayed as 10,000+ so not sure how many listings in total, but that should win them an award. What do they win for that gargantuan effort?
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Also worth mentioning there were a number of price drops and then subsequent price increases for the same properties on the same day.
Now, the cynics amongst you might think that could have been an attempt to win some sort of prize and if that is what you think then there is nothing I can do to change your opinion.
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Instead of incentives to reduce asking prices why don’t they try something really radical, like an incentive for progressing their sales through to completion. Crazy as it sounds I know but it might just work!!!
If I have to take one more call from their vendors who are in chains with us, asking me how their sales are going I may not be responsible for my actions! Of course I know the answer because I protect my client and do a thorough job, I also know that if I don’t do it, nobody will.
For the sake of balance, I am having the same problems with several “traditional” agents too!
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Jesus – they’re damned if they don’t sell their houses, and they’re damned for trying to do what EVERY agent does and get reductions on stock that isn’t selling so that they’re saleable!
I’ve heard of whinging Aussies, but some people really will whinge at anything.
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There is a world of difference between intelligently and honestly approaching owners to reduce a property that is not selling despite being properly and well marketed after a sufficient period of testing the market has occurred and, creating a financially incentivised competition designed to drop clients prices no matter the circumstances or circumstances. The latter may, arguably, be a breach of an agents duty of care and responsibilities under the 1979 Estate Agents Act.
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EAA 1979 jurisdiction almost certainly doesn’t extend to NSW!
lets not think this is Big news – most agents trying to survive are seeking to educate sellers to be more realistic on price – it is a difficult conversation and staff can need encouraging to do the job – the problem with badly thought out “competitions” is that they are open to abuse – list a Property one day at a higher than agreed price and reduce it the next etc. It also implies they are not working hard enough to actually sell the property. An alternative approach would be to pay staff on sales completions (novel idea eh?!) and not just listings!
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Interestingly no word from the PB obsessed Duck and Dom. Havethey had a PB epiphany?
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