Pseudo agencies – proper real estate agents or law breakers?

16 Oct 2018

ThinkstockPhotos-496256470-jpg-735x450.jpgWe believe choice in the market is not only important, it's vital. Competition drives us to become better at what we do, ensuring we never become complacent and always strive to provide our clients with a premium service.

However, Real Estate Institute of WA’s (REIWA) President, Hayden Groves, has once again warned consumers about the risks of using agencies such a Purple Bricks to sell their home.

You've probably seen the adverts, highlighting that - unlike other agencies - Purple Bricks do not charge their clients commission. Since their marketing campaigns surfaced in the Perth market, clients continue to ask us what we think of their offering… Our answer? Unfortunately, if it seems too good to be true, it probably is.

The Purple Bricks model: a closer look
The company charges clients $4,500 fee and “no commission”, which of course, sounds pretty enticing in a market where vendors are trying to save every penny. But Mr Groves highlights the concerns regarding this “fee”.

“I understand that $1,000 goes to the agent upfront, essentially for doing an appraisal of your home, then $3,500 goes to promotion and marketing, which is not itemised, and presumably some of the money goes to the Purple Bricks business itself. Then you are effectively on your own.

“What you do not hear is that extra fees are involved if you want them to conduct home opens and when you receive an offer all the details have to be sent to a law firm in Adelaide for a contract to be put together.
So, what are these extra fees? Well, here’s where it gets interesting... Want the agent to do a home open for you? Apparently, there’s a fee for that. Keen to use your own settlement agent? You’ll be charged an extra $300 for that right… and the list goes on.

The bigger issue…
If we’re going to talk about ‘proper’ real estate agents, let's discuss how a ‘proper’ agent earns a living (legally).

Typically, a real estate agent is incentivised through the payment of commission at settlement. In other words, the agent is paid once they have sold a client’s property. If the property is listed but it does not eventuate to a sale, the agent will not be paid their commission fee.

A Purple Brick’s agent on the other hand, is paid for listing the home, not selling it. So, if you’ve enlisted a Purple Bricks agent to sell your home, whether the home actually sells or not, the agent has been paid. Our first question was, “What’s driving the agent to work hard for you and to secure the best possible sale price?”

Mr Groves points out another alarming fact.

“In WA, it appears Purple Bricks agents are not employees of the parent company and therefore must hold their own Agent License. Of the 26 registered Purple Bricks participants in WA, only three hold a license that enables them to act on a behalf of a seller; with the remainder (if not employees) breaking State laws."

In light of this new information, we encourage all those looking to buy or sell in the future to do their research into the company you plan to deal with. Ensure you know exactly what you will be receiving as part of their service and ask plenty of questions if you're unsure. When it comes to your greatest asset, you can never be too careful.

Thinking of selling? Speak to one of our qualified, professional Sales Associates at your local Peard office, today.
 

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