Has Purplebricks ruined fixed-fee agencies?

With notable fixed-fee agency Purplebricks recently under scrutiny by New South Wales and Western Australia, can you trust any fixed-fee agency? According to the CEO of one, this level of scrutiny is a good thing for all fixed-fee agencies, and highlights the good they can do for vendors.

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In late April, fixed-fee agency Purplebricks was flogged with a $20,000 fee for deceptive marketing in Queensland, which followed reports earlier this month that fair trading bodies in NSW and WA were looking into Purplebricks’ business model.

Speaking with sister publication Real Estate Business, Purplebricks chief marketing officer Matt Siddons said while they were being scrutinised, it was not yet an investigation.

“To our knowledge, there is no investigation,” Mr Siddons said.

Mr Siddons said that they had a good relationship with Fair Trading Queensland and were not currently in dialogue with them.


“We accepted their undertakings, we’ve met those. We are always looking for ways to make our proposition clearer and some of the suggestions that came back from OFT were helpful.”

With this level of scrutiny placed on a more notable fixed-fee agency, consumers may decide to paint other fixed-fee agencies with the concerns, but Upside Realty’s CEO, Adam Rigby, who also uses a fixed-fee model, believes that this scrutiny could result in changes to how fixed-fee agencies operate, which can be a good thing for vendors.

“I don’t think it matters whether youre fixed fee or commission-based... If youre not clear in what youre doing and the way you market and advertise and present yourself is not aligned with what is actually going on, its always going to cause issues,” Mr Rigby told Smart Property Investment.

“I think the scrutiny... is based on the fact the fixed-fee model is taking off at a huge pace because this massive dissatisfaction with the current model of commission, and probably, theres a lot of dissatisfaction with the level of the fee incurred.

“So, I think it will change, any massive changes in any industry, whether it be like [what] we saw happen with Uber coming out in different markets, ... or whether it be streaming video or internet broadcasts.”

Mr Rigby said that any innovator introduced into an established market will experience high levels of scrutiny as they bring with them high levels of disruption, which will naturally cause suspicion from the more established players and users of those services.

However, if a disruptor comes along, Mr Rigby said that they need to be “squeaky clean”.

“You have to be open-ended about how you interact, because you have to accept that you will be scrutinised,” the CEO said.

Investors can find the right fixed-fee agency, according to Mr Rigby, by:

1. Aligning commercial outcomes

Mr Rigby said that the first thing investors need to do is to make sure the chosen agency works with their financial goals.

“For example, if the fee is incurred and youre liable for the fee prior to... selling the property, then the agent is unlikely to be particularly motivated to service,” the CEO said.

2. Check the records

If an agency has some way to measure its success or failures by a third party, Mr Rigby said that the measure should be seriously considered. Some agencies, like Upside Realty, use RateMyAgent to have their agents assessed.

The review site matters, too, as some may not allow for reviews to be removed or the site to be flooded by more generic reviews.

3. Trust the agent

No matter the agency, if an agent does not give you the right impression, whether it is something you can pinpoint or not, Mr Rigby said that vendors should be sticking with who works well with them.

“Youve got to make sure that youre working with someone that you can work with, and particularly, if youre an investor, you really actually have got to build a relationship with a company or an agent over and over again,” Mr Rigby said.

“As long as the pricing is competitive, the service is high and they are using technology, it can make the process better.”

Upside’s place in the fixed-fee agency space is one of transparency, a belief that Mr Rigby holds strongly in relation to the fixed-fee agency industry.

“What weve tried to do is be incredibly transparent up front about everything from the fee structure through to whats included, what isnt included, so the nice thing working with Upside is you know everything is included,” the CEO said.

“You can control the process, which I think is very different.”

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