Online real estate agent looks to disrupt Australian market
A new real estate agent has claimed it can save Aussies nearly $6 billion in commissions.
UK-based online real estate agent Purplebricks is launching in Australia, and says its model of charging vendors a flat fee of $4,500 can save the average home seller $11,500, News Ltd has reported.
A report from Stephen Koukoulas of Market Economics which was commissioned by Purplebricks has claimed Australians could save $5.75 billion on real estate commissions by moving to the flat fee model, News Ltd reported.
“Over the past 30 years the average Australian house price has risen by almost 600% from just under $90,000 to around $614,000. The real estate agent’s commission, at 2.2% of the sale price, has risen from $1,970 to over $13,500,” the report said.
Koukoulas claimed the selling process was becoming easier and more efficient for agents, even as their commissions rise.
“It’s no harder to sell a house today than it was 20 or 30 years ago. Agents are getting a very, very high boost in their commissions simply because house prices are going up,” he said.
Koukoulas predicted the flat fee model could prove a major disruptor for the real estate industry.
“I wouldn’t be surprised at all if over the course of time you see real estate agents discounting their commission fees to maintain their competitive edge,” he said.
Purplebricks launched in 2014 in the UK, where it sold $4.9 billion worth of property last year, News Ltd said. In spite of this, the company has posted a loss for the last two years due to heavy advertising costs.