Another Australian consumer watchdog is investigating Purplebricks, the low-cost real estate agency based in the U.K., three months after it was fined $20,000 AUD ($15,747 U.S.) for misleading consumers in Queensland about its fees.
Purplebricks chief executive Ryan Dinsdale (LnkedIn profile) told the Nine Network that Consumer Protection in Western Australia had launched an investigation into the online agency, but wouldn’t confirm the nature of the probe.
“We’ve had great dialogue with Consumer Protection in WA. It’s expected they would ask questions and we’re answering all of them.”
This comes as the chief executive of the Real Estate Institute of WA (REIWA) Hayden Groves (LinkedIn profile) said that Purplebricks was deceiving consumers and called on the consumer watchdog to investigate the claims Purplebricks makes about its business model.
“Purplebricks has been advertising for a long time, comparing themselves with regular agents … the reality is it is quite different,” Groves told WAToday. “What’s deceptive about their advertising is that they’re claiming to be proper real estate agents, and that goes to the heart of it.
“They not acting like a professional agent should be in terms of seeing the transaction through to settlement and ensuring they’re getting the best price for their client and ensuring that they are promoting the property. It’s not the same model. It’s as simple as that.”
Groves said the upfront fee Purplebricks charges sellers, regardless of whether their property is sold through the service or not, only motivated Purplebricks agents to win listings, rather than sell properties.
“I think a real estate salesperson should be remunerated upon discharging their responsibility, which is to actually facilitate the sale of the property in a professional way,” he said.
However, Dinsdale disagreed with Groves’ assessment of the Purplebricks service in WA, saying that the company had a strong record and positive reviews in the state.
“We simply don’t agree with Mr. Groves on this. REIWA is an association funded by traditional real estate agents and it is understandable that they are nervous about the introduction of new competition.”
According to WAToday, 405 homes were listed with Purplebricks between 2016 and 2018, with 138 being sold through the service. That’s a success rate of 34 percent, compared with the national average of 77 percent.
But Western Australia is the midst of a severe housing downturn after the mining boom ended and population growth stalled. The resulting glut of property on the market has seen house prices almost halve since the market peaked in 2015/16.
Consumer Protection declined to confirm or deny whether any investigation into Purplebricks was underway when approached for comment.