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Is property in a new disruptive purple patch?
3 minute read
As digital disruption ripples through industry after industry – and each one invariably gets a headline comparing it to Uber – it’s hard to see where the disruption will stop.
In terms of Uber, it remains to be seen how much better off the average user will be if the traditional taxi system fully caves in – but users have been given a taste of how much better that service could be, and that’s sure to change something for the better.
The latest industry to be hit with a new digital solution threatening to make older, costlier and less convenient options redundant is real estate.
There are now two, dare I say it, Uber-esque companies operating in Australia which can sell your property for a flat fee that puts traditional pricing to shame – with potential savings up to $11,000, or even more depending on the value of your property.
Purplebricks has thus far had incredible success in the UK over the last two years, and has had its fair share of media attention since first opening its virtual doors to the Australian market last August.
buyMyplace, an ASX-listed company, launched this month with a full service offering giving vendors everything from property appraisals to price negotiations for $4595. Auctions will cost just an extra $895. The most basic DIY package starts at just below $700.
A quick look at the mechanics
In a nutshell, Purplebricks offers a tailored online platform which sellers can utilise to advertise their homes for one flat fee of $4,500.
Sellers directly correspond with potential buyers, receiving questions and offers with the ability to respond in real time.
What does that sound like to most people? Greater control. Perhaps a higher level of involvement, but Australians jump at opportunities to do-it-yourself as long as there’s savings to be made.
There are still property agents, or in the case of Purplebricks, they’re called ‘property experts’, involved in the transactions. These agents are familiar with the local housing market and are there to advise their clients just like in traditional models.
It may seem like these agents could be getting the raw end of the deal, with costs going from, for example, $15,000 to under $5,000 for the same service – however, being a digital platform with presumably less overheads, a greater portion of that fee may end up in the agent’s hands than if they worked for a traditional agency.
But that’s a question for a Purplebricks employee. All we need to assess is the pros and cons for the customer.
Who is set to benefit?
Just like Uber’s model is all about the win-win – drivers have flexibility over their hours and greater control over how much they make in a day, while users receive generally cheaper fares and the ability to assess and choose drivers – similarly, the new Uber of real estate is aiming at success through passing on benefits to all parties.
Even buyers may come to benefit, as prices could potentially be pushed that bit lower thanks to a lighter burden of fees for the seller.
With two players now operating in Australia, that too can only help customers get the best deal possible.
Industry takeover or niche market offering?
Many traditional agencies are unfazed, or at least appear it, by the new model threatening to undercut their entire business model.
Some believe operators like Purplebricks will cater only to a niche market, with a large demographic still left for existing agencies – in which case, we could see a percentage of the least competitive of those die off in the next few years as buyMyplace and Purplebricks absorb some of that market.
Alternatively, this could be the moment that changes the industry forever.
In Australia, the taxi industry is hobbling by on government-subsidised crutches, and it 100% has Uber to thank for that. Basically, your average person has now seen what they were missing out on, and there’s no going back.
In fact, the more you think about it, the more you wonder how so many of these digital disruptions weren’t developed sooner – they just make more sense.
It’s very possible the same thing is happening right now in the world of property.