Purplebricks may be struggling to get over 5% market share in the UK and have failed to break into the US and Australia, but its German venture could prove the final vindication of its hybrid agency model.
This week the German parliament passed legislation requiring both buyers and sellers to split selling agents’ fees between them.
This is designed to encourage greater competition among agents on fees, dropping a major bombshell on the country’s property industry.
Until now German estate agents have charged up to 7.4%, helping make moving home in Germany very expensive for vendors.
A €300,000 home usually attracts fees of between €18,000 and €21,420 depending on the agent.
The new law has been prompted, in part, by the rise in cut-price online-only and hybrid agencies and in particular, Homeday.
Its majority shareholders are Purplebricks and German media giant Axel Springer, which between them have invested some €40 million in its operation.
Using a model almost identical to Purplebricks’, Homeday entered the market in 2014 with a flat 3.9% sales fee, significantly undercutting traditional agents.
Homeday’s co-founder and CEO Steffen Wicker (pictured above, middle) told German trade website Refire: “We’re expecting that in the medium term there’ll be more competition in the market, which will benefit both buyers and sellers.
“That’s long overdue, given the high additional purchase costs associated with property buying in Germany. We’re expecting commissions over the coming two years to fall by up to 30%.”
Homeday could do with the boost; it lists approximately 600 properties for sale in Germany, compared to the 4,000 or so being sold by the country’s biggest agent, Engel and & Volkers, and has 200 brokers and 200 employees.