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Strewth! Leading Oz trade body clashes with Purplebricks over advertising claims

Western Australian institute claims hybrid agency's advertising is "false" and "misleading", but Purplebricks has hit back.

Nigel Lewis

Purplebricks has been called out by one of Australia’s leading industry bodies, which believes the hybrid agent’s advertising is “false” and “misleading”.

The comments were made by Hayden Groves (pictured, below), the president of Real Estate Institute of Western Australia (REIWA), who has also called for a government investigation into Purplebricks.

He says its advertising implies that the agency completes all the work of ‘real’ estate agents, but without the commission.

Western Australia and its capital Perth is the country’s largest state and is where Purplebricks set up shop two years ago.

Hybrid model

But like many other property markets elsewhere including in the US, UK and other parts of Australia, its hybrid model has been ruffling industry feathers.

“What we were seeing is that Purplebricks has been advertising for a long time comparing themselves with regular real estate agents [but] the reality is quite different,” Groves told local paper WA Today.

“I think that 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 are not acting like a professional agent should be doing in terms of seeing the transaction through to settlement, ensuring they’re getting the best price for their client and ensuring that they are promoting the property.

“They’re advertising [that] they’re proper agents and they’re doing everything else that a proper agent does. It’s not the same model, it’s as simple as that.”

REIWA has also made other complaints about Purplebricks, many of which will be familiar territory for UK agents.

Up-front fees

These include that the company’s ‘local experts’ are motivated to get listings, not sell properties, and that consumers pay up front for their service, not after a sale.

Purplebricks chief executive in Australia Ryan Dinsdale (pictured) said he didn’t agree with REIWA and that it was “an association funded by traditional real estate agents and it is understandable that they are nervous about the introduction of new competition”, he says.

“We believe there is room for all types of models and we are here to simply offer choice to consumers. Australians are starting to question why they pay tens of thousands of dollars in commission when they sell their homes.”

REIWA says it has approached the country’s regulatory body, the Department of Mines, Industry Regulation and Safety, to request an investigation into Purplebricks.

 

June 13, 2018

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