Purple Bricks Found Out

Disclaimer: These comments are the writer’s own and do not necessarily reflect the current opinions and policies of the Real Estate Institute of Western Australia.

I have used this column before to highlight the risks to the community of using Purple Bricks and other “pseudo agent” models when dealing in real estate. Back then I claimed that Purple Bricks and groups like them are not “proper agents” like their TV ads claim.

I pointed out that “proper agents” are incentivised through the payment of a commission at settlement which ensures they work for their client from beginning to end to procure the best result possible. That is our responsibility by law. Appropriately, an agent that fails to complete their task doesn’t get paid. Comparatively, Purple Bricks charge no commissions but incentivises their agents to list your property for about $4500 (including advertising), then effectively you’re on your own unless you pay for “extras”.

Well, it turns out that Purple Bricks has fallen foul of the Office of Fair Trading (OFT) in Queensland for alleged breaches of the Australian Consumer Law and Property Occupations Act (Qld 2004) and copped a $20,000 fine.

Queensland’s regulator claim consumers were misled by Purple Bricks about additional services offered by them, despite the agency advertising ‘low, fixed fees’ for their services when selling property. Purple Bricks also failed to fulfil some of its regulatory obligations around properly accounting for funds held in trust and some other technicalities that “proper agents” need to comply with.

Apparently, the OFT received several complaints from consumers alleging false and misleading representations from Purple Bricks regarding their fees, particularly that the fixed fees were payable regardless of whether a property was sold, or if their services were cancelled. In the UK, half a dozen Purple Bricks adverts have been banned in the last eighteen months by the country’s Advertising Standards Authority, mainly for misleading consumers about their fees.

I stand by my opinion that Purple Bricks are not behaving like Real Estate Agents. They are not properly negotiating the sale on behalf of the seller, taking on the risks nor managing the sale through to settlement because there’s no incentive for them to do so. They’re not using REIWA and ACCC approved contract documents either and if you want to use your own settlement agent, you’re forced to pay extra. That’s just weird.

Hopefully, other regulators around the country will take notice of Purple Bricks’ behaviour in dealing with consumers and follow Queensland’s lead.

by Hayden Groves
REIWA President
REIA Deputy President

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