What can Purple Bricks teach us?

Last week, Purple Bricks announced it will be departing the Australian market – and agencies across the country let out a collective cheer and a not so subtle “we told you so”.

Which got WCPT to thinking: what is it that failed here, and what can we learn?

About Purple Bricks

Purple Bricks arrived in Australia in 2016, with a promise to shake up real estate sales. Their model was highly successful in the UK, with a value proposition that spoke directly to the seller: a property can be sold for far cheaper than the existing commission rates on offer by incumbent real estate agencies (in other words, their message was this: sellers, you’re being ripped off). Purple Bricks instead offered a fixed fee model, to be paid up front by a seller at the point of listing their property – whether that property sold or not.

The business model assumed that property in Australia was almost selling itself, meaning owners were paying premiums to real estate agents for services that were not necessarily required. In an up market, when property is moving thick and fast, this is a compelling offer to a property owner. However, in a down market – like the one that faced Purple Bricks almost as soon as it landed on Australian shores – its a much tougher sell, because the properties themselves are much tougher to sell.

Purple Bricks has pointed to their aggressive growth strategy, pursued during a significant property downturn, as being at the root of their demise. But many industry players have suggested that their model would never be successful in Australia, irrelevant of the market conditions. So where does the truth lie?

Lessons Learnt

It is easy to take comfort in the failure of others, particularly when those others are our competitors. But to suggest that the failure of one business is an endorsement of another is a fallacy; a leap in logic that might help us sleep better at night, but also blinds us to the market forces that could be coming after our own businesses, right now. WCPT are not here to advocate for any one business model or agency or franchise over another – but we do take real estate success seriously, and aim to ask the tough questions in the face of any business failure. So in the spirit of continuous learning, we have pulled together some reflections:

– Real estate values are down as much as 15% nationally, meaning Purple Bricks launched directly into an almost immediately tough property market. Had they launched in 2010 and got traction and consumer endorsement as interest rates declined, could they have succeeded, and had the opportunity to evolve their established business model in line with market moves?

– There is a belief among some that real estate sales people are poorly incentivised to achieve the best possible outcome for their sellers: that instead of working for an extra 1% or 2% increase in a sale price, sales people are far better off moving more stock and moving it quickly. Now that this flaw has been identified, it is fair to assume it will be attacked again.

– In a downturn, when money has to stretch further, consumers want more flexible, creative solutions. Real estate models are evolving across the world, continuously, in order to deliver better outcomes for increasingly savvy and demanding consumers. Take Zillow in the United States as an example, which has created its own marketplace for property.

– It is worth considering that it was not the Purple Bricks model itself that failed, but the business that failed. The management team that failed. Had this model been executed by another management team within a different business, could it have been successful?

The inescapable reality is this: residential real estate is Australia’s most valuable asset class, which makes it a very attractive industry for disruption – even a small slice of that pie is worth bucket loads. If a new idea works and can be scaled, it is worth pursuing (in other words: will make people very, very rich). This means entrepreneurial brains and savvy investors alike want to sink their teeth into Australian property, and will keep coming from every angle: PEXA is a recent and highly relevant case to consider.

So at WCPT, we chose to eschew complacency and “I told you so” rhetoric. It is with a heavy heart that we bid farewell to Purple Bricks – because at the end of the day, these are agents and sales people with careers and families and bills and lives. And it is with a focused mind that we ponder who is coming next – when, where, and for what?

Want to Learn More?

These are the types of heavy-hitting questions that our next Business Strategy class will be diving into on Monday 1 July. If this is the kind of thinking that gets your brain excited, perhaps it is time to launch into your Diploma of Property?




  1. I think Purple Bricks were complacent with not only their business model, but also the way the marketed the brand. Their advertising to begin with was okay, but recently, their TV advertisements had people claiming extraordinary sales results, I don’t think consumers were buying the hype. I think we can all learn to not treat the public like fools, honesty and transparency are more important than ever.

  2. Thank you for this article and parts are a very true read and a part angle that I didn’t completely.
    What was failed to be elaborated on was the companies misleading advertising, what it has actually cost an everyday Mum and Dad seller with upfront fees that have been lost when there was no success and not to mention, no incentive for the representative to achieve the maximum price on their clients home in this challenging market.
    Sellers need to choose an agent that has a plan, works hard, markets well and actually home opens and shows buyers properties.
    When I hear the saying that “homes sell themselves”, I totally disagree; the PB model completely proved this theory to be an old wives tale…

  3. I’ve been an agent and lecturer in the industry for many years. PB we’re lucky to get away with their “no commission” ads. Most of us have agreed to fixed fees witch is the same as PB and IS a type of commission by definition. Real estate fees have been deregulated for decades in WA. Not sure how they could take a fixed fee whether the property sells or not because the Act says we don’t get paid until settlement. PB were circumventing they law in my opinion and should have been forced to shut down for it!

Submit a comment