“Purple Bricks” sounds too good to be true. What is the catch? – AS SEEN ON TV
DEAR TV: Purple bricks is a UK-based company. Since acquiring ComFree in Canada in 2018, they’ve been advertising their “commission free” real estate process, but it doesn’t mean that their Realtors work for free.
Traditionally, Realtors pay all upfront listing costs and are compensated only if the sale is completed successfully. In contrast, Purple Bricks charges an assortment of upfront fixed fees tied to varying levels of service — whether a home sells or not.
In order to educate myself on what Purple Bricks was offering, I signed up for one of their webinars. Right out of the gate, the presenter addressed the importance of offering a competitive commission to the buyer’s Realtor. This isn’t part of their mainstream advertising, but in the fine print on their website, it does indicate that costs “may not include remuneration paid to the buyer’s agent, if any.”
The “fixed fee of $799” offered on the website is the base price for a four month contract. Similar to the starting price of a car advertised on TV, options will increase the amount that you pay. Purple Bricks charges additional fees to arrange showings, and if you want help with that, you must also opt-in to their “offer assistance” program. This à-la-carte approach allows sellers to choose which services they think are important. I compare it to my mom’s homemade beef stew. Mom relies on a specific set of ingredients; if someone included only half of them, they would still have a stew, but the results may vary somewhat.
If you’ve hired a traditional agent previously, this won’t likely be the same level of service. Purple Bricks is a virtual office. From what I understand, they make one visit to your home and expect it to be photo ready. They don’t use professional photographers, but take the photos themselves. You are expected to write your own MLS description, host your own open houses, arrange your own showings and negotiate your own deals (unless you pay extra).
With Purple Bricks, For Sale by Owner (FSBO) and other discount and DIY real estate models, customers are sold on a perceived cost saving. They do not account for the incalculable results of a traditional business model, in which they may receive offers well beyond their expectations.
Here are some interesting statistics to mull over: in 2017, seven percent of home sales were DIY or FSBO, according to the U.S.-based National Association of Realtors (NAR). According to NAR, FSBO homes sold for an average of $200,000, while agent-assisted homes averaged $265,000.
Pro Tip: if you are considering the DIY route, read the fine print and run the numbers to be sure it is the best approach for you.