13 MAY 2019 | Daily Top Story: Purplebricks’ closure in Australia shocked its own employees

Agents at online real estate outfit Purplebricks say they were shocked by the company’s announcement it would quit the Australian market – a move they found out about at the last minute.

The British-founded company said late on Tuesday it was unable to make progress in a challenging market, had expanded too rapidly and would wind up local operations.

One agent, who wished to remain anonymous for fear of losing clients, only joined the company at the end of last year.

“Everyone feels pretty devastated and drained. A few people who don’t have mortgages and are not tied up financially, they took it more lightly,” the NSW-based agent said. “I’m not in a financial position to take a break from work. I’ve got two mortgages and have no rental returns. I feel depressed.”

Purplebricks said it was required to make its global announcement and the one to its agents simultaneously because of its disclosure obligations as a listed company.

Another agent, who also wished to remain anonymous, was devastated by the news after they joined the company three months ago.

“We didn’t know anything about that so it was a shock for us. I heard about it from the news,” the NSW-based agent said. “We’re just wrapping up. We’re cancelling appraisals … some of my colleagues have 15 listings [though].”

Both agents said they had been overwhelmed by job offers by competing agencies.

Cain Turton had been with Purplebricks in Queensland since its inception in 2017. He said it had been a great company under good management until changes were introduced last October.

At that time, head office installed new managers and a new fee structure in a bid to boost profits for shareholders who were demanding more, he said.

“People were put in control who believed in nothing other than micromanagement,” Mr Turton said. “I’m a contractor, I only get paid when I work. But they were trying to bring in a ridiculous amount of management, working us for 14-hour days.”

Mr Turton said the changes led to an exodus of top-performing agents, which then left the company short-handed.

“There was not an agent who wasn’t carrying a minimum of 12 properties, some of them were carrying 24 properties,” he said. “They hastily changed too much and threw out all the agents they had.”

A Purplebricks spokesman said after significant consultation with employees and agents, the company had implemented a new model which had showed promising signs but it was not enough to stay open.

The company advertised 11 real estate agent positions between April and last Thursday.

The spokesman said the company had remained committed to the Australian market up until the decision was made by the board that its operations were no longer viable.

Purplebricks’ arrival in Australia was met with hostility and skepticism from more traditional real estate agencies but local management had remained bullish about the company’s prospects.

Last year it was the subject of negative reports about its agents’ fixed feesallegations of pressuring vendors to lower their asking prices and of a toxic culture within the business. Its share price crashed to a two-year low.

A Victorian-based Purplebricks agent, who also requested anonymity, said everyone was shocked but a flurry of job offers from competitors was not surprising.

“People were so nasty, now they’re all flocking, trying to pick up the pieces,” the agent said. “We did a great job with Purplebricks. I worked with them from the start.”

The agent said they would not have continued to work for Purplebricks if all the negative reports had been true. “That was all bullshit. That was all other agents being nasty because they didn’t appreciate us taking their business.”

University of Sydney Business School associate professor Jamie Alcock said it was unfortunate the company had folded in Australia.

“I don’t think it was bound to fail, it was a market ripe for disruption,” Mr Alcock said. “The [real estate agent] commissions in Australia are very high by international standards.

“There is a lot of money to be made. It’s not a hugely complex task to sell residential property; a lot of it could theoretically be disrupted through some technological revolution or a new business model.

“When you see large fees and there are no huge technical skills or qualifications required, it’s disruptable.”

Former agents have been more scathing of the company, alleging its cut-price model was unsustainable and its demise inevitable.

A former NSW-based agent said the company’s “churn and burn” model treated people like a commodity and the company was simply “commission collectors”.

“Purplebricks’ corporate model didn’t let agents take care of their buyers and vendors,” the agent said. “In this turning market, you need to hold the purchasers and vendors by the hand and lead them through their sales and purchase process.

“It’s physically impossible to deal with multiple vendors, huge volumes and do the correct service by the buyers and vendors.”

Source: https://www.domain.com.au/news/purplebricks-closure-in-australia-shocked-its-own-employees-835728/?utm_campaign=strap-masthead&utm_source=smh&utm_medium=link&utm_content=pos5&ref=pos1

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