Yahoo Finance Purplebricks quits Australia, founder and CEO leaves
Online flat-fee real estate agent service Purplebricks is shutting down its Australian operations.
The move comes at a time of upheaval for the UK company, with founder and chief executive Michael Bruce leaving the business, immediately replaced in the hot seat by chief operating officer Vic Darvey.
The company, which matched up home sellers with agents that would work for a flat $4,500 rather than a commission, entered the Australian market 2.5 years ago with a publicity blitz, including television ads that were still running in recent months.
But unfortunately that time has coincided with a slide in Australia's real estate market, with major cities seeing prices deflate in the past 18 months.
"Market conditions have become increasingly challenging. This, combined with some execution errors, has resulted in the [Australian] business not delivering the progress the board expected," stated the company on the London Stock Exchange.
"Accordingly, the group has chosen to exit the Australian market and the business there has been put into an orderly run down with immediate effect, pending closure. The business remains committed to our current customers."
Yahoo Finance has contacted Purplebricks Australia for comment.
Locally the company employs 180 contractors and permanent staff, according to The Australian, and it is a major shirt sponsor of the NRL team Melbourne Storm.
A Storm spokesperson told Yahoo Finance that the sponsorship was for 2019 only and that the closure of the Australian arm would have no impact on funding for the team.
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Yahoo Finance columnist Stephen Koukoulas undertook research back in 2016 that showed Purplebricks could save Australians more than $5.75 billion with its flat-fee structure.
"One would expect them to severely disrupt the industry. It would not be at all surprising if the traditional real estate agents fail to react to this incursion to their business model. They may act by cutting their fees, which of course would be great news for all home sellers," he said at the time.
However, the Purplebricks model has been criticised for not encouraging agents to work in the best interests of the vendor. The AFR last year reported the company offering a cash prize to agents who convinced the most number of sellers to reduce their asking price.
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