Selling Homes for a Flat Fee: Purplebricks Launches in Canada

In a surprising move, British-owned online estate agent Purplebricks launched in Canada at the top of the year – contrary to previous statements made by the company.

Purplebricks acquired Canadian online real estate broker DuProprio (also trading as ComFree) in July of last year. This instantly fuelled rumors that they were looking to set up business north of the U.S. border.

Selling a home without paying commission

Like Purplebricks, DuProprio offers a similar flat-fee service – enabling owners to sell their homes without paying commission to a real estate agent.

DuProprio CEO Lukas Lhotsky appeared recently on local television wearing a Purplebricks shirt and was presented as their new Canadian CEO. During the interview, he claimed that vendors would save “tens of thousands” of dollars by using their $800 “fixed-fee” service and avoiding agent commissions.

The DuProprio service includes a listing on realtor.ca, taking photos of the property and assisting homeowners with market valuation. However, the fixed-fee service is not without additional upsells; they charge an extra $400 for viewings and $1,900 for their own negotiation services.

Homeowners can compare this to a traditional sale via a real estate agent that typically carries a commission of around five per cent.

Let’s compare the two offerings directly, under two different pricing scenarios:

Scenario #1: You’re selling a home for $300,000

• Real estate agent: A 5% commission of $1,500
• Purplebricks (basic): A flat rate of $800
• Purplebricks (with add-ons): A flat rate, plus viewings and negotiation services for $3,100

Scenario #2: You’re selling a home for $800,000

• Real estate agent: A 5% commission of $4,000
• Purplebricks (basic): A flat rate of $800
• Purplebricks (with add-ons): A flat rate, plus viewings and negotiation services for $3,100

Based on the figures above, the Purplebricks flat rate of $800 is very appealing, provided you’re willing and able to take care of all other expenses and tasks involved in the sale.

For lower-priced properties, it may be cheaper overall to sell via a traditional agent and pay a commission percentage. For higher-priced properties, it may be cheaper to use the Purplebricks model, even if you’re paying for their additional services.

Naturally, there can be many other variables to consider when selling a home. It’s best to talk to multiple parties and ask a lot of questions. This way you’ll develop a clear understanding of the process, the timelines and all of the costs involved.

Purplebricks to directly employ their own Canadian agents

During a televised tour of their Toronto headquarters, Lhotsky mentioned Purplebricks Canada would directly employ their own agents, known as “Realtors.” This differs from the U.K. model which employs agents as contractors. Lhotsky also confirmed that Canadian agents would be paid a flat-fee for each successful sale.

The company recently launched their new website, offering services to only four provinces for now – Ontario, Alberta, Manitoba, and British Columbia.

The website also promotes how consumers can save over $28,000 on a $500,000 sale by using their Realtor service. Purplebricks is projecting to sell 280 homes this year – a very small percentage of the Canadian housing market. Despite this humble forecast, many industry professionals are watching closely to see how Canadians consumers react to the “flat-fee” model.

Assistance to buy homes as well as sell

In addition to selling homes, Purplebricks is also assisting those buying new homes, with Realtors that find, identify and negotiate the sale of properties on the client’s behalf.

Currently, they are also offering a $2,000 “cash-back” bonus to people who sign up for this service.

Despite initially stating they would not operate in Canada, Purplebricks is here, and they’re looking to cement a place in the housing market. With a unique value proposition and promises of big savings for consumers, it will be interesting to see how the Purplebricks service fares over time. One thing is certain: by offering to sell a home for just $800, Purplebricks is sure to gain plenty of attention.

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