<img height="1" width="1" src="https://www.facebook.com/tr?id=390674378043480&amp;ev=PageView &amp;noscript=1"/> The Dangers Of A Purple Brick Foundation - The Storey Team : Toronto Real Estate

The Storey Team : Toronto Real Estate

The Dangers Of A Purple Brick Foundation

12 February 2019
Cam Woolfrey

When Real Estate “Discount Selling” Services End Up Being The Wrong Choice.

Recently, there have been a barrage of commercials in between my Leafs and Raptors games. They have me feeling conflicted because on one hand, the commercials are fantastic - but on the other, they claim they're going to put me out of a job. Truthfully I'm torn.

Enter "Purplebricks."


Their ads are pretty constant on most local TV stations, (Yes I am directly linking to my competition) and it's clear they are making an effort to be a major player in the Canadian Real Estate market. Purplebricks.ca (Really, go ahead and look, you won't want to use them at the end of this) are the latest real estate phenomenon to claim that they will put an end to “useless” real estate commissions.

So as an active member of the Real Estate community, I tried to take an objective look at whether or not I should be looking for a new job. 


“End the Commissery”


As I mentioned before, their ads are fantastic. They have commercials that grab your attention right away and promise that you’ll get the same service you should expect from a realtor – all for one low fixed rate starting at $779.00.

Seems like a no brainer, right?


As often happens in life, when something looks too good to be true, it often is; so I’d like to pull back the curtains a bit on this company. Don’t get me wrong, there are certain instances where using a company like "Purplebricks" makes sense. For example, if you have experience of 6/7 of :  Marketing, Real Estate Law, Staging and Design, Negotiating, Economics, local market trends, and have a decent understanding of how local policy shapes a city…. you could probably benefit from low commission and being incredibly inconvenienced in your daily life.

However, in almost every other instance, It’s a very easy case to make that; using the “More Expensive Option” (a traditional realtor), actually nets you more money at the end of the transaction. Given that no up-front costs are undertaken until closing, making sure you NET the most money should be everyone’s #1 priority!

Let’s look at three scenarios:

- A Regular Real Estate Experience
- A PurpleBricks Experience
- A StoreyTeam Experience 


There are two main reasons that even a regular real estate experience is likely a better option than Purplebricks:

One, because of the structure behind almost all discount brokerages, and

Two, because of the incentives for both parties relating to service involved in a real estate transaction.

 It’s an important decision. You want to be working with the “Best of the Best”



I think we can all agree that if you’re good at your job, you want to be paid to your highest potential. I think we can also agree, that up until recently the standard of knowledge and experience required to get your real estate licence in Ontario was a bit of a joke. As a result, we have over 55,000 licenced realtors in the GTA today. 10% of those agents (the best of the best) do 90% of the business. These are truths.

Now, consider that at 2.5% - the industry standard for the listing side of real estate commissions – a $1,000,000 transaction will result in $25,000 in listing commissions. After we account for all necessary brokerage/listing expenses, combined with annual memberships, services, closing gifts and fees – you could conservatively assume that a realtor would take home $15,000 out of that transaction. Not bad! Now assume that to be considered an “experienced realtor” – you we be selling at least one home per month. Again, pretty conservative.

Even if all you sell are entry level condos you’re still going to NET around $100,000 annually.

PurpleBricks offers a starting salary of +/-$40,000 + commission and incentives. After speaking with a couple of their agents, and comparing with UK and US markets (where they already exist) for the purposes of this discussion, the average agent at that company makes about $67,000 per year.

Just looking at these rough numbers we can pretty safely assume that any agent with experience and success in real estate would choose the solo route because they will simply make way more money. Unless someone is selling themselves completely short, if you want to work with an agent that will be providing “Best In Class” service, it is very unlikely that PurpleBricks is going to deliver.

Quality Over Quantity

 

For a company like PurpleBricks to survive, they absolutely need to run on volume (doing a TON of deals). Professional photography is +/-$150 alone per session for a bottom tier photography package. So now add the company’s overhead in terms of salaries, materials, advertising budget, the cost of their offices, etc… they need to absolutely PUMP out deals if they’re only charging a fraction of what the competition does. What does this say about the quality of service that each individual agent is going to be able to provide to their clients?

If a traditional real estate agent is able to make the same amount of money (or more) with 1/3 of the clients then theoretically they should be able to devote 300% more time to those clients! This means more time for career development, research, due-diligence, speaking to other agents on your clients behalf, and making sure that their every needs are taken care of (within reason). It means that nothing should ever fall through the cracks.  I would even go as far as arguing that being overloaded with listings and deals would mean that a salaried employee would be motivated to “Get the Job Done” rather than make sure that their clients best interest are being prioritized.

Lastly, I want to talk about how our specialized team absolutely blows a company like this out of the water. This may sound bias, and it definitely is; but I can honestly say I believe it to be true .It’s the reason we have been successful and It’s also the #1 way you can give yourself the best return on investment for any property that you buy or sell.

Simply put, we are experts at buying and selling property. We partner with the best, and we study to know the most.

The Storey Team Touch

 

As mentioned previously, with the Purplebricks package you’re basically only getting the following:

- Professional Photography
- MLS Listing (Unless you pay a fee you have to do the showings yourself)
- A Snazzy sign
- A Local Expert

When you list with the Storey Team you get (for no additional cost):

- Professional Photography (upgraded package)
- MLS Listing
- A Snazzier Sign
- Floor Plans
- Listing Video
- Targeted Electronic Marketing Plan
- “Coming Soon”/ ”Just Listed” Hard Mail-outs to a strategically targeted area
-  Staging***
- A Dedicated team filled with local experts who are consistently quoted in Toronto media and focused specifically on you

The difference is pretty obvious.

Not only that, but something like Staging, which costs (usually at a minimum) $2,500 has been repeatedly proven in most cases to bring anywhere from 2-15% more to the selling price of a home. Let me repeat that:


Staging a home can get you anywhere from 2-15% more to the selling price of that same home.



That’s enough for me to stop writing right now, but when you add in all the other factors that I mentioned above it’s almost always true that in using The Storey Team, you’re going to get;

- Better Service
- A Less Stressful Experience
- A higher “Take Home” (Net) price on your home
- A closing gift and someone who you can rely on for advice and conversation on all things real estate for years to come

People are entitled to their own opinion, but with all of these factors existing it doesn’t really seem like that much of a decision to me. I wouldn’t even remotely consider a discount brokerage.

I always believe that there is a space for innovation in any industry. However, when a company disrupts my profession I believe it’s my duty to give it the highest level of scrutiny, selfishly, to make sure I’m not backing the wrong horse! I can say that without a doubt I will not be joining the “Purple Brick Army” any time soon, and I would recommend anyone looking to buy or sell their take the same approach. I really didn't mean for this to become an AD for our services but...They speak for themselves!!!!