The risk of low-cost fixed commissions

UK-based Purplebricks, founded in 2012, had a low commission promise, previously valued at £1.4 billion, but was sold for £1 on 16 May 2023.

Purplebricks disrupted the traditional estate agency market by offering low-cost fixed fees to sellers and operating exclusively online, thereby reducing costly physical branches.

However, the company’s shares have fallen significantly, resulting in a current valuation of approximately £4m. News of the sale has caused a 46 per cent drop in the share price to 0.8p, compared to its peak of over 500p per share in 2017.

Over time, sellers realised that choosing the cheapest agent might not produce the best results because it meant selling their home for thousands less.

They recognised the importance of effective marketing and broad exposure of their property across multiple platforms, evidently reaching a greater number of potential buyers and engaging with experienced sales agents in a professional environment to maximise their income. The sale of Purplebricks is dependent on a shareholder vote.

The risk of low fixed fees promised by some agencies, for example, who work on commissions of 2.5%, sometimes results in less exposure for your property.

Consequently, instead of being a sure shot, it can result in shooting yourself in the foot.

If you want to sell a property, trust the quality and who really works for you.

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The Guardian, Sky News and Financial Times.