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<p><span>The Treasurer has given mortgage brokers respite on a plan to ban trailing commissions by 2020, opting instead for a 2022 review.</span></p>
<p><span><span>Mortgage Choice chief Susan Mitchell has welcomed the Government’s decision today to maintain trail commissions on new loans.</span><br><br><span>In his statement today the Treasurer, Josh Frydenberg, said abolition of trail won’t proceed in 2020 because the government is concerned about the adverse effect on competition in mortgage lending market. </span></span></p>
<p><span><span>He also conceded that abolishing trail would be “a free kick to the banks”.</span><br><br><span>The government will review trailing commissions in three years’ time, as well as the feasibility of continuing upfront commission payments. </span></span></p>
<p><span><span>The review will be conducted by the Council of Financial Regulators and the Australian Competition and Consumer Commission (ACCC).</span><br><br><span>Treasurer Frydenberg acknowledged that mortgage brokers and small lenders are “absolutely critical in the mortgage lending market”. </span></span></p>
<p class="x_MsoNormal"><span lang="EN-US">The Finance Brokers Association of Australia (FBAA) has cautiously welcomed a decision by the Federal Government to backflip on its commitment to abolish trail commissions, which was one of the recommendations of the Hayne report from the banking royal commission.</span></p>
<p class="x_MsoNormal"><span lang="EN-US">FBAA managing director Peter White said it was a step in the right direction.</span></p>
<p class="x_MsoNormal"><span lang="EN-US">“I applaud the announcement by treasurer Josh Frydenberg but it won’t end our efforts to see the correct polices in place to protect consumers from the greed of the big four banks.</span></p>
<p class="x_MsoNormal"><span lang="EN-US">“The Coalition’s announcement to keep trail commissions has been delivered in a pre-election environment so uncertainty remains about how exactly this will work after the election.”</span></p>
<p class="x_MsoNormal"><span lang="EN-US">Mr White said the announcement confirms how out of touch Commissioner Hayne is and calls into question the findings of the royal commission.</span></p>
<p class="x_MsoNormal"><span lang="EN-US">“Hayne simply didn’t get it but it’s now the case that both sides of politics are now very clear on the importance of mortgage brokers.</span></p>
<p class="x_MsoNormal"><span lang="EN-US">“Both the Coalition and Labor </span>recognise<span lang="EN-US"> that the recommendations of the royal commission would in fact hand power back to the big four banks, which is an absurd result,” White said.</span></p>
<p><span><span>“Australia’s 17,000 mortgage brokers will applaud the Government’s common sense decision to keep trail commissions," Mitchell said.</span></span></p>
<p><span><span>ASIC’s 2017 Review of Mortgage Broking Remuneration Report did not identify trail commissions as directly leading to poor consumer outcomes, nor recommend the removal of trail commissions.</span><br><br><span>“The figures speak for themselves. The latest data shows that 59.1% of home loans originate through the mortgage broking channel, yet Australian Financial Complaints Authority (AFCA) data for the month of November 2018 revealed that of 6,522 complaints against financial service providers,  only 29 related to mortgage brokers. This is less than half of one percent of reported complaints.”</span></span></p>
<p><span><span>Mortgage Choice's residential settlement figures show that in the past two years the big four banks have lost 10% of market share to smaller lenders.</span><br></span></p>
<p>AFG chief David Bailey welcomed the Government's "considered approach and urge the Labor Party to adopt this sensible policy heading into the election."</p>
<p>"It's important that our industry not be a political football heading into an election so that the 26,000 small businesses, their families and, importantly, their customers have certainty about the future of the sector," he said.</p>
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j.ballantyne1990-6AQqhLzZaK

Mortgage brokers to keep getting trailing commissions until at least 2022 under Coalition 

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<p>Purplebricks Australia chief executive Ryan Dinsdale has quit the struggling estate agency after just two-and-a-half years.</p>
<p>The departure was reportedly by "mutual agreement," Fairfax Media advised.</p>
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<p data-gtm-vis-recent-on-screen-7770372_137="424936" data-gtm-vis-first-on-screen-7770372_137="424936" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">Dinsdale (below) said he was "incredibly proud" of leading the Purplebricks brand over the past two-and-a-half years.</p>
<p>"The business has successfully disrupted the real estate industry in Australia, with over 4000 homes sold and saving sellers more than $45 million in traditional fees," he said.</p>
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<div class="cq-article-content-media section">"I felt the time was right to pursue another venture," he said.</div>
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<p>Earlier this year Purplebricks appointed of Neil Tavender to the role of chief operating officer in its struggling Australian outpost.</p>
<p>It is understood Tavender will replace him as CEO.</p>
<p>Purplebricks have advised agents Dinsdale "will leave the business to pursue new opportunities" but would support a period of transition until next March at the latest.</p>
<p>Other recent departs include chief financial officer Brad Rom who quit earlier this month to join the community healthcare group, Mable.<br><br>The departures comes after leaked documents showed that <a href="https://www.urban.com.au/news/85596-low-commission-model-under-scrutiny-as-purplebrick-defectors-leak-internal-sales-documents" target="_blank">NSW agents were departing after struggling to get vendors to sign up</a> despite the low commission policy.</p>
<p>The constant staff shuffle, and extraordinary media mismanagement, came as Purplebricks' struggled with dreadful headlines generated by aggrieved former staff claiming the startup was like a "sweatshop."</p>
<p>The non-traditional estate agency market is virtually non-existent in Australia, but Ryan Dinsdale said: “We would look to replicate our UK market share success in Australia.”</p>
<p>Dinsdale has hoped to recruit “high quality Australian estate agents with local expertise who may feel disenfranchised or disillusioned”.</p>
<p>Dinsdale did not have an estate agency background, but held various marketing roles, including being marketing director for Virgin Money Australia. He joined the British hybrid agency from CommSec.</p>
<p>“We are changing the way Australians sell real estate, giving them the best experience through incredible service and saving them thousands of dollars along the way.</p>
<p>“Purplebricks has been a huge success in the UK and we believe it is exactly what the Australian public have been waiting for,” he suggested in his early days in the post.</p>
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<p><span>The vacant role of national sales manager has now been filled by Sean Green who brings 20 years industry experience, most recently with LJ Hooker in its corporate office. Prior to this, Mr Green was with Century 21 and Raine &amp; Horne.</span></p>
<p><span>Since October, Purplebricks Australia has hired an additional 55 new agents and expect agent numbers to grow further before the end of the year.</span></p>
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Neil Tavender in as Purplebricks Australia chief executive Ryan Dinsdale departs low commisery estate agency

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<p>Purplebricks is set to amend its offering in Australia so that half of the commission fees will be payable on sale, rather than all on signup.</p>
<p>Purplebricks Global COO Neil Tavender said the changes were a natural evolution of a business.</p>
<p>They have however raised their commission again, progressively from its initial flat cost of $4500.</p>
<p>Purplebricks has sold over 4,000 homes since its launch.</p>
<p>Kenny Bruce, its co-founder, toured Australia to speak with their listing agents.</p>
<p>“For customers, our new offering reduces exposure when a home isn’t sold whilst still offering a flat fee that side-steps large com</p>
<p>The new structures sees:</p>
<p>• An all-inclusive fee of $8,800 incl. GST when selling with Purplebricks. If the property goes to auction, an additional fee of $600 incl. GST is incurred by the customer.</p>
<p>• Only half of this fee is paid on listing ($4,400 incl. GST), although every customer can choose to defer this payment for six months or until settlement.</p>
<p>• The remainder of the fee is only payable when the home is sold following settlement.</p>
<p>• Access to a best-in-class marketing package that now includes ‘premiere’ listing on realestate.com.au, the cost of which would normally be paid by the seller and range between $1000 and $4000. This is coupled with professional photography, floor-plan, for sale board and other marketing and advertising as part of the overall package.</p>
<p>As part of the changes, Purplebricks agents will have the opportunity to more than double their income per listing, receiving an additional payment on the successful closure of the sale of the home.</p>
<p>“Our agents will continue to be highly motivated to achieve strong sale results and have the bandwidth to provide the highest level of service as we expand our footprint across the nation.”</p>
<p>“An entrepreneurial franchising model has always been at the heart of our business and is what has facilitated tremendous growth for Purplebricks across the globe." Tavender said.</p>
<p>Purplebricks Australia will honour terms and conditions in all existing contracts.</p>
<p>The offering will be in implemented from 1 October.</p>
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Purplebricks evolves its offering in Australia so not all commission upfront 

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<p>An explosive commission battle between two top Toorak estate agents has gone public despite the REIV's attempt to deal with the dispute between its members on a confidential basis.</p>
<p>The battle is over the $140,000 commission entitlement following the $14 million sale of a Toorak penthouse.</p>
<p>RT Edgar agent Oliver Booth has reportedly filed the complaint against Marshall White agent Marcus Chiminello.</p>
<p>They both claim to have introduced the same undisclosed buyer.</p>
<p>The “notification of complaint” was reported by the Sunday Herald Sun.</p>
<p>Chiminello says the buyer approached him.</p>
<p>“At the end of the day I’ve done nothing untoward," he told the paper.</p>
<p>"We were reappointed to sell the property and we facilitated a deal.”</p>
<p>Booth had taken a buyer through the property four times and secured an offer in writing of $14 million, including the furniture.</p>
<p>But Chiminello sold it to the same buyer just days later.</p>
<p>The vendor authority for an exclusive agreement had reportedly been with Booth who then encountered difficulty in contracting the vendor as the Chiminello sale approached.</p>
<p>The Orchard Piper development even had celebrity US agents the Altman Brothers lending their name to the property's marketing.</p>
<p>One source said the REIV would not be happy with the disputes between members leaking out as it seems the leading agents were working on just one percent commission.</p>
<p>The $14 million sale price reported by the Herald Sun varies with the press release advisory <a href="https://www.urban.com.au/news/87886-washington-street-toorak-penthouse-sold-for-16-million-plus" target="_blank">which indicated it was $16 million plus</a>, albeit without any advisory of any property and furniture allocation.</p>
<p>"Marshall White agent Marcus Chiminello sold the penthouse of 29 Washington Street, Toorak last week in an off market sale for a price that was nearly double the previous record of $8.2 million," the national media was advised.</p>
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jchancellor-FAypfDUnLy

Battle between estate agents Oliver Booth and Marcus Chiminello goes public over $140,000 Toorak penthouse commission

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<p>Purplebricks has appointed of Neil Tavender to the role of chief operating officer in its struggling Australian outpost.</p>
<p>Tavender is a former sales director at UK-based listings portal Rightmove, before he worked as commercial property director at propertyfinder.com.</p>
<p>“Neil Tavender has been appointed to the new position of group COO of Purplebricks to support the growth of the business," a spokesperson said.</p>
<p>"Neil has a wealth of real estate knowledge, combined with many years of Australian board-level sales, marketing and digital experience."</p>
<p>Mr Tavender was granted share options worth approximately $2.5 million on his appointment.</p>
<p>His appointment followed the recent departure of New South Wales-based Brent May, its national sales director.</p>
<p>May had joined "well positioned to draw on his 25 years of real estate experience."</p>
<p>"There is no doubt in my mind that Purplebricks is the smart way to sell property," May had suggested when he was at the low commission agency.</p>
<p>Leaked documents obtained by the AFR earlier this year showed that <a href="https://www.urban.com.au/news/85596-low-commission-model-under-scrutiny-as-purplebrick-defectors-leak-internal-sales-documents" target="_blank">NSW agents were struggling to get vendors to sign up</a> despite the low commission policy.</p>
<p>Industry leader Hayden Groves says Purplebricks <a href="https://www.urban.com.au/news/83984-purplebricks-aren-t-offering-proper-agents-hayden-groves" target="_blank">aren't offering proper real estate agents.</a></p>
<p>The staff shuffle comes as Purplebricks' struggles continue to capture dreadful headlines from aggrieved former staff.</p>
<p>Its numbers have dipped to 90 from its 105 high late last year with many agents quitting because they could not make a living.<br><br>Jason van Straalen, a former agent at Purplebricks in Australia, is the latest to have claimed the hybrid model will not work in a declining market.</p>
<p>van Straalen has said that he quit after earning less than half of what he was told he would earn.</p>
<p>He has also accused Purplebricks of a bullying culture, as agents struggled to reach targets.</p>
<p>He says he worked 80-hour weeks and secured 67 listings in 13 months, but only managed to sell 20.</p>
<p>van Straalen talked to the Australian Financial Review, which ran the interview originally under the headline: “Inside the Purplebricks sweatshop: former agent accuses it of toxic culture”.</p>
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<p>He also suggested that share options promised after six months did not materialise.</p>
<p>The UK-based Property Industry EYE website has noted the Purplebricks Australian boss Ryan Dinsdale emailed his team alleging that the recent Financial Review story gave it no opportunity to respond.</p>
<p>It was something that EYE did although Purplebricks did not take them up on the invitation.</p>
<p>“You may have seen that the AFR have published another article today," Dinsdale says in his email.</p>
<p>"Despite having a right to respond to such content we were sadly not given any opportunity by the AFR and the article was printed without any balanced, factual comment from Purplebricks.</p>
<p>"We have asked the AFR what their agenda is and why we were not respectfully given the opportunity to respond to this one-sided story.</p>
<p>“In any event, what is clear to me is this article simply highlights that there are a small number of former agents who don’t share our values as a business.”</p>
<p>An earlier email, dated June, from Dinsdale referring to another Financial Review story told staff that selling more than 3,500 homes in Australia indicate the agents were "excelling – this tells us we have a long term future in this market and we are a popular proposition amongst sellers and agents."</p>
<p>“To suggest that traditional agent models are better suited to a slowing market shows a lack of understanding of how Purplebricks works,” Dinsdale added.</p>
<p>van Straalen has now set up his own fixed-fee agency JVS Real Estate.</p>
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Purplebricks lashes out at negative Australia media reporting as unhappy agents keep departing 

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<p>The Australian division of Purplebricks has reported an EBITDA loss of £11.8 million ($21.1 million), but with average revenue per listing instruction being up 22% to £3,170 it expects to reach monthly profitability within 12 months.</p>
<p>The group says it was seeing a "seachange" in consumer acceptance.</p>
<p>It has have now facilitated the sale and completion of over $2.1 bn of properties in Australia, $1.76bn of which was in the latest financial year.</p>
<p>There were 4544 listings in the financial year.</p>
<p>The loss was bigger than expected, but the group surprised with fewer agents, that they call local property experts.</p>
<p>"<span>We now expect that Australia will reach monthly profitability within 12 months," the company chairman Paul Pindar advised.</span></p>
<p>The disruptor claims to have saved Australian's over $36 million in traditional agents commission all the time <a href="https://www.urban.com.au/news/85596-low-commission-model-under-scrutiny-as-purplebrick-defectors-leak-internal-sales-documents" target="_blank">meeting critical headwinds</a> from within and long established rivals.</p>
<p><span><span>"Our business in Australia continues to grow, having only recently completed its first full year in the five key target states.   </span></span></p>
<p><span><span>"We believe we can create a strong, market leading, profitable business in Australia and will continue to invest in growing our market share," Pindar advised.</span></span></p>
<p>The disruptor reported its Australian revenues rose 285% to £13.5 million ($24.1 million) in the year<span> to April</span>.</p>
<p><span>"Whilst the markets in the UK and Australia have been and continue to be challenging for the industry, with overall transaction volume and sentiment down year on year, we have managed to gain market share, increase revenues and grow customer engagement in all three countries in which we operate," i</span>ts chief executive Michael Bruce noted. </p>
<p class="aek">"We have made the progress we expected in Australia during this financial year. </p>
<p class="aek">"Revenue has increased by 285% year on year to £13.5m ($24m) and the average revenue run rate has increased by 137%.  </p>
<p class="aek">"Average revenue per instruction has increased by 22% to £3,170 ($5680).  </p>
<p class="aek">The number of agents sat at 90 although there was a change in strategy during the year to introduce sales associates with a view to increasing the productivity of the lead agents.</p>
<p class="aek">A total of 88 sales associates have been recruited.</p>
<p class="a">"Whilst the Australian market overall is challenging for the industry there remains a big opportunity for Purplebricks to capitalise on the significant sea-change in consumer thinking, as they move away from high cost traditional estate agency to saving thousands of dollars and getting great service with Purplebricks. </p>
<p class="a">"We are investing more in advertising, technology and the advancement of our service in Australia to grow our market share," Bruce said.</p>
<p class="aek">Its establishment investment as at 30 April 2018 came to a total of £19.3m ($34.5m) invested by the group in Australia.</p>
<p class="aek">Adjusted operating costs increased from £3.9m to £6.7m (70.7%) as the scale of operations increased. </p>
<p class="aek">The loss from operating activities includes the charge of £0.6m (2017: Nil) arising from grant of share options to incentivise and retain Australian employees and agents. </p>
<p class="aek">Marketing costs increased from £3.8m to £11.4m as the business invested in growing market share. </p>
<p class="aek">"This increase of 198.4% compares favourably to the increase in revenue," the accounts noted.</p>
<p class="a">Last December the UK disruptor reported some $1.1 billion of residential real estate – around 2200 homes – had been sold in its first 14 months of operations in Australia.</p>
<p>Australian interim losses more than doubled to £5.1 million as the company r<span>amped up its marketing budget.</span></p>
<p>The company disclosed as part of its latest interim results that revenue from its Australian business surged to £6.8 million ($11.9 million) for the six months ended October 31.</p>
<p>It was up from £400,000 in the prior corresponding period, when it had only been trading for two months.</p>
<p>Its full-year revenue was forecast to hit £12 million. Its first results were announced <a href="https://www.urban.com.au/news/72420-purplebricks-reports-10-million-losses-in-australia" target="_blank">last June</a>.</p>
<p>It suggested the percentage market share in Australia as at last October was higher than UK after first anniversary.</p>
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<p><span>It had 105 local property experts across five states. </span></p>
<p><span>"We are fast building a brand, with unprompted brand awareness reaching 10%, a level which it took the UK two years to reach. </span></p>
<p><span>"Our aim is to replicate the success that Purplebricks is having in the UK," he advised.</span></p>
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<p>The five states were New South Wales, Victoria, <a href="https://www.urban.com.au/news/85863-queensland-ranks-as-purplebricks-listing-heartland" target="_blank">Queensland</a>, South Australia and Western Australia.</p>
<p><span>As at last December Purplebricks charged a flat sales fee of £2,708 ($4,500AUD) everywhere other than New South Wales where it charged £3,309 ($5,500 AUD) which includes professional photography, marketing and advertising on platforms Domain.com.au and RealEstate.com.au, as well as the Purplebricks Australia website. </span></p>
<p>Given the role of auctions in the Australian property market, Purplebricks offers an additional auction facility with a top-up fee, which includes an auctioneer and all viewings held by a local agent or their experienced viewing assistant.</p>
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Purplebricks Australia sees profitability within next year

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<p>Queensland is the hotspot for the low commission estate agency Purplebricks, according to internal documents.</p>
<p>Some 40 percent of early June's listings came from Queensland.</p>
<p>It represented 71 fresh listings.</p>
<p>There were 42 new listings in NSW and 36 in Victoria.</p>
<p>WA had 16 and SA had 11, giving a national tally of 176 fresh listings.</p>
<p>The tally covered the period from June 1 -18 this year.</p>
<p>The tally represented just 27 percent of the target listings.</p>
<p>Internal reports obtained by The Australian Financial Review also showed sales numbers totalled 125 out of a target of 423.</p>
<p>The newspaper noted more than half way through June, 23 out of 85 agents had yet to secure a single listing, while 15 agents had secured just one listing and 17 agents two listings.</p>
<p>The numbers indicate how tough it was for many agents to earn a living and why many are quitting the disruptor, according to the newspaper in its fifth hatchet job article on the low cost agency so far this month.</p>
<p>The newspaper initially lauded the disruptor in its initial post-launch coverage.</p>
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<p>Purplebricks Australia CEO Ryan Dinsdale sent an email to all staff last week telling them they should "not to be distracted by criticism from those that seek to undermine us".</p>
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<div>"Instead, have courage and take pride in the fact that we are doing something special and building great businesses together," Mr Dinsdale said.</div>
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<div>It has also faced a <a href="https://www.urban.com.au/news/83984-purplebricks-aren-t-offering-proper-agents-hayden-groves" target="_blank">sustained critical campaign</a> for real estate institute leaders who have claimed they didn't offer "proper estate agents" and <a href="https://www.urban.com.au/news/79406-reinsw-slams-low-fee-upfront-disruptive-agencies" target="_blank">didn't seek top price results</a>.</div>
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<a href="https://www.urban.com.au/news/85596-low-commission-model-under-scrutiny-as-purplebrick-defectors-leak-internal-sales-documents" target="_blank">The Purplebricks low commission model</a> is premised on Australian agents being expected to list 10 properties a month by converting 40 per cent of appraisals.</div>
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Queensland ranks as Purplebricks listing heartland

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<p>The Purplebricks low commission model - where Australian agents are expected to list 10 properties a month by converting 40 per cent of appraisals - has faced yet another hostile expose in The Australian Financial Review.</p>
<p>It was the fourth article in the past week by the paper which once lauded the Purplebricks model, which has the slogan, Full service. No commission. One fair fee: The most convenient and transparent way to sell a house.</p>
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<p data-gtm-vis-first-on-screen-7770372_137="4381" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">Purplebricks has certainly faced a exodus of its agents for various reasons.</p>
<p data-gtm-vis-first-on-screen-7770372_137="4381" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1"><a href="https://www.urban.com.au/news/79048-lizzie-buttrose-auction-result" target="_blank">Its most high profile agency listing came last December</a> with the Vaucluse offering by socialite Lizzie Buttrose through estate agent Dean Emerson who also had <a href="https://www.urban.com.au/expert-insights/buying/81681-secret-house-rules-rosebery-auction" target="_blank">the House Rules listing in Rosebery</a>.</p>
<p data-gtm-vis-first-on-screen-7770372_137="4381" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">Emerson, now at Coastline Realty, was a Puplebricks territory owner between January 2017 and April this year. His new agency profile says his net turnover in the last 18 months saw over 40 properties sold for in excess of $60 million.</p>
<p>The newspaper concluded it was getting harder for most Purplebricks' suburban agents to convince vendors to sign up, despite the commission savings.</p>
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<p>Internal sales documents obtained by The Australian Financial Review covering the first two weeks of June highlighted underperformance by its NSW agents.</p>
<p>The documents indicated that 27 NSW Purplebricks agents secured a combined 26 listings.</p>
<p>Their NSW agents were converting around 20 per cent of the 123 home appraisals they conducted over the fortnight.</p>
<p>The conversion rate was down from 28 per cent of appraisals converted during February, March and April.</p>
<p>Its top agent over the fortnight had converted four out 10 leads.</p>
<p>Among the 27 NSW agents, nine were struggling to secure a listing in early June.</p>
<p>Some six agents secured two or more listings.</p>
<p>Agents who earn $1000 per instruction – with the remaining near $5000 of the upfront fee going to Purplebricks – require a high volume of listings to make a living.</p>
<p data-gtm-vis-first-on-screen-7770372_137="4381" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">The paper reported the Purplebricks agents with a backlog of unsold listings were having their capacity to list more "turned off" by head office, preventing them from earning income.</p>
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<p>The company provides some financial assistance in these instances, but at the discretion of Purplebricks.</p>
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<div>Today Purplebricks defended the model and its culture amid claims of "toxic work environment" after current and former agents told the AFR they had been "bullied, threatened and undermined."<a href="https://www.afr.com/real-estate/residential/26-listings-for-27-agents-purplebricks-agents-struggle-to-win-new-listings-20180621-h11nzt"><br></a>
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<p data-gtm-vis-first-on-screen-7770372_137="3248" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">"Purplebricks rejects the serious allegation of a bullying culture," a Purplebricks spokesperson said after former Purplebricks Newcastle agent Steven Bashford claimed anyone who achieved success "gets chopped back".</p>
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<p data-gtm-vis-first-on-screen-7770372_137="14088" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">"It's appalling how they treat agents. Their behaviour is bullying," he said.</p>
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<div>Bashford claimed Purplebricks' head office would call his vendors to "draw out any complaints" against him. Purplebricks can claw back money from agents if a customer complained.</div>
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<p data-gtm-vis-first-on-screen-7770372_137="17091" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">Former northern Sydney agent Richard Mirosevich, who sold 41 properties in seven months after a 100 per cent conversion rate of appraisals to listings, has claimed he was fired.</p>
<p>"I was getting great results then they sacked me without notice because I was getting too big.</p>
<p>"They took over my area and replaced me with three to four other people," he said.</p>
</div>
<div>
<p>Purplebricks' spokesman rejected these allegations.</p>
<p>"We work in partnership with our agents and are committed to investing resources to support them in changing market conditions."</p>
<p>Last week, the Financial Review revealed 27 agents had left the company since March with overall numbers falling to 88 from the 105 reported late last year.</p>
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</div>
<div>
<p>Purplebricks Australia CEO Ryan Dinsdale sent an email to all staff last week telling them they should "not to be distracted by criticism from those that seek to undermine us".</p>
</div>
<div>"Instead, have courage and take pride in the fact that we are doing something special and building great businesses together," Mr Dinsdale said.</div>
<div> </div>
<div>It has also faced a <a href="https://www.urban.com.au/news/83984-purplebricks-aren-t-offering-proper-agents-hayden-groves" target="_blank">sustained critical campaign</a> for real estate institute leaders who have claimed they didn't offer "proper estate agents" and <a href="https://www.urban.com.au/news/79406-reinsw-slams-low-fee-upfront-disruptive-agencies" target="_blank">didn't seek top price results</a>.</div>
<div> </div>
<div>PRDnationwide released research claiming customers got a better result when they <a href="https://www.urban.com.au/news/68834-traditional-agents-secure-higher-prices-than-the-disruptors" target="_blank">pay the full real estate commission rates</a>.</div>
<div> </div>
<div>There was negative press when Purplebricks was <a href="https://www.urban.com.au/news/81465-purplebricks-fined-by-queensland-fair-trading-over-misleading-fees" target="_blank">fined $20,000 fine by the Queensland Office of Fair Trading</a> over misleading customers about how it charges its fixed fees in agreements with clients.</div>
<p>The newspaper claimed "broke" real estate agents were quitting the British based disrupter "in droves" as the fixed-fee agency's low-margin, high-turnover business struggles to achieve enough sales amid a slowing Australian housing market.</p>
<p data-gtm-vis-first-on-screen-7770372_137="4279" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">The Purplebricks territory owners (franchisees) and agents said the envisaged $100,000 to $180,000-a-year salaries had failed to materialise.</p>
<p>Internal sales figures show that 15 agents undertook a combined 768 home appraisals between February and April, securing 189 listings between them</p>
</div>
<div>
<p>While two of these agents have 72 instructions between them, the remaining agents have won between zero and 18 new listings each over the three-month period.</p>
<p data-gtm-vis-first-on-screen-7770372_137="13204" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">"The concept is brilliant, but the business model is wrong for Australia," said former Purplebricks Newcastle agent Steve Bashford, who quit in May.</p>
<p>"There is a big difference between what they promised us and what we achieved."</p>
<p>Other current agents and franchisees, who asked not to be named, made similar observations.</p>
</div>
<div>
<p>"There's no money in it. The business model is flawed," said a current franchisee.</p>
<p data-gtm-vis-first-on-screen-7770372_137="37228" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">"I've sold 50 properties in 18 months and I'm broke," another nameless agent who recently quit told the AFR.</p>
</div>
<div>Apart from the $1000 instruction fee, agents can earn additional fees if a customer arranges a Purplebricks home viewing or signs up for a mortgage with one of its partners.</div>
<div> </div>
<div>The Purplebricks are the only agents facing income challenges.</div>
<div> </div>
<div>The REI says the bottom 50 percent of agents nationally sell less than two properties to earn less than $30,000 annually.</div>
<div> </div>
<div>It is a far more competitive industry with NSW sales volume down 16 percent last year with agent numbers up by 20 percent.</div>
<div> </div>
<div>
<a href="https://www.urban.com.au/expert-insights/investing/60186-purplebricks-arrives-in-sydney" target="_blank">Since launching in September 2016</a>, Purplebricks has secured more than 5200 listings and sold more than 3600 homes. On selling<span> 3,500 properties its suggested it had saved home sellers over $38 million in traditional commission.</span>
</div>
<div> </div>
<div>It currently has 1500 properties for sale. Purplebricks recently raised its fees - raising the price in Victoria, for example, to $5999 from $4500. </div>
<div>
<p>Its UK headquarters reported a £5.1 million loss from its heavily marketed Australian business for the six months to the end of October 2017. </p>
</div>
<div>
<p>Purplebricks Australia CEO Ryan Dinsdale recently told the Financial Review more than 80 per cent of agents were earning a "good income".</p>
<p>"It's a new model in Australia with a new way of doing things so it won't suit everyone," Mr Dinsdale said.</p>
<p>"We are really pleased with how the business in Australia is going."</p>
<p data-gtm-vis-first-on-screen-7770372_137="47234" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">He confirmed franchisees and agents sometimes had to contribute to the cost of customer refunds because there was a "shared responsibility to provide exceptional service".</p>
<p>He also confirmed that Purplebricks had in "rare circumstances" stopped providing new appraisals to territory owners if they had a lot of unsold properties.</p>
<p>In an analyst piece in 2016 UBS's Mark Fielding and Heidi Richardson estimated that a UK Purplebricks agent needed to sell 12 times as many properties as a typical sales agent to achieve salary levels claimed by Purplebricks.</p>
<p>It has a $20 million Avoid Commissery marketing budget in Australia which has included a partnership with the renovation show House Rules on Channel Seven.  </p>
</div>
<div>
<div>
<p data-gtm-vis-first-on-screen-7770372_137="34078" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">Equities analysts at Jefferies, Anthony Codling and Sam Cullen raised concerns that the model rewards listings over sales.</p>
<p data-gtm-vis-first-on-screen-7770372_137="34078" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">Being listed in the UK, the AFR reports have generated huge interest from the UK property press with a Purplebricks spokesperson indicating the Australian agency had hired 18 agents in the last two months.</p>
<p>“The net number of agents in the field in Australia is unchanged from March, despite some churn.</p>
<p>“We are winning market share in a declining housing market.</p>
<p>“Our growth allows us to continue to recruit while many traditional operators are making substantial redundancies.”</p>
<p>The spokesperson also said that the Australian Purplebricks business was set to at least meet full-year expectations.</p>
<p>“Market expectations are for year-on-year revenue growth in Australia of 250 percent," the spokesperson advised.</p>
</div>
</div>
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Low commission model under scrutiny as Purplebricks defectors leak internal sales documents 

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<p>Lawyers acting for Victorian vendors have successfully argued in the County Court that an estate agent was not entitled to the commission payment because the Exclusive Sales Authority (ESA) form used "did not comply" with the Estate Agents Act.</p>
<p>In August 2017 the County Court of Victoria found that a Consumer Affairs approved rebate statement did not comply with the Act as it did not contain each and every word of the prescribed warning.  Last month, a year later, the Supreme Court of Victoria – Court of Appeal upheld the decision of the County Court of Victoria.</p>
<div>
<p>The case involved a Ray White St Albans agent who had unsuccessfully sued the vendors for a $385,000 commission payment following the $8.8 million sale in 2016 of a six-hectare industrial site at 382 Greens Road in Keysborough.</p>
<div>
<p>The ruling opens the possibility of claims by unhappy vendors against estate agents who used a non-compliant ESA form which were supplied by the Real Estate Institute of Victoria (REIV) where the commission has yet to be paid.</p>
<div>
<p data-gtm-vis-first-on-screen-7770372_137="3618" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">The industry body, which represents around 5000 estate agents in Victoria, sold the ESA forms as a legally binding vendor contract giving the agent the authority to sell a vendor's home and be paid commission and any other outgoings including marketing and advertising costs.</p>
<p data-gtm-vis-first-on-screen-7770372_137="3618" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1"><span>Two versions of the contract were available for agents to buy from the REIV. The longer version with the full wording of the rebate statement as stated in section 49A of the act, whereas the shorter version did not.</span></p>
<p data-gtm-vis-first-on-screen-7770372_137="3618" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">The REIV's ESA form included an altered statement on rebates that was approved by state's consumer watchdog, but it was different from the exact wording of the Estate Agents Act</p>
<p data-gtm-vis-first-on-screen-7770372_137="3618" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">The form, which was amended around six years ago, did not comply with section 49A of the Act.</p>
<p data-gtm-vis-first-on-screen-7770372_137="3618" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">The issue erupted last week on the Lexology website where lawyers at <a href="https://www.lexology.com/library/detail.aspx?g=cd8c102a-e9eb-4b79-8cf7-f787a5084ed9" target="_blank">Logie-Smith Lanyon</a> noted it was "now incumbent upon the Victorian Parliament to immediately provide a legislative solution to rectify an obvious administrative error in the Consumer Affairs forms."</p>
<p data-gtm-vis-first-on-screen-7770372_137="3618" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">They noted while a legislative solution had been mooted, it is yet to be put before the Victorian Parliament.</p>
</div>
<div>
<p>The REIV chief executive Gil King said in a statement provided to Fairfax Media that "upon being made aware of the issue late last year, the REIV took immediate steps to ensure all authorities were compliant."</p>
<p>"At this stage, the extent of the issue is not clear," Mr King noted. </p>
</div>
<p data-gtm-vis-first-on-screen-7770372_137="21424" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">It has emerged there is one case where Amy Sheggerud-Woods, a partner at Marsh &amp; Maher Lawyers, is acting for an estate agent in proceedings involving the agent's entitlement to commission.</p>
<p>"Not only will the Supreme Court decision have far-reaching consequences for real estate agents who have used the Exclusive Sales Authority forms, but also for vendors, for the REIV (which has supplied the forms to real estate agents), and perhaps for Consumer Affairs Victoria (which approved the short form rebate statement)," <a href="https://www.linkedin.com/pulse/real-estate-agents-commission-risk-victoria-amy-sheggerud-woods/" target="_blank">Ms Sheggerud-Woods wrote on LinkedIn last month.</a></p>
<p>In the Keysborough case Augustin Pty Ltd (the Respondent) owned the property at 382 Greens Road, Keysborough and in signing an exclusive sale authority, engaged Advisory Services Pty Ltd (trading as Ray White St Albans) (Applicant) for the sale of the property.</p>
<p>The Respondent sold the property however the purchaser defaulted under the contract.</p>
<p>The Respondent then engaged another agency to assist in selling the property once more, which the applicant claimed was during the period of the exclusive sale authority.</p>
<p>A dispute arose and the applicant sued the respondent for commission on both sales, totalling $385,000.</p>
<p>Lawyers ML&amp; K Legal facebooked in early May that <a href="https://www.propertyobserver.com.au/http://classic.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSCA/2018/95?stem=0&amp;synonyms=0&amp;query=st%20albans" target="_blank">the judgement</a> was "a must read for real estate agents!"</p>
<p>The Ray White estate agency was represented by R Hay QC briefed by Alderuccio Solicitors while the property owner engaged I W Upjohn briefed by Webb Korfiatis.</p>
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Commissions at risk after REIV estate agent commission form bungle 

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<p data-reactid="403">The publicly listed Perth-based<span> real estate and financial services group, The Agency Group, formerly known as Ausnet,</span> has dropped their underwriter for the proposed 550 million share issue which was to help buy a burgeoning Sydney based estate agency.</p>
<p data-reactid="403">The company announced it had dropped the underwriter, CPS Capital Group, just seven weeks after their appointment which advised "the acquisition of Top Level was firmly on track."</p>
<p data-reactid="403">The proposed raising of $10 million at 2 cents a share was to be used to assist the acquisition of Top Level Real Estate, trading under licence as the The Agency East Coast which is headed by <span data-reactid="410">Matt Lahood,</span> and other McGrath rebels, <span data-reactid="413">Ben Collier, Shad Hassen</span> and<span data-reactid="416"> Stephen Chen</span>.</p>
<p data-reactid="403">The shares were trading at 1.6 cents today, as boss Paul Niardone indicated he hoped the termination allowed for "greater scope and additional capacity to raise additional funding."</p>
<p data-reactid="403">Click here <a href="https://www.propertyobserver.com.au/images/2018/4/26/AgencyGroup1.jpg" target="_blank">to enlarge.</a></p>
<p data-reactid="403"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/4/26/AgencyGroup1.jpg" alt=""></p>
<p data-reactid="403">Attempting to become a national group, The Agency which is headed by<span data-reactid="419"> Paul Niardone, saw its shares initially </span>close down by 12 per cent at 1.5 cents.</p>
<p data-reactid="403">The Fairfax Media business gossip column, CBD published an unconfirmed suggestion The Agency principals "have had to stump up their own cash to keep the operation afloat."</p>
<p data-reactid="403">The Perth-originated Ausnet leadership have long aspired to secure the east coasters, but been unable to pull it off.</p>
<p data-reactid="403">The last official update had indicated the east coast Top Level with some 90 agents was achieving "exceptional results."</p>
<p data-reactid="403">The shareholders were told the east coast team had 380 settled sales, for the 11 month period from April 2017. </p>
<p data-reactid="403">It had "achieved exceptional results with total sales of $695 million, total commissions of $10.2 million and 380 settlements for the year up to March 2018." </p>
<p data-reactid="403">Click here <a href="https://www.propertyobserver.com.au/images/2018/4/26/Agency_Comms.jpg" target="_blank">to enlarge.</a></p>
<p data-reactid="403"><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/4/26/Agency_Comms.jpg" alt=""></p>
<p>The Agency Group utilised the <span>shell company Namibian Copper</span>, for its late 2016 ASX listing as Ausnet. <span>The company raised $5.8 million as part of a </span><span>backdoor listing</span><span> and recapitalisation with shares initially trading at 3.3 cents on its 2016 listing. They shortly after hit 4 cents after the <span>raising jointly underwritten by Patersons Securities and Transocean Securities and backed by retail finance broker Finsure Group, which took an initial 8 per cent stake in Ausnet.</span></span> </p>
<p>Click here <a href="https://www.propertyobserver.com.au/images/2018/4/26/AgencyWA.jpg" target="_blank">to enlarge.</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/4/26/AgencyWA.jpg" alt=""></p>
<p>The group has expanded mostly in WA with the SLP group now incorporated into its results.</p>
<p> Click here <a href="https://www.propertyobserver.com.au/images/2018/4/26/AgencyPerformance.jpg" target="_blank">to enlarge.</a></p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/4/26/AgencyPerformance.jpg" alt=""></p>
<p>The Agency opened the doors of its Bondi Beach office early last year, billed as a “disruptive and fast growing real estate sales and property management business.”</p>
<p>It represented an experimental break from the traditional franchise model - aiming to be a true one-stop shop offering selling agents, property management services, as well as mortgage-broking services, settlement agents and insurance brokers. The stockmarket has been told agents have been referring around 60% of all sales for financing broking.</p>
<p>But the big difference was in contrast to the traditional franchise agency model, The Agency offered lucrative commission splits for the agents.</p>
<p>Franchise agencies usually take a 50:50 split on all the agents’ sales commissions, rarely with more generous 60:40 splits in the agents’ favour.However, The Agency offered agents a starting split of 75:25 split in the agents’ favour, rising to 80:20 and 85:15 as and when higher targets were met.</p>
<p>Agents are also offered a buy-in on the property management income stream.</p>
<p>That split lured top-performing selling agents away from leading east coast franchise groups.</p>
<p>On the announcement of CPS agreeing to get The Agency's fundraising underway, Paul Niardone said CPS Capital Group had "a strong track record of fundraising success and to have them support our capital raising is a significant milestone in the advancement of this transaction.</p>
<p>“We recently undertook a roadshow to meet with, and present to, a range of Australian small cap funds, institutions, and received overwhelmingly positive feedback."</p>
<p>But is appears the group is struggling to get east coast credibility. Established in 1996, its aim has been to become the "<span lang="EN-US">most reliable and trusted real estate and </span><span lang="EN-US">financial </span><span lang="EN-US">services company in the Asia Pacific region."</span></p>
<p>Subject to successful completion of the proposed capital raising, CPS Capital Group was to receive 6% of the underwritten amount, plus 2,000,000 ordinary shares in the company.</p>
<p>(An earlier version of this article indicated the Agency had lost its underwriter. It actually terminated its underwriter.)</p>
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