Mauricio Umansky, the outspoken chief executive of The Agency in Beverly Hills, taunted the US CEO of Purplebricks during an Inman Connect panel Tuesday, dismissing agents working for the discount brokerage as “plumbers” unqualified to represent buyers and sellers.
“If you want to hire a plumber for the most important transaction of your life go for it,” Umansky quipped during a feisty CEO Connect session entitled “Speed Debate: Full Commissions are Dead” Tuesday morning inside Carnegie Hall in Manhattan.
Moderated by Vija Williams of Ben Kinney Companies, the back-and-forth heated up after Eric Eckardt, the US CEO of Purplebricks, predicted that, industry-wide, agent commissions would likely see “compression” in the near future — an opinion that runs counter to many real estate experts who believe discount brokerages can never fully replicate a traditional full-service experience.
Unsurprisingly, given that Purplebricks is a flat-fee company that claims to be “driving seismic change” in the real estate industry, Eckardt said consumers are more driven to find deals, more empowered by data and have the chance to be more efficient thanks to technology.
At the same time, Eckardt continued, companies like Purplebricks have leveraged technology to become more “lean and efficient” themselves. Combined with consumer trends toward greater empowerment, that means lower costs associated with selling real estate.
“And we can pass that cost savings on to the consumer,” Eckardt said.
Umansky — founder and CEO of The Agency — responded flatly to Eckardt’s claims, saying that “you get what you pay for.”
Umansky compared agents working for discount brokerages to janitors or plumbers, and said that such companies simply cannot provide the same level of service offered by traditional brokerages.
Umansky explained that he recently conducted research by having his employees call Purplebricks agents to see what the experience was like. It didn’t go well.
“I can tell you that inevitably the experience was absolutely horrendous,” he said.
But Eckardt responded by pointing to his company’s data, which indicates customers are satisfied with their Purplebricks experiences.
The two leaders did not reach a consensus Tuesday morning, but the comments underscore an ongoing debate that is currently raging within the real estate industry over what agents should, and can expect, to be paid. It’s a debate with no easy answers, and that will likely continue for the foreseeable future.
“I believe that all though people are searching for discounts,” Umansky concluded, “at the end of the day it’s all about referral business.”
Earlier this month Purplebricks announced significant changes to its business model in the United States, saying it would offer varying listing fees to homesellers by region, which it will now only charge if and when a home is successfully sold.
The change brings Purplebricks U.S. closer in line with more traditional models of the industry — its agents will only get paid when a deal closes, as opposed to the previous model when sellers paid the brokerage an upfront fee regardless of the outcome of their listing — and further away from the disruptive model it uses in the U.K., its home country.
Purplebricks came to the United States in the autumn of 2017 with the promise of a low, flat-rate listing fee and has quickly expanded to a number of new markets. In the U.S., the company’s previous universal fee for sellers was $3,600 (raised from an initial $3,200).