Is there a crack in the bricks? Discount brokerages

Friday May 10th, 2019

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Discount brokerages have been on the GTA scene for quite some time now.  One of the biggest has been the British company Purple Bricks who stepped into the Canadian Market in January of this year by purchasing another well known company Comm Free.  The problem with discount brokerages is they offer a false sense of savings comparing the savings, on a real estate transaction at a full 5% commission.  I honestly don't remember the last time I collected a full 5% and of course it still has to be shared with the selling agent, so their claims of saving tens of thousands of dollars simply don't add up.  The other problem is their vastly discounted flat fee simply isn't sustainable in a slow market as the business model is based on volume.  Right now Purple Bricks is struggling, their publicly listed shares dropped 5% earlier this week and  the company is pulling out of Australia after only 2.5 years of operation and in the US they are scaling back their investments in marketing and other overheads.

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