UK brokerage Purplebricks on the hot seat for home-sale claims

Jefferies analyst says company’s figures could not be duplicated

(Credit: Pexels, Pixabay)
(Credit: Pexels, Pixabay)

Purplebricks, a London-based discount brokerage that has quickly expanded into Southern California, is now fighting claims it sells far fewer homes than advertised.

The three-year-old company, which opened a Los Angeles office in the fall after raising $60 million from investors, offers a low flat fee to clients, and claims it has sold more than three-quarters of homes listed.

But a Jefferies analyst, in a recent research report, put that figure at closer to 50 percent, “near the middle of the pack of its study of 7,000 agents,” according to a BBC report, quoting his research.

Sign Up for the undefined Newsletter

The flat fee that Purplebricks charges can save home sellers thousands of dollars, the company said, compared to other brokerages that charge a portion of the home’s sale price. It uses a combination of online and local agents.

But the company, which as of December had a market cap of $1.32 billion, doesn’t disclose its data on home sales. The Jefferies report cautioned investors that the rapidly expanding brokerage did not have a proven business model, and its home-sale success could not be proven, according to BBC.

The company responded in a statement to the news outlet, saying it “firmly refutes the criticism in the research note of its revenue recognition policy” and stands behind its audited results.

A Purplebricks representative did not immediately respond to The Real Deal for comment. [BBC] — Alexi Friedman