Purplebricks is backtracking on its disruptive brokerage model
The brokerage will still charge a flat fee but it will vary by market
Discount brokerage Purplebricks is taking a more traditional approach in the U.S.
The company is changing its business model to offer sellers varying listing fees, which are only charged if and when a home is sold, Inman reported. The modified approach, which launches Tuesday, aligns the Purplebricks more with traditional business models, in which agents are paid when a deal closes.
“These changes have been informed by customer and agent feedback and are designed to drive increased market penetration and support continued growth,” Eric Eckardt, the U.S. CEO of Purplebricks, said in a statement. “Our customers enjoy even greater peace of mind while still paying well below the national average commission of 5 to 6 percent, and our agents benefit from more flexibility to build their businesses.”
Purplebricks entered the U.S. market in 2018, with the flat-rate listing fee of $3,200 — later increased to $3,600. Now, consumers can search on the website to see what the fee is in their ZIP code. Currently fees range from $4,950 in Las Vegas to $5,950 in Queens and $8,950 in Manhattan.
“It’s interesting because you’re taking this really big overseas disruptor — their business in the U.K. has been built from the ground up to be radically different from the status quo,” real estate advisor Mike DelPrete told Inman. “It’s interesting seeing them come over here to the U.S. and they slowly pivot back to the status quo here.”
In the U.K., the brokerage still charges the fee upfront. And in Australia, the company raised fees and charges sellers half of the fee upfront and the other half when the deal closes.
When the company reported results for the first half of 2018, it said the brokerage had 140 agents in the U.S. and operates in seven states. Purplebricks also said its “footprint represents more than 20 percent of the total U.S. addressable residential existing resale market.”
But the pivot comes has real estate companies’ shares have struggled. Last year, Purplebricks and fellow discount brokerage Redfin took a hit thanks to the broader housing market. And Purplebricks’ entrance to the U.S. proved to be pricey: The company’s expenses for the first eight months in the U.S. were more than double that of the first eight months in Australia. Both brokerages have focused on rapidly increasing market share. [Inman] — Meenal Vamburkar