Purplebricks, an online real estate outfit from Great Britain, is landing in the US this winter. Targeting California as its launch site due to the state’s #1 ranking in transactions nationally and its total sales commissions, according to the California Association of REALTORS, of $11B annually, Purplebricks has chosen the Southern California market as its first bull’s eye.
Three years ago, the brothers Michael and Kenny Bruce created Purplebricks after much success as “traditional” real estate agents in Britain. Similar to Redfin, Purplebricks blends technology, hands-on service and low fees to entice consumers.
Purplebrick’s business plan for this hybrid, cloud based brokerage includes
• no physical offices
• “territorial exclusivity” by zip code to its “100’s of Local Real Estate Experts” drawn from “highly experienced, full time” agents
• free leads and full appointment calendar scheduling on a weekly basis
• heavy advertising spending to generate leads through distribution channels and listing portals
• all customers to pay a flat fee for instruction to avoid the industry issue of “just looking”
• a tech platform that enables sellers to approve showing and view listing performance
• low fee list-side commission that is 25% of going rate
• additional fees for services (viewing appointments, energy performance certificates, mortgage referrals, insurance, conveyance, etc.) are added as clients request those services
• a focus on double-end transactions
Eric Eckardt, a real estate tech veteran, is heading up the US expansion of Purplebrick. Already in Europe and Australia, Eckardt said, “Purplebrick will help make the (real estate) process more transparent, convenient and cost effective.” In much the same way as AirBnB in lodging and Uber in transportation, Eckardt hopes to enable the UK model of allowing buyers and sellers to negotiate directly in the US.
Purplebricks in its fledgling three years is already trading on the London Stock Exchange and has more than doubled in value since the Brexit vote last year. Its market capitalization currently stands at $1.3B.