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Purplebricks changes tactics in US, takes on traditional fee structure

Fixed-fee agency Purplebricks has announced a change to its US business model, switching to a varied listing fee structure which will only be charged when a home is sold.

The new approach for the network will launch this week and aligns the business with a more traditional agency model.

“These changes have been informed by customer and agent feedback and are designed to drive increased market penetration and support continued growth,” Eric Eckardt, US CEO Purplebricks, said in a statement.

“Our customers enjoy even greater peace of mind while still paying well below the national average commission of five to six per cent, and our agents benefit from more flexibility to build their businesses.”

The company has been in the US market since 2018, initially entering with a flat-rate listing fee of US$3,200, later upping the price to US$3,600. The agency now allows consumers to search the website to find the fees in their area.

The agency launched initially in the UK, where they still offer the fixed-fee business model, on the platform of doing things differently and ‘disrupting’ the traditional sales model. This is the same structure they launched in Australia.

In the UK the agency currently charges the full fee upfront, while they changed their Australian fee model in 2018 and currently request half the fee upfront and half upon sale.

As of the last report, Purplebricks has 140 agents in the US across seven states.

The US market has proven to be a tough one for the agency to break into. Their expenses in the first eight months of business were more than double those in the first eight months of business in Australia, where the network is still operating at a loss.

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One Comment

  1. Purple bricks model in Australia is not sustainable as a the small fixed fees is not enough to cover many hidden tasks and costs involved in selling a house. The USA is clearly in sink or swim mode deciding to survive rather than smash the industry.

    It takes more than deep discounting to differentiate and ” disrupt” in the market, pure market economics will attract the type of agent typically earning a low commission any way, probably under achievers in the industry.

    This being the case they may well sell the property for LESS than Optimal value , a huge hidden cost if the sale price is significantly lower than that of a “commission Motivated GUN AGENT”, then has the vendor really saved money or ACTUALLY lost money in a lower sale price,

    I am all for disruption but discounting is the most naïve imposter of innovation now and in the past, lets see some real ground breaking innovation??

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