Purplebricks changing U.S. business model

To make money with that commission structure you would absolutely have to dominate your market. What I've found with some of my competition, the quality of the agents handling the transactions is lacking. If an agents compensation is $50,000 a year, you're just not going to be getting the best and the brightest or the most motivated (I'm referring to NYC).

The New York market demands a highly competent agent/broker.

Keith Burkhardt
TBG

Keith,
From what I understand the average Purplebricks agent in California earns a shade over $100,000/yr (under the old fee structure). I assume they are not going to adjust the agent's split downwards with the new fee structure so I am also assuming that agents will be making more now. I am fairly certain that is substantially higher than what the average agent in NY earns.

I don't dispute that you have found the competency of some of your competition lacking, but I have to say the same thing about a non-inconsequential amount of the agents at "full commission" firms.

Per the article: "Currently fees range from $4,950 in Las Vegas to $5,950 in Queens and $8,950 in Manhattan."

That sounds insanely expensive, even if they now ask for that flat fee at closing, vs upfront.

Just saying, there are a lot of better priced options out there...do your research!

That means if you're selling a $895,000 apartment you'd be paying 1% in commission, not including the 2.5% they require you to pay to buyers' agents.

And if they find the direct buyer, they charge the flat fee plus the 2.5% buyer fee. There's no discount for a direct buyer.

Pretty pricey offering to be honest ..

Interesting color, if that's the case wouldn't you say the advertising is a bit ambiguous? It's not really $8,950 flat fee, but it's actually $8,950 flat fee plus 2.5% of sale price, plus the $8,950 is payable whether you successfully sell or not. Am I right?

Honestly, I understand why they changed the model. Most people would not be keen to pay thousands upfront with no guarantee of success, but then have to pay 2.5% upon closing regardless of whether it was a direct or represented buyer.

Also, there are options for sellers in NYC. I know that Hauseit for example offers a full service listing option for 1% commission, and also an Agent Assisted FSBO (i.e. flat fee MLS) listing for $349 as of this writing.

Redfin I believe also operates in NY, or at least Westchester. They have a 1.5% to 1% minimum, depending on which state you're in. I think there's also a $5,000 minimum commission they must receive for NY State.

So if one of the "top agents" Hausit refers you to gets the listing and then another agent in the same firm sells it, what commission does the seller pay?

30, I'm surprised the average purplebricks agent is making a 100K a year in California.

Redfin has greatly reduced there discounts as they've tried to scale. And of course everyone forgets the 2.5% to the buyer agent.

We've been successful with a very straightforward model for both buyers and sellers. For sellers we offer a full-service brokerage model max commission 3.75%. You can look at our website for a list of recently listed and sold properties. It's a difficult model to scale though, as I believe a great deal of our success comes from the high level of customer service we provide.

Keith Burkhardt
TBG

Keith,
That's why you have wonder what's really going on with Hausit. What do they supposedly collect? A referral fee on 1%?

Looks like they're struggling based on an article in the real deal. An article that they're reassessing their Australian and US business operations.

https://www.ft.com/content/ff6c9232-7311-11e9-bbfb-5c68069fbd15

Although I do think to some extent "the writing is on the wall" WRT traditional Real Estate brokerage services having to undergo some rather large change in the relatively near term.

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