NEWSFLASH: Purplebricks launches audacious £50m bid to expand into America

Online agent Purplebricks this evening launched an audacious two-hour time slot for investors to pile £50m into its next expansion – into the USA.

In a statement to the stock market, three minutes before 5pm today, Purplebricks said it would be launching a State by State roll-out in America.

The money it hopes to have raised in such a short time this evening will be used to recruit and train Local Property Experts in the US, market the brand to consumers, and finalise the recruitment of a management team in America.

More news as we get it – and the full story, as you would expect, in tomorrow morning’s EYE.

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35 Comments

  1. Mark Walker

    Investors??????

     

    Hahahahahahahahahahhahahaaaaaaaaaaaaaaaaaa.

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  2. MrC83

    US already facilitate For Sale By Owner…

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  3. Hillofwad71

    Amazing the placing is not even showing any discount  from the SP .Certainly got to hand it  to them  large cojones

    This is the one thats going to stop the juggernaut firmly  in its tracks . £50m wont go far Death Valley is more than  likely  the destination as the graveyard is failed with UK rollouts in the States   Havent even really conquered Shard  End yet  let alone San Francisco

     

    They are going to need a lot of luck

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  4. ringi

    Given that sales agents often charge 6% or more in the USA, I think they may find the USA easier then the UK.

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    1. SLoftus52

      I was thinking just that.  Compared to the UK where commissions are already rock bottom, in the US realtors charge much much more.

      Where I work we charge 8%, in Mexico, working with Americans and they have no issue with the rates at all.  There is much more involved here particularly given you need to be bi-lingual and it is a more complex drawn out process, so you work hard for the money, but Purple Bricks could do well in the US because of their fee based model.

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  5. The Outsider

    you don’t wanna be holding the chips when this all falls apart!

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  6. Hillofwad71

    Ringi    Normally the fee is split beween the buyers and sellers agents Totaly different system  If Bricks think they can waltz in to the good old U S of A and turn the whole game upside down they will have a big fight on their hands

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  7. PropExpertWM

    OK investors … here’s my pitch: “I’m making huge losses in the UK, having spent millions of pounds of your money and I expanded into Australia deepening these loses, can I have £50m to go to America please?”

    How is this even possible? … are these investors stupid

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    1. 1stTimeBuyer

      Most rapidly growing businesses loose money in the first few years.  Just look at Zoopla.  Twitter have never made money, and next snap chat?

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  8. RedBryan96

    I was working at Foxtons when they invested in YHD with a similar model albeit the tech has advanced considerably since then. Be interesting to see how this plays out.

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  9. Trevor Mealham

    America is a very different property market based on sharing access to listings to cobroker more buyers in.

    If PB reps pitch ‘cheap’ good luck as the Realtors will put up the garlic and crosses.

    Realtors heart and soul is the 770 MLSs where putting in shared listings means you get to offer others and earn a split of the cobroker fee.

    PB agents will look stupid having 6-12 listings for sale, almost FSBO whilst all the traditional Realtors have 3-4,000 local listings, thus 99.9% of the time allow better buyer to seller property matches.

    Cheap has been tried and DOESN’T work in the USA

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    1. Typhoon

      And we should not be letting it happen here Trevor.

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  10. surrey1

    I always got the impression the role of an agent/realtor and accompanying customer service, was valued more highly hence the qualification, licensing and higher fee. Didn’t seem the approach of paying to do it yourself so likely to take traction.

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  11. IndAgent

    Just like a kid that takes a bite of if all the bits of fruit in the bowl, yet never finishes anything.

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  12. yawn

    If Oasis couldn’t crack America then the chuckle brothers stand no chance

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  13. RAL

    The Americans at least understand the value and benefits of an agent for both buying and selling… Knowledge and negotiation skill, this PB blag will fall flat on its face

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    1. Trevor Mealham

      @ RAL – The main agent/Realtors brokerage will typically charge 6% and enter the listing in the MLS where there can be upto 85,000 Realtor sub agents (the two biggest being CRMLS and TREND MLS which have 80,000 to 85,000 agents each). Any sub agent can introduce applicant buyers and earn 3% from the deal.

      Research shows Realtor brokered deals can achieve 10% to 20% higher than budget or FSBO deals.

      Simply cobrokerage is superior to the UK lone agent model at 1% fees and below.

      Co brokerage is made poss via a different multidirectuonal data schema. RM, Z and UK portals run on an inferior single directional schema.

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      1. RAL

        Thanks for the facts you seem to know your stuff …It’s really all about getting paid properly for the work we do whatever the system…

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        1. Trevor Mealham

          Thanks RAL. Yes ive studied the US market for 7-8 years.

          Buddy Rob Larson who I talk to weekly is the Chief Information Officer at CRMLS the biggest MLS in America. CRMLS is about twice the size of RM and Z put together

          The UK runs under the RM schema which just takes agents data from their CMS to their website and portals.

          The USA runs on a superior multi directional ‘Agent 2 Agent’ RESO schema.

          Portals here dont want agents colloaborating. The Yanks on the other hand encourage B2B/Agent 2 Agent.

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  14. ddmoore08

    Great story.

    If any of you high st cowboys had a notion about the US market you would know about the success of Redfin and Compass. Although not fixed fee they are 50% cheaper than the ‘tradional’ agents. They are tech first shops. Compass born in 2014 – valued at a billion +

    You all should stop laughing and at the very least hedge your own position and invest in PB.

    If you had done so before – you would be laughing to the bank now.

     

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    1. Trevor Mealham

      @ddmoore08

      The American MLS data structure upgraded Jan 2017 for all 1.2m real estate agents over 770 MLS’s.

      My good friend Rob Larson led the team of 15 coders. It was the biggest change nationally to MLS in 10/15 years. Rob is over with me in June/July this year.

      But the flaw for PB is that the US MLS controls the whole market and expects agents if accessing others stock to also put their stock in at 50/50 splits based on 6% take on’s.

      Those who cut up other agents or don’t give back soon fall out with other agents and as such blocks access to the majority of local listings.

      Investing into PB USA would be worse than investing in ice cubes for the Eskimos

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      1. Trevor Mealham

        **Sorry meant data structure upgraded Jan 2016

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  15. proagent54

    The US market is very different to that of the UK (and AUS to be fair), asking for £50m is an insult quite frankly. Investors see our industry as an easy return, anyone who has done the job for as long as I have know that it is not just about cheap fees or big advertising. This will fail and anyone who has put money in WILL lose out

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  16. NickTurner

    Don’t you just love the expression ”be used to recruit and train Local Property Experts”

    To become a property expert takes years………………….. 

     

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    1. ddmoore08

      So what did you do for the first few years working as an agent? Shadow day in day out?

      A smart organised person with the right tools and wifi can become a property expert anywhere.

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  17. Philosopher2467

    You can’t blame them for making the most of the momentum they have in the eyes of investors looking for the next ‘big thing’. Strike while the iron / you’re hot. It will be a big surprise to see it become a medium/long term sound investment. Very ‘last minute dot com’ in my opiinon. Nice little earner for the instigators though possibly?

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  18. RAL

    I’m thinking of taking the PB Russian business opportunity …. Any advice please…

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    1. Philosopher2467

      Bullet proof vest perhaps? Kalashnikov also?

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    2. 1stTimeBuyer

      Keep cash back for bribes.

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  19. agency negotiation limited

    Never interrupt your competitors when they are making a mistake.

    Question: Do they really have the management to keep their eye on three markets? Icarus had more of a chance.

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  20. Shaun77

    This naked emperor doesn’t half get around…

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  21. WillBrom7121

    Best of luck to them I say!

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  22. 1stTimeBuyer

    Should of brought shares in them.  They have gone wild since early December.  Good luck to them.

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  23. Stubby26

    This could be Purplebricks equivalent to Napoleon invading Russia. I see and long cold winter ha ha

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  24. Traditionalist

    PB accounts are due out soon – last year’s had plenty of bold statements about their move into the Australian market despite huge losses, is this a repeat tactic?  It would seem at the moment, you can fool all of the people all of the time. In the US they have 2 hopes and Bob has left the building.

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