Purplebricks is struggling in Phoenix, USA, where it launched in June, it has been claimed.
Commentator Mike DelPrete says that Phoenix was the ‘sweet spot’ for Purplebricks because while Southern California and New York are expensive markets, the Purplebricks proposition resonates with mid-market customers.
DelPrete says: “Phoenix is that market.”
However, he says that traction there has been modest. In five months, he claims there have been 75 listings and 26 sales.
He also claims that Purplebricks is struggling to recruit and retain brokers in Phoenix.
DelPrete says: “If we assume a broker is paid $1,000 of the $3,600 listing fee, that’s a very low effective annual pay package.
“I still believe Phoenix is the right market for Purplebricks . . . This – not more expensive markets – is the sweet spot for the fixed fee proposition.”
DelPrete goes on to say that the US real estate market is undergoing significant change, with new players rapidly growing market share at the expense of traditional firms.
DelPrete notes that Phoenix is only one out of several markets in the US where Purplebricks launched some 14 months ago.
But he says that in its first eight months, Purplebricks had 582 total listings nationally: “If Purplebricks wants to make a dent in the US, these numbers need to be in the hundreds and thousands.”
He concludes: “Purplebricks’ success in the US market is not assured. Raising a lot of money doesn’t guarantee success.”
Purplebricks launched in America, in California, in September 2017, and has rolled out to other regions since.
Purplebricks is due to announce interim results next week.