Purplebricks, a flat-fee real estate brokerage that swept across Britain and Australia before landing on U.S. shores last year, announced Monday it will expand to Sacramento and Fresno.
The company says it charges a flat rate of $3,200 to perform most of the tasks that sellers’ agents now manage for a 2.5 percent to 3 percent commission. That can be as much as $10,500 for a mid-priced $350,000 home in Sacramento County.
The services include listing a home for sale, making it available for viewings and helping sellers negotiate. Purplebricks provides additional online services, including one that lets sellers negotiate directly with buyers via its website.
Agents are still part of the the Purplebricks model. The company enlists what it says are experienced and well-vetted local agents to work with sellers from listing to closing.
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Sellers still have to pay the buyer’s agent’s full commission but can save thousands of dollars by eliminating much of their agent’s fee, the company says.
The process is “convenient, transparent and cost effective,” Eric Eckardt, the company’s chief executive in the U.S., said in an interview Monday.
Purplebricks started in the United Kingdom in 2014 and claims to have quickly become the nation’s largest real estate brokerage before moving on to Australia and then Los Angeles in 2017.
The upstart company has raised controversy along the way and has experienced stock-price swings and questions about its performance in closing sales.
It joins other firms such as Redfin that offer sellers lower fees to list and help sell their homes.
The companies have taken off in strong sellers’ markets, such as Southern California and Sacramento, where homeowners question the need to pay traditional commissions when houses can sell in a matter of days for high prices.
Some local real-estate professionals said Purplebricks and Redfin are the latest high-tech twist on companies such as Help-U-Sell. Such firms proliferate in heated sellers’ markets, when homeowners are less willing to give up large chunks of equity.
The brokerages tend to come and go, said Steve Galster, a real estate broker in Fair Oaks. “Discount brokerages have been around for years, but there has never been a dominant one locally,” he said.
Doug Covill, an agent with Coldwell Banker in Sacramento and former president of the Sacramento Association of Realtors, urged buyer caution.
The agents that online brokerages provide may not be as experienced as advertised – which could prove a problem during negotiations or when things go wrong.
“Sometimes all those discount brokers have to offer is a discount,” Covill said.