The Purplebricks stock market bull run took yet another huge leap forwards yesterday with its share price up 20 per cent at one point after confirmation that the hybrid agency had raised £50m for expansion into the United States.
Purplebricks closed around 15.9 per cent up at 262.0p. Some analysts have suggested that this puts the market capitalisation of Purplebricks as being roughly the same as Countrywide and Foxtons combined.
The agency, which launched in the UK in 2014 and broke into parts of the Australian market last year, says it will enter the American market in the second half of 2017.
The US realtor market – where commission for traditional estate agents can be far higher than in the UK and Australia – is worth an estimated US$70 billion annually. Some analysts say it is better-suited to the Purplebricks ‘Local Property Expert’ model because there is already a culture of self-employed estate agents operating in defined local patches.
The Motley Fool investment website praised the Purplebricks move, saying that in addition to per-transaction fees, money in the US can be made from multiple listing services – sites that allow selling agents to list all their properties and buying agents to introduce more options to their clients.
“These MLS take a cut of the commission if they introduce the selling and buying agents for a successful transaction. This could be big bucks for Purplebricks as it builds up a massive database of home movers like it has done in the UK” says the Motley Fool.
“We are confident that with our understanding of the US market and our experience from having already launched in two markets Purplebricks can build a significant business in what could be one of the most fascinating and rewarding real estate markets in the world” says Purplebricks chief executive Michasel Bruce.
“For the realtors we recruit Purplebricks presents an exciting new platform to build scalable, profitable businesses in their own dedicated regions, supported by our strong technology infrastructure and marketing reach. For US customers we are seeking to offer a better deal in selling and buying their homes, with a more convenient, transparent and cost effective service” he adds.