Purplebricks, a London-based discount brokerage that has quickly expanded into Southern California, is now fighting claims it sells far fewer homes than advertised.
The three-year-old company, which opened a Los Angeles office in the fall after raising $60 million from investors, offers a low flat fee to clients, and claims it has sold more than three-quarters of homes listed.
But a Jefferies analyst, in a recent research report, put that figure at closer to 50 percent, “near the middle of the pack of its study of 7,000 agents,” according to a BBC report, quoting his research.
The flat fee that Purplebricks charges can save home sellers thousands of dollars, the company said, compared to other brokerages that charge a portion of the home’s sale price. It uses a combination of online and local agents.
But the company, which as of December had a market cap of $1.32 billion, doesn’t disclose its data on home sales. The Jefferies report cautioned investors that the rapidly expanding brokerage did not have a proven business model, and its home-sale success could not be proven, according to BBC.
The company responded in a statement to the news outlet, saying it “firmly refutes the criticism in the research note of its revenue recognition policy” and stands behind its audited results.
A Purplebricks representative did not immediately respond to The Real Deal for comment. [BBC] — Alexi Friedman