United Kingdom-based flat fee brokerage Purplebricks secured a $177 million equity investment and moved up its New York launch date to April 3, the company announced Monday.
Purplebricks is one of the leading flat fee real estate startups in the United Kingdom and Australia. The company made its U.S. debut in California just over six months ago and had planned to launch in New York metro area later this year.
“Since launching in the U.S in September 2017, we have achieved tremendous success and recognition in what we consider to be some of the most highly competitive residential real estate markets in the world. Our platform has been well received in all four California markets, and we are excited by the promising opportunity we see in the New York [designated market area],” Purplebricks U.S. CEO Eric Eckardt said in a statement.
German publisher Axel Springer, which also owns Business Insider, contributed the $177 million investment. Of that incoming funding, $71 million will go toward Purplebricks’ U.S. operations and expansion.
“The $71 million from this investment will be utilized to bring on strategic hires that will bolster our growth, support technological updates and enhance our marketing and advertising programs, giving us expanded visibility in the region,” Eckardt said.
In the United States, sellers who use Purplebricks pay a flat $3,200 fee to list their homes and then later pay a buyers’ agent commission. The fee is paid when the home is first listed and is not refunded if the home doesn’t sell. Purplebricks agents list the homes and provide marketing materials.
Purplebricks has encountered some controversies abroad recently, including penalties over misleading advertising and investor guidance that suggested Purplebricks only sold half as many homes as it claimed.
Purplebricks’ U.S. staff has said that those issues won’t affect its stateside business, where the company’s business model differs to match the U.S. real estate market and its regulations.
“Axel Springer’s strategic investment in Purplebricks’ platform is a clear endorsement and a reflection of confidence in our business model and global ambitions,” Purplebricks founder Michael Bruce said in a statement. “This investment will serve to more quickly bring our highly-differentiated, cost-effective and consumer-centric model to buyers and sellers in new markets across the U.S.”