The head of Pacific Sotheby’s International Realty berated the U.S. CEO of low-fee brokerage Purplebricks over the company’s flat-fee model.
Brandishing an American flag, the head of Pacific Sotheby’s International Realty berated the U.S. CEO of low-fee brokerage Purplebricks over the company’s polarizing discount model, calling on agents to defend their commissions.
Accusing the low-fee brokerage of spurring consumers to request discounts, Pacific Sotheby’s International Realty CEO Steve Games launched a full-throated defense of conventional agents and their commission rates, drawing rousing applause from attendees during a raucous conference hosted in April by the San Diego Association of Realtors. He then challenged Purplebricks’ U.S. CEO Eric Eckardt over the UK-based company’s flat-fee model.
“The [commission] pressure is coming from you, not the consumer,” Games said, interrupting Eckardt during a fiery diatribe that involved a number of props, including the American flag, a rotary telephone and a framed picture of Warren Buffett. “Who’s asking people from the onset if we should discount? The people who are advertising the discount on the television.”
Games’ interjection came as Eckardt tried to respond to the animated presentation that Games had just concluded.
Games kicked off his speech — a video of which was recently posted in the Inman Coast to Coast Facebook group — by brandishing an American flag and asking the audience if they thought he should have brought it to a real estate convention.
He then tore into Purplebricks for its $3,600 flat-feet business model rates in the U.S., plus an offer of compensation to buyer’s brokers. Typically traditional brokerage’s offer commission rates that hover somewhere around 5 percent or 5.5 percent. Beside San Diego, Purplebricks now operates in Sacramento, Fresno, New York, Arizona and Nevada.
“Stand up if you think you earned every single penny that you earned on your last real estate deal,” Games said. “OK these are the people that work in my offices!”
“And these people [agents at Pacific Sotheby’s International Realty] did more business than all the rest of the people on this stage this month!” he shouted, turning to representatives of other brokerages who participated in the panel. “Thank you, stand up again!”
Games clarified in an interview with Inman on Monday that he was referring to Pacific Sotheby’s International Realty’s sales by dollar volume. The brokerage boasts nearly 1,000 agents and 30 offices across San Diego, Orange County and Coachella Valley on its website.
At another point, Games picked up a rotary dial telephone, called it a “terribly abused tool today,” and dropped the device on the stage.
He then encouraged attendees to think hard about what they want to say to clients on the phone.
Later administering some group therapy, Games told audience members to stand up, hug each other and say: “Millennials are going to buy houses.”
“We’ve been told they’re going to live in apartments. I don’t think so,” he said.
Clarifying his use of props in the speech, Games told Inman he used the American flag to suggest the American dream of homeownership wasn’t dead and that he used the retro telephone to convey how far technology had advanced over the years.
In what may have been the climax of his performance, Games called on agents to stick to their guns when negotiating with customers.
“When it’s time to go out and do the job, when it’s hard work, when it’s incredible, you have to hold the commissions,” he said.
“I don’t care what your commission is, but mine has to be high enough to pay for the very best real estate agents in the business, and I have people that want to work with us.”
He added that real estate agents should use technologies as “an asset to us who are the real estate agents who do the job.”
“And let’s not start the conversation with a discount,” he said.
Games picked up a photo of Warren Buffett, who he said was a former client.
“Warren Buffett did not ask me for a discount!” he said.
In an interview with Inman, Games said he resents Purplebricks’ advertising, which touts rates that are less than what Purplebricks calls the “stupid amount” paid to conventional brokers.
“Who’s assuming that the residential real estate market is only interested in discount as opposed to service, right?” he said.
Asked for his reaction to Games’ comments on low-fee brokerages, Eckardt told Inman in a statement that Purplebricks is merely responding to a consumer appetite for lower fees.
“We encourage thoughtful conversation about the evolution of real estate brokerages,” Eckardt said. “Innovative platforms like Purplebricks exist because there is a need and strong demand among consumers for an alternative way to buy and sell homes. We believe our differentiated value proposition provides consumers with the information, transparency and optionality they are craving.
“Every aspect of our business model continues to be informed and influenced by consumer behavior, preferences and feedback from the field,” he added. “We are very pleased with our initial success in the U.S. and look forward to continuing to execute our growth plan.”
Jason Chudoba, a spokesman for Purplebricks, said the brokerage’s U.S. operation had sold homes worth $234 million as of April 30, since launching in Los Angeles in September 2017. Its U.S. business took in $2.64 million in revenue during that period, he added.