Flat-fee real estate agency Purplebricks expanded into the U.S. last year after building a successful business in the United Kingdom and Australia, and after securing a sizable investment from European media giant Axel Springer, Purplebricks’ U.S. expansion is about to shift into overdrive.
Purplebricks announced Monday that Axel Springer is investing $177 million in the company. In exchange, Axel Springer is acquiring 11.5% of the company.
According to Purplebricks, the injection of funding will be used to “accelerate Purplebricks’ expansion into new target markets, advance technological innovation and expand the company’s service offering.”
The company said that $71 million of that $177 million is being set aside to accelerate the company’s growth in the U.S. According to the company, the $71 million from Axel Springer is approximately twice as much money as the company has used to fund its U.S. operation thus far.
Specifially, Purplebricks said that the money will be used to “support and enhance the company’s infrastructure, technology, management depth, advertising and marketing, and recruiting and training.”
The company’s first U.S. market was Los Angeles, before later expanding in California to Fresno, Sacramento, and San Diego.
The company was already plotting its next move in the U.S., announcing earlier this year that it is planning to expand to New York.
Originally, Purplebricks said that it was targeting June 2018 for its New York launch, but thanks to the investment from Axel Springer, Purplebricks is moving its New York expansion up by two months to April 3, 2018.
The company said that its New York regional headquarters will be located in Midtown Manhattan.
“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,” Purplebricks U.S. CEO Eric Eckardt said.
“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),” Eckardt added. “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.”
Purplebricks says that what sets it apart is that home sellers only need to pay a flat fee of $3,200 to list their home and, upon closing, pay the buyer’s agent commission. The flat fee is the same for homes of all values.
By paying a flat fee for a technologically enhanced real estate experience, sellers can save thousands on their home sale, the company claims.
According to Purplebricks, a New York homeowner who is selling a $560,000 home can save $13,600 by using Purplebricks compared to paying the standard real estate brokerage commission.
And thanks to Axel Springer’s investment, New York homeowners will be able to use Purplebricks’ services much sooner than expected.
“Axel Springer’s strategic investment in Purplebricks’ platform is a clear endorsement and a reflection of confidence in our business model and global ambitions,” Michael Bruce, founder and group CEO of Purplebricks, said.
“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,” Bruce continued.
“Furthermore, Axel Springer’s experience and success scaling its business should make Purplebricks’ continued growth more efficient and effective,” Bruce added. “Moreover, Axel Springer’s strengths in digital technology and the significant resources it has deployed in IT development should also benefit Purplebricks as we continue to innovate and offer our customers enhanced functionality and engagement.”