A British real estate company Monday launched a flat fee home listing service in San Diego County, charging sellers $3,200 to list a home.
The cost is likely cheaper for most sellers who are used to a 2.5 percent listing fee, so the offer could save sellers hundreds of dollars in commission costs.
Purplebricks, with its flat fee, adds to a growing number of companies that are lowering commission fees in the competitive Southern California housing market.
Eric Eckardt, CEO of Purplebricks' U.S. operation, said the company offers as much, or more, than a traditional real estate brokerage. Low listing fees are sometimes associated with agencies that don't do much for clients.
"The flat rate obviously is a great value," he said. "Home sellers get 3-D virtual tours, a full-service offering, professional photography and a local real estate expert that actually shows up at the house and works with them throughout the process."
A typical listing fee is about 2.5 percent of the sale cost, and an additional 2.5 percent for the buyer's agent.
For a median priced home in San Diego County, $540,000 in November, a seller could save roughly $10,000 on listing commission fees.
Eckardt said part of the reason Purplebricks, which formed in 2014, can keep costs low is because it does not have a lot of physical offices and they pass that savings on to consumers.
Dana Kuhn, real estate lecturer at San Diego State University, said commission fees seem to be artificially high because it stays about the same in good times and bad.
"When prices are high, it just makes more people into Realtors," Kuhn said. "The (commission) model has survived for a long time, but is vulnerable now to online systems."
The real test of the company in the United States will likely be user reviews that are still being generated. Purplebricks launched in Los Angeles and Orange counties in September.
Zillow's review page of Purplebricks real estate agents in Irvine has 4.8 out of 5 stars with 38 combined sales in the last year. However, seven of the 18 sales for the agents were before Purplebricks launched and they were with different agencies. So, while reviews are out there, it will likely be a while before its clear if Purplebricks is catching on in the United States.
In the United Kingdom, the company was in a well-publicized fight last year with the nation's largest independent review site, allAgents. Purplebricks had questioned the authenticity of critical write-ups, reported Reuters, and allAgents responded by removing Purplebricks from its profile page, although it is now back up.
The company's success in the U.K. might negate the public spat. Revenues in the first half of 2017 were up 150 percent from the same time last year, but losses doubled as the company expanded into Australia and the United States, said the Financial Times.
Nancy Fitzgerald, a Purplebricks agent in Irvine, said she does as much for clients now as when she was with other firms. Fitzgerald is one of the best reviewed Purplebricks agents in California on Zillow with clients praising her for quickly responding to inquires.
"We do everything that a traditional agency would do. We probably do more," she said.
One thing assisting any low cost agency is homes are selling very quickly. The average days on market for a home in San Diego County in November was 29, down from 33 days the same time last year.
Purplebricks also launched in Fresno and Sacramento on Monday.