Purplebricks Group plc Launches in the US – Zeus Comments

What is new?

This morning Purplebricks Group Plc (LON:PURP) has released details of its US product offering:

* Later today, Purplebricks will release TV adverts across Los Angeles:
Aimed at Sellers: “Real misery – the misery you feel when you pay too much in commission”
Aimed at Buyers: “Real misery – the misery you feel when you miss out on your dream home”

* Sellers listing their property with Purplebricks will pay flat fee of $3,200 and 3% buyers commission (assuming Purplebricks sells the property) saving thousands of dollars compared to market commissions of over 5%;

* Buyers can use www.purplebricks.com to view all properties for sale in the Los Angeles market (on the MLS), make offers in real time, negotiate and communicate directly with sellers;

* Buyers will be able to tour Purplebricks’ properties using 3D virtual reality and buyers who select Purplebricks as a buying agent (paying a c.3% commission) will receive a $ 1,000 rebate on closing;

* Purplebricks has recruited 30 Local Real Estate Experts (LREEs) and plans are in place to have “around 50 LREEs in the market within weeks”.

A trading update will be released ahead of its AGM on 29th September.

Zeus’ view
This announcement provides a clear view of Purplebricks’ US product offering. We expect the adverts will be available on YouTube in due course.

We make no changes to our forecasts for Purplebricks which expect 150 LREEs by March 2018. The trading update or the interim results are more suitable opportunities for analysts to adjust forecasts.

Valuation
In the UK new Purplebricks listings on portals appear to be consistent with our forecasts and our expectation of continued growth in 2H. In Australia, Purplebricks appears on track to breakeven in FY(Apr)19e. This announcement provides evidence that Purplebricks’ plans for the USA are also on track.

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