INSUBCONTINENT EXCLUSIVE:
Opendoor, a four year-old, San Francisco-based company, has from the outset intended to make it possible to buy and sell residential real
estate with a few key strokes
It seemingly gets closer to that audacious vision by the day
The company closed on $325 million in new funding in June in a round that brought its total equity funding to $645 million to date — and
its valuation to more than $2 billion
The company has also raised $1.75 billion in debt, and two sources tell us more funding from SoftBank is imminent.Opendoor cofounder and
CEO, Eric Wu, who previously cofounded two other companies, won&t answer questions about SoftBank when asked
But there no question the company is one of the most capital-intensive startups on the scene currently
Opendoor bids on homes sight unseen, agrees to buy them, then — contingent on an inspection to verify the quality of the home (&sometimes
customers aren&t aware of things like foundation issues,& explains Wu) — it sells them, charging a fee of &about 6 percent,& he says
(Recent reports claim this number can reach as high as 13 percent.)To date, the company has largely been working with people who need to
sell their homes quickly because of a new job or other life event
By using Opendoor, goes the pitch, they don&t get stuck paying for two mortgages when they can&t afford it
Yet Opendoor increasingly wants to help them buy that next house, too
Toward that end, the company has just acquired Open Listings, a four-year-old, L.A.-based startup that has aimed to make it easier and
cheaper for buyers to purchase homes by automating much of what an agent would do, thus reducing the fee an agent would traditionally
take.Opendoor isn&t saying what it paying for Open Listings, which had raised $7.6 million from investors over the years, including Y
Combinator, Matrix Partners, Arena Ventures, and Initialized Capital
But all of Open Listings& 45 employees will join the 900 employees of Opendoor, and the move gets Opendoor into a handful of new cities in
which it wasn&t already operating, including San Francisco,Seattle, Austin, L.A., and Chicago.The deal was also a very natural fit, suggests
He says he met Open Listings cofounder and CEO JuddSchoenholtz in 2015, when Schoenholtz — through YC alumni network — approached Wu,
whose last company had passed through YC program
Schoenholtz &reached out and wanted to share what they were trying to solve in real estate, so we met up and talked about problems we saw
and our respective approaches
Judd was starting with the buyer side, and we were starting with the sales side, and we continued to share notes on how we were solving
both.&The acquisition is the very first for Opendoor, though one senses it just the beginning of similar tie-ups
In a call yesterday, Wu referred to other initiatives that Opendoors is exploring, including a kind of financing business, which Wu has been
talking about for yearsbut that sounds closer now to fruition
&We&re doing some things around mortgages that will integrated into the shopping experience,& says Wu, without wanting to elaborate further
Home improvement loans may also be on the horizon
(Wu says Opendoor &also wants to enable home buyers to personalize their experience.&)Opendoor is also working more closely with developers,
forming partnerships with &19 of the 25 largest home builders in the country over the last 18 months,& says Wu
The idea is for Opendoor customers to put down a deposit on a new home, with Opendoor operating quietly in the background to both help
choose a closing date, as well as to sell those customers& previous homes.The big question, as always, is what Opendoor does in a sustained
The company is reportedly on pace to spend more than $2.5 billion on home purchases over the next year
Yet buying homes is a complicated affair
For starters, after Opendoor acquires each home, it has to ensure the home is up to code in order to resell it
Indeed, though the company is willing to buy homes built after 1960, Wu says a growing amount of its inventory was built no earlier than
1990.Hanging on to its inventory, which Opendoor does for 90 days on average, would seem to pose an equally big risk, particularly given
that the housing market is highly sensitive to interest rates and other macroeconomic factors that could prompt a market cool-off
We may even be seeing earlysigns of one right now.Wu doesn&t seem concerned, focused as he is on creating a kind of virtuous cycle of home
Asked about housing market slowdowns, he shrugs off the question
Maybe he needs to operate that way, given the ambitious vision of Opendoor.Says Wu whentalk turns to rising mortgage rates and growing new
