I am currently in Hunstville, Ontario (Muskoka region) and I have about 15 minutes before I need to head out for dinner. So this is not going to be a long post.
I did, however, want to share with you a new real estate app that I learned about today called SQFT. (Thanks Evgeny.) They were just featured in TechCrunch and their mission is to make it easier and cheaper for people to buy and sell homes using just their smartphone. They’re calling themselves the first DIY real estate portal in America.
As a homeowner, you create the listing yourself and then it gets syndicated out to hundreds of other websites (including the big players like MLS, Zillow, and Trulia).
You’re still technically working with “independently operated licensed real estate agents”, but the app itself handles setting up the showings and even the offer negotiations. Their hope is that they can reduce real estate commissions to < 2%.
This is a space that I’ve been following closely for a number of years now and seems to be really heating up. Opendoor.com is another online real estate platform that I’ve written about a few times. And in my view, they are the furthest out front.
My realtor friends don’t like it when I say this, but I think we’re going to see a lot of changes in this space in the near future.
Yesterday Opendoor.com finally launched their product in Phoenix. If you’re a regular reader of Architect This City, you might remember that back in July of this year I wrote about how they had just raised $10M of funding to make selling your home as easy as a few clicks.
Well, since then, I’ve been following them like a hawk. I had all the founders on Twitter notification (so I got notified every time they tweeted) and I was eagerly anticipating their launch.
Now that they’ve launched, we have a much better idea of how their business model is going to work. I say “better idea” only because there’s still portions of it that are a question mark for me.
In any event, Opendoor basically provides instant liquidity to homeowners. You go on, tell them about your home, and they then make you an offer to buy, which looks like this and lasts for 3 days. The offer they make you is calculated using comparable sales and adjustments based on your home’s unique characteristics.
Upon accepting their offer, they then schedule a home inspection (at their cost) to confirm your home’s condition. Once this is done, you just select your move out date and Opendoor handles the rest. The fee for all this is 5.5%, which the company claims is less than the 6% that realtors typically charge (this would be high for Toronto).
After buying your home, Opendoor plans to turn around and resell it.
What this reminds me of is a “bought deal.” In the world of investment banking, a bought deal is when the bank itself agrees to buy the entire offering of a particular security, as opposed to going out to the market and trying to raise the money. The advantage to the company (offering the securities) is that there’s no financing risk. They know they’re going to get their money. But it usually means the company gets a lower price.
So what I wonder, is if this is what’s going to happen here. Since Opendoor is effectively taking on the selling risk, does that mean their offers will be lower? Or are all their costs built into that 5.5% and that’s truly their core business model? I’m sure some of this will surface in the coming weeks.
I do, however, think they are smart to be focusing on the supply-side of the marketplace and offering virtually perfect liquidity to homeowners. Real estate is a unique asset in that it’s difficult to bring supply to the market. And so if control the supply-side, I think you have a pretty good shot at controlling the market as a whole.
A few weeks ago I was invited by Toronto realtor Andrew la Fleur to participate in his True Condos podcast series. I had actually never met Andrew before in person, but I knew of him because of Twitter, his blog, and because he was an early user of my past startup, Dirt.
I was initially a bit apprehensive about being on a realtor podcast, because I thought it might end up as some sort of cheesy marketing piece. But I’ve come to learn that Andrew is not that kind of guy. He’s also interviewed some really great people in his podcast series (here’s the full list), so I feel honored to have been invited.
I’ve embedded the podcast below, but if for whatever reason you can’t see it, click here to be redirected to Andrew’s site. We talk for about 30 minutes, with a big focus on openness and transparency in the real estate industry. Thanks again for the invite Andrew. It was great to meet you in person.
I am currently in Hunstville, Ontario (Muskoka region) and I have about 15 minutes before I need to head out for dinner. So this is not going to be a long post.
I did, however, want to share with you a new real estate app that I learned about today called SQFT. (Thanks Evgeny.) They were just featured in TechCrunch and their mission is to make it easier and cheaper for people to buy and sell homes using just their smartphone. They’re calling themselves the first DIY real estate portal in America.
As a homeowner, you create the listing yourself and then it gets syndicated out to hundreds of other websites (including the big players like MLS, Zillow, and Trulia).
You’re still technically working with “independently operated licensed real estate agents”, but the app itself handles setting up the showings and even the offer negotiations. Their hope is that they can reduce real estate commissions to < 2%.
This is a space that I’ve been following closely for a number of years now and seems to be really heating up. Opendoor.com is another online real estate platform that I’ve written about a few times. And in my view, they are the furthest out front.
My realtor friends don’t like it when I say this, but I think we’re going to see a lot of changes in this space in the near future.
Yesterday Opendoor.com finally launched their product in Phoenix. If you’re a regular reader of Architect This City, you might remember that back in July of this year I wrote about how they had just raised $10M of funding to make selling your home as easy as a few clicks.
Well, since then, I’ve been following them like a hawk. I had all the founders on Twitter notification (so I got notified every time they tweeted) and I was eagerly anticipating their launch.
Now that they’ve launched, we have a much better idea of how their business model is going to work. I say “better idea” only because there’s still portions of it that are a question mark for me.
In any event, Opendoor basically provides instant liquidity to homeowners. You go on, tell them about your home, and they then make you an offer to buy, which looks like this and lasts for 3 days. The offer they make you is calculated using comparable sales and adjustments based on your home’s unique characteristics.
Upon accepting their offer, they then schedule a home inspection (at their cost) to confirm your home’s condition. Once this is done, you just select your move out date and Opendoor handles the rest. The fee for all this is 5.5%, which the company claims is less than the 6% that realtors typically charge (this would be high for Toronto).
After buying your home, Opendoor plans to turn around and resell it.
What this reminds me of is a “bought deal.” In the world of investment banking, a bought deal is when the bank itself agrees to buy the entire offering of a particular security, as opposed to going out to the market and trying to raise the money. The advantage to the company (offering the securities) is that there’s no financing risk. They know they’re going to get their money. But it usually means the company gets a lower price.
So what I wonder, is if this is what’s going to happen here. Since Opendoor is effectively taking on the selling risk, does that mean their offers will be lower? Or are all their costs built into that 5.5% and that’s truly their core business model? I’m sure some of this will surface in the coming weeks.
I do, however, think they are smart to be focusing on the supply-side of the marketplace and offering virtually perfect liquidity to homeowners. Real estate is a unique asset in that it’s difficult to bring supply to the market. And so if control the supply-side, I think you have a pretty good shot at controlling the market as a whole.
A few weeks ago I was invited by Toronto realtor Andrew la Fleur to participate in his True Condos podcast series. I had actually never met Andrew before in person, but I knew of him because of Twitter, his blog, and because he was an early user of my past startup, Dirt.
I was initially a bit apprehensive about being on a realtor podcast, because I thought it might end up as some sort of cheesy marketing piece. But I’ve come to learn that Andrew is not that kind of guy. He’s also interviewed some really great people in his podcast series (here’s the full list), so I feel honored to have been invited.
I’ve embedded the podcast below, but if for whatever reason you can’t see it, click here to be redirected to Andrew’s site. We talk for about 30 minutes, with a big focus on openness and transparency in the real estate industry. Thanks again for the invite Andrew. It was great to meet you in person.
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