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A friend of mine flipped me this New York Times article today talking about the rapidly growing interest in proptech and about Opendoor – a topic and a company that I have written about many times before on the blog.
Here’s a snippet about proptech:
The hauls are part of a race by investors to pour money into technology for real estate, or what Silicon Valley now calls proptech. Having watched tech start-ups upend old-line industries like taxis and hotels, venture capitalists are casting about for the next area to be infused with software and data. Many have homed in on real estate as a big opportunity because parts of the industry — like pricing, mortgages and building management — have been slow to adopt software that could make business more efficient.
On the Opendoor front, which is the largest/most valuable company in the proptech category, they have now raised over $1 billion. By the end of this year they plan to be in 22 cities across the United States.
Interestingly enough, they have started experimenting with other business models, beyond just buying and flipping homes. They now circumvent agents and sell some homes directly to customers.
But Eric Wu, the CEO of Opendoor, believes that you can’t automate proper advice and so that will remain. The role of agents is simply about to shift from “administration” to that of “advisory”.
I have been arguing for years that the home buying and selling process is ripe for change. And what we are seeing today is really the start of that.
According to the NY Times, real estate tech startups raised $3.4 billion in funding last year. Some firms, such as Fifth Wall Ventures, are entirely dedicated to the space.
This is money betting on change.
Photo by Grant Lemons on Unsplash
A friend of mine flipped me this New York Times article today talking about the rapidly growing interest in proptech and about Opendoor – a topic and a company that I have written about many times before on the blog.
Here’s a snippet about proptech:
The hauls are part of a race by investors to pour money into technology for real estate, or what Silicon Valley now calls proptech. Having watched tech start-ups upend old-line industries like taxis and hotels, venture capitalists are casting about for the next area to be infused with software and data. Many have homed in on real estate as a big opportunity because parts of the industry — like pricing, mortgages and building management — have been slow to adopt software that could make business more efficient.
On the Opendoor front, which is the largest/most valuable company in the proptech category, they have now raised over $1 billion. By the end of this year they plan to be in 22 cities across the United States.
Interestingly enough, they have started experimenting with other business models, beyond just buying and flipping homes. They now circumvent agents and sell some homes directly to customers.
But Eric Wu, the CEO of Opendoor, believes that you can’t automate proper advice and so that will remain. The role of agents is simply about to shift from “administration” to that of “advisory”.
I have been arguing for years that the home buying and selling process is ripe for change. And what we are seeing today is really the start of that.
According to the NY Times, real estate tech startups raised $3.4 billion in funding last year. Some firms, such as Fifth Wall Ventures, are entirely dedicated to the space.
This is money betting on change.
Photo by Grant Lemons on Unsplash
Emily Badger of the New York Times published an interesting piece yesterday talking about the tech industry’s current obsession with trying to fix cities. And there are certainly many problems to fix.
Staying true to tech and engineering parlance, there’s lots of talk of optimization. How do you technologically optimize a city, for things such as affordable housing?
There’s no doubt that many of you will sympathize with this statement:
“To planners and architects, all of this sounds like the naïveté of newcomers who are mistaking political problems for engineering puzzles.”
But naïveté is not always a bad thing and with all of the money sloshing around in this industry, there’s also no doubt that this is likely a new era of city building.
The article ends by quoting JD Ross, the 27-year old co-founder of Opendoor – a startup that we have discussed many times before on this blog and is now valued at over $1 billion.
It is him saying that he wants to figure out how to put $100 million into this space as soon as he can figure out the right target to optimize for. “It’s better than buying a Bugatti.”
Of course Sidewalk Toronto – which is mentioned a few times throughout the article – is already a perfect example of tech infiltration.
But I think Dan Doctoroff gets it right when he posits that the real naïveté will come from disrespecting urbanist traditions.
Photo by David Alacaraz on Unsplash
Last month Zillow.com launched a new feature called “Instant Offers.” Press real estate can be found here.
It is:
“…a way for homeowners to sell their homes quickly by providing them with offers from investors and a comparative market analysis (CMA) from a local real estate agent, as an estimate for what the home might fetch on the open market.
Here is a bit more about how it works:
“To participate in Zillow Instant Offers, verified homeowners interested in receiving investor offers confirm information about the home (number of bedrooms, square footage, etc.), highlight any updates and provide several photos of the home. From there, select investors who buy homes in the area can present their offers alongside the CMA from a local real estate agent. Any investor offers and the CMA will include an overview of fees associated with each option, to enable sellers to make an informed apples-to-apples comparison.”
When I first saw the headline, I thought they were copying Opendoor. But it’s not the same model. They aren’t buying the homes, like Opendoor, they are simply working to coordinate an “instant” transaction. Still, I’m sure that Opendoor provided at least some of the impetus for this feature.
Of course, the most interesting question with these online real estate platforms is: Will they disrupt real estate agents? Mike Delprete wrote a great post about this in the wake of Zillow’s announcement.
But ultimately he concludes something that I have felt strongly for years:
“So, while real estate sites are best positioned to disrupt the real estate industry by displacing agents, they’re also the least likely to do so, because agents are their biggest customers and source of revenue.”
The irony.
About 70% of Zillow’s revenue comes from real estate agents. So it seems unlikely that they – at least currently – will be the ones that turn the tables on agents.
Some real estate platforms have started diversifying their revenue streams for probably this exact reason. But who knows, it may be a new entrant, rather than an incumbent, who pulls this off.
Emily Badger of the New York Times published an interesting piece yesterday talking about the tech industry’s current obsession with trying to fix cities. And there are certainly many problems to fix.
Staying true to tech and engineering parlance, there’s lots of talk of optimization. How do you technologically optimize a city, for things such as affordable housing?
There’s no doubt that many of you will sympathize with this statement:
“To planners and architects, all of this sounds like the naïveté of newcomers who are mistaking political problems for engineering puzzles.”
But naïveté is not always a bad thing and with all of the money sloshing around in this industry, there’s also no doubt that this is likely a new era of city building.
The article ends by quoting JD Ross, the 27-year old co-founder of Opendoor – a startup that we have discussed many times before on this blog and is now valued at over $1 billion.
It is him saying that he wants to figure out how to put $100 million into this space as soon as he can figure out the right target to optimize for. “It’s better than buying a Bugatti.”
Of course Sidewalk Toronto – which is mentioned a few times throughout the article – is already a perfect example of tech infiltration.
But I think Dan Doctoroff gets it right when he posits that the real naïveté will come from disrespecting urbanist traditions.
Photo by David Alacaraz on Unsplash
Last month Zillow.com launched a new feature called “Instant Offers.” Press real estate can be found here.
It is:
“…a way for homeowners to sell their homes quickly by providing them with offers from investors and a comparative market analysis (CMA) from a local real estate agent, as an estimate for what the home might fetch on the open market.
Here is a bit more about how it works:
“To participate in Zillow Instant Offers, verified homeowners interested in receiving investor offers confirm information about the home (number of bedrooms, square footage, etc.), highlight any updates and provide several photos of the home. From there, select investors who buy homes in the area can present their offers alongside the CMA from a local real estate agent. Any investor offers and the CMA will include an overview of fees associated with each option, to enable sellers to make an informed apples-to-apples comparison.”
When I first saw the headline, I thought they were copying Opendoor. But it’s not the same model. They aren’t buying the homes, like Opendoor, they are simply working to coordinate an “instant” transaction. Still, I’m sure that Opendoor provided at least some of the impetus for this feature.
Of course, the most interesting question with these online real estate platforms is: Will they disrupt real estate agents? Mike Delprete wrote a great post about this in the wake of Zillow’s announcement.
But ultimately he concludes something that I have felt strongly for years:
“So, while real estate sites are best positioned to disrupt the real estate industry by displacing agents, they’re also the least likely to do so, because agents are their biggest customers and source of revenue.”
The irony.
About 70% of Zillow’s revenue comes from real estate agents. So it seems unlikely that they – at least currently – will be the ones that turn the tables on agents.
Some real estate platforms have started diversifying their revenue streams for probably this exact reason. But who knows, it may be a new entrant, rather than an incumbent, who pulls this off.
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