I always imagined that one of these days Zillow would branch out and become a virtual real estate broker and get into the business of listing and selling homes online. But someone has beaten them to it and added a very appealing twist to the standard listing/selling formula.
A service that allows homeowners to instantly sell their home online has raised an additional $20 million in funding and is expanding to two new cities.
Opendoor, which debuted two months ago in metro Phoenix, is adding Dallas and Portland to its list of available cities this year, CEO Eric Wu said.
The startup, which is based in San Francisco, has raised a total of $30 million in funding from Khosla Ventures and GGV Capital, both of Menlo Park, Calif., and a number of angel investors.
Under the service, homeowners wanting to sell their house or condominium enter their address online and submit some basic information about it. Within minutes, Opendoor, opendoor.com, provides a obligation-free offer to buy the home.
Nearly all aspects of the transactions are conducted online, and homeowners can close and receive funding in as little as three days.
Opendoor currently purchases about a home a day in the Phoenix market, Wu said.
In looking to expand, Opendoor, which employs three full-time and 13 part-time workers in Phoenix, searched for markets with 10,000 or more real estate transactions annually , Wu said. The company also looked at the number of days houses were on the market and the number of deals that fell through, Wu said.
Dallas and Portland were the best fits for the service, he said.
The company, which made the announcement Thursday, also reported that Glenn Solomon, a managing partner at GGV Capital, who has led investments in Square, Pandora and others, will join the Opendoor board of directors.
When buying a home, Opendoor charges a 5.5 percent resale fee, plus adjusts the amount it pays for a home to account for market risk, home maintenance and repair costs. After purchasing a home, the company makes it move-in ready and then lists it for sale.
The service is designed to make selling a home simpler and frictionless, Wu said. "We're trying to be a retail outlet for homeowners," he said.
Wu, who grew up in Glendale, started buying houses while a college student at University of Arizona. He previously founded Movity.com, a location data analytics company that was acquired by Trulia.com in 2011. He still owns about 100 rental homes.
The idea for Opendoor came about after Wu realized that a house, which typically is a person's biggest asset, is one of the hardest things for an individual to sell. For-sale homes generally stay on the market for weeks — the national average for January was 103 days, according to Realtor.com. Many home sellers can't buy another home until they sell their current one, because they can't afford two mortgages, he said.
Because it buys homes outright, Opendoor gets rid of the time-crunch factor, he said. There is a three-day inspection contingency on all transactions.
Besides Wu, the Opendoor team also includes executive chairman Keith Rabois, senior partner at Khosla Ventures and a former executive at PayPal, Slide and Square.
Since Opendoor.com debuted in Phoenix and the founder, Mr. Wu, attended the University of Arizona here in Tucson, how long can it before they start opening doors here in Tucson.
This may not work for everyone but I’ll bet they’re on to something. No muss, no fuss, and quick as can be you’re out the door with cash in hand.
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