I would agree that the business of selling homes hasn’t changed much. Internet technology has provided great assistance, but nobody has figured out how to replace realtors yet.
But outsiders think our industry is ripe for a change.
Here’s another start-up coming this summer:
Rabois’s startup was code-named HomeRun, and the seed for the idea was planted more than a decade ago, as VentureBeat reported in April.
“My friend [PayPal and Palantir cofounder] Peter Thiel suggested that I come up with an idea to innovate in residential real estate,” Rabois told VentureBeat in April. “It’s the largest part of the economy unaffected by the Internet. And that was definitely true then, and even with things like Trulia and Zillow, it’s fundamentally true today. But the process of [selling a home] hasn’t been transformed by technology.”
Now, that could change. OpenDoor will launch in July, its website promises.
The startup will “work with sellers directly to purchase home[s],” “work with local partners to rehab, maintain, and improve our portfolio of properties,” and “partner with local brokers and Realtors to market, list on [the multiple listing service], and resell to retail buyers and investors,” according to the site online now at opendoor.com.
That description sounds even more interesting than what Rabois told us originally. It shows that OpenDoor will do a lot more than just run a self-service website.
“We don’t have more information to add at this time,” Rabois wrote in an email to VentureBeat after this article was posted.
Their website (click HERE) promises to provide:
A transparent and simple sales process.
Full certainty on the price and close date.
Receive an instant offer online and funding in as soon as three days.
They expect that sellers will contact them, looking to sell their house for a small discount in order to close in a few days. The I-News said HERE that the discount would be less than 8%.
But sellers already think their home is worth at, or above, actual market value, so the 8% will sound more like a 10% to 15% discount to them. If there are sellers willing to dump and run, then guys like Tom Tarrant will be much more efficient in procuring the sale, because the folksy personal visit will be more effective than a website offer.
Even though it doesn’t sound like he has sold homes previously, the opendoor guy has confidence in his model:
“We have to value the home, sight unseen,” he said. “You can put in your address and we tell you what it’s worth instantly. And we’ll want to buy it from you for that price.”
Underneath the covers, HomeRun will analyze lots of data — some being proprietary, some not — to make an split-second calculation, with minimal human interaction. It’s “pretty complicated stuff,” Rabois said.
To do such work at scale would be vastly more complicated. So, at least initially, HomeRun will focus exclusively on the U.S..
“This can be a $10 billion to $100 billion [business] if we just do the U.S. correctly,” Rabois said. “I don’t want to get distracted. Focus is the most important thing for startups.”
They are going to determine what to pay for your house from a central command tower, pay out the cash in a few days, and then rehab and flip?
A better idea would be for a start-up to hire the best agents in town and create an exclusive marketplace.