Buying or selling a home is an excruciatingly difficult process that can last more than three months. Finding a broker, making a buyer/seller ‘match’ and then dealing with the endemic bureaucracy of mortgage financing. Not to mention inspectors, lawyers and more lawyers.
A new startup called OpenDoor is hoping to cut through most of that red tape, helping sellers get instant offers and close in just three days.
Its founders include Eric Wu (Trulia’s (TRLA) ex-head of geo) and Keith Rabois (Khosla Venture partner, former COO at Square), and yesterday it announced $9.95 million in venture capital funding. Khosla Ventures led the round, with more than two dozen individual angel investors also participating.
OpenDoor is not yet revealing much about its product, but CEO Wu did provide some details during a phone interview yesterday:
1. The initial roll-out will be in a select number of urban markets (OpenDoor already has picked them, but isn’t disclosing yet). Each municipality and state has different rules governing residential real estate transactions. This means that if it chooses San Francisco, for example, it would not be able to handle transactions in surrounding suburbs.
2. All of the $9.95 million is being used for operations. Expect the company to also strike a deal with one or more major financial lenders, in order to help facilitate the mortgage financing process.
3. If there is a property on the OpenDoor platform that doesn’t quickly sell, the company itself may take possession of the property (using the aforementioned financial partner) in the interim.
4. Wu doesn’t see OpenDoor as a Trulia/Zillow killer, so much as a potential partner because brokers would still be part of the process. He didn’t elaborate on how or why brokers would still be needed (i.e., why pay 5% when the process is largely automated), or what type of commission OpenDoor itself might take.
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