附近上门

Buying or selling a home can be stressful and challenging. But as we鈥檝e seen across multiple industries in the startup world, the right mix of emotional upheaval and logistical headaches can provide ripe soil for disruption.

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Enter the residential real estate startup market where we鈥檙e seeing a variety of models play out. While some companies promise lower commissions than traditional brokerages, others so consumers don鈥檛 have to put them on the market. Still others give homeowners a chance to trade in their house and a number of other iterations abound.

Besides talking to a couple of these startups, we鈥檙e also going to attempt to quantify this market by looking at the data.

In 2018, U.S.-based real estate companies as a whole raised a combined $4.99 billion across 105 transactions, according to 附近上门 data. While that鈥檚 down from the $5.8 billion raised in 95 deals in 2017, it鈥檚 still a staggering 10 times higher than the $520 million raised by such startups in 2013, as you can see in the chart below.

For the purposes of this piece, we鈥檒l focus on companies in the residential real estate space. Of that $4.99 billion raised in 2018, startups in the North American residential real estate category raised a total of $532 million in the first half of 2018. That was up from 45 companies raising $314 million in all of 2017.

Where We Are Today

2019 is starting out strong. Not pictured in the chart above is the fact that, according to our data (keeping in mind that all deals have likely not been reported yet), there has been $1.9 billion invested in 32 general real-estate related venture deals during the year so far.

In January, , a licensed residential real estate brokerage using AI and big data, closed on a $45 million Series C round. Also in January, New York-based online home selling platform Knock.com raised $400 million in a Series B round that was a mixture of equity and debt. Then in March, Arizona-based online homebuying startup closed a $565 million and San Francisco-based raised a $300 million at a pre-money valuation of $3.8 billion.

Bottom line: If these massive rounds are any indication, 2019 is likely to surpass last year’s numbers. In the meantime, we talked with two of those massive first-quarter funding recipients, and , in an effort to better understand the space.

The Early Innings

co-founded Knock in 2015 with years of experience as part of the founding team at , which went public in 2012 and was by for $3.5 billion in 2014 . (He鈥檚 also an investor in other startups including ).

Knock has grown from 30 people at the beginning of 2018 to 150 today with the goal of having 200 employees by the third quarter, Black said. The company in 2018 also tripled its revenue and is on track to double or triple it this year. 聽

Currently, the startup operates in five markets: Phoenix, Atlanta; Charlotte, Raleigh-Durham, Dallas-Fort Worth. Part of the goal with its recent financing is to double the number of U.S. cities served by 2020.

鈥淲e鈥檙e not looking to move into more expensive markets like New York, San Francisco or Seattle,鈥� Black told 附近上门 News. 鈥淲e鈥檙e trying to get into more affordable housing markets where younger generations are moving to, as well as warmer states where people buy homes throughout the year.鈥�

Despite the comparison to other startups in the space, Black argues that Knock has a unique model.

Knock makes an all-cash, non-contingent offer on a home on behalf of the buyer with its own money, aiming to get them a discount. It then represents the sale of their old house and once that transaction closes, it transfers the new house in their name.

Looking ahead, Black remains confident about Knock鈥檚 chances in an increasingly crowded space, noting that he believes there鈥檚 plenty of room for competition.

鈥淩ight now, still all the companies in the space together have low single digit market share. We鈥檙e in the early innings really,鈥� he told 附近上门 News.

, managing director of (which led Knock鈥檚 , agrees.

鈥淚t鈥檚 not a winner take all market,鈥� he said.

Levine added that 鈥� like many investors 鈥� he had seen a lot of opportunities in real estate over the last five years.

鈥淢ost of which were focused on technology to help facilitate the existing market, and generally speaking , sold to brokers,鈥� he told 附近上门 News. 鈥淲e could never get our heads out around them, as much as we recognized that real estate was a massive market.鈥�

But when Foundry was introduced to Knock from another of its investors, its model was 鈥渋mmediately resonant鈥� to Levine.

鈥淚t was simply more aligned with the home buyers,鈥� he added. 鈥淚 particularly love the segment of the market Knock is working in. It鈥檚 a wide swath of the market.鈥�

For example, a typical Knock customer is selling a house for about $285,000 and buying a house in the low $300,000s, according to Levine.

鈥淭hat was appealing to me,鈥� he told 附近上门 News. 鈥淪ometimes investors who live in more expensive homes forget they are not necessarily the target market.鈥�

Trading Homes Like Cars

Phoenix-based , raised a massive in March from an undisclosed investor 鈥� a round that included debt and equity (although the company declined to break down how much was each). The four-year-old company, which CEO describes as an 鈥渙n-demand buyer,鈥� has raised about $975 million over time.

Users log on to the Offerpad site, upload photos of their home and then 鈥済et a fair market offer within 24 hours,鈥� Bair said.

鈥淲e do due diligence and can close on their schedule,鈥� he said.

So, how is this different from Knock or other similar companies out there?

Bair is a former Realtor, and he believes that experience has helped him understand home buyers鈥� pain points. He is adamant that Offerpad does not serve as a 鈥榝lipper,” as it does not perform “major” home renovations.

鈥淲e are a buying service giving people the ability to trade in homes like cars,鈥� he told 附近上门 News. 鈥淲hen people upload pictures of their house to our site, we try to give them the best offer.鈥�

The company then conducts 鈥渁 light refresh鈥� and puts it right back on the market.

鈥淲e鈥檙e not looking to buy distressed homes or work with people in distressed situations,鈥� he said. 鈥淥ur model is more about offering convenience and certainty to busy people who don鈥檛 want to have to deal with listing their homes and all the headaches that go along with that.鈥�

Like Knock, Offerpad is targeting markets with strong economies and median prices that are not outrageous (it鈥檚 in Phoenix, Tucson, Las Vegas, Charlotte, Raleigh, Tampa, Orlando, Houston, San Antonio and Austin, for example)

In 2018, real estate transactions conducted via the Offerpad site grew 125 percent year-over-year, according to Bair. As of early April, the company had nearly 500 employees and had hired 97 people in the first quarter alone. Offerpad charges a 6 to 8 percent fee, depending on the risk it expects to experience when trying to re-sell the house.

As long as the housing market remains relatively hot, startups like these will likely continue to see demand. The true test will be when the market takes a turn.