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Homeowners know too well, how hard it can be to get an offer after putting your house up for sale in the market. You might have a hot piece of property that you think others are just dying to get their hands on. However, once you put it up for sale; weeks turn into months and sometimes into years. People just keep coming to view, but none actually makes an offer.

Selling a house starts to feel more like a hassle, and starts to distract you from your other activities. It starts to feel more like you are a real estate agent doing marketing for properties. Dan Ariely, a behavioral economist, says that homeowners will be willing to sell their homes at a lesser price, as long as in return they can avoid the hassle and get a precise timing. Especially during the slow seasons of home sales.

The less liquid and slower the market is, the more people who are selling will value this process,” says Ariely.

A Silicon Valley-based startup, Opendoor, has come up with an innovative solution to this problem. They buy and sell homes in quantities, lifting the hassle of individual homeowners looking for a buy. That also comes with the advantage of sellers selling their homes within the shortest time possible.

Opendoor strategy is to buy and sell homes in quantity, using a business model that is making successful companies in Silicon Valley successful. They target the broad middle of the market when both buying and selling.

They mainly purchase single-family homes that were built not earlier than 1960 with prices within the $125,000 to $500,000 limit. Opendoor does not have interest in distressed properties; such properties usually require work to sell well. Neither is Opendoor interested in luxury properties as they can become hard to value.

As you can imagine, Opendoor being in the business of buying and selling properties needs a lot of capital and is operating in an industry with great risks. The startup has raised $110 million in equity from Access Industries, GGV Capital, and Khosla Ventures among others to finance their operations.

An evaluation of the company done earlier this year placed Opendoor valuation at $580 million. It has raised over $400 million in debt for buying homes.

Opendoor strategic plan

To make its operations profitable, Opendoor must strategically price their homes accurately, without seeing them, and must sell them within the shortest time possible to minimize the carrying costs.

That means as interest rates and housing prices falls, Opendoor adjusts their prices downwards quickly. The opposite is true when interest rates and housing prices increase.

For more information about it works, head on to the Opendoor site here.

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