In a time when people are coming up with creepy and complex business ideas to somehow impressive investors and get attention, there is one startup which is piling up truckloads of money in funding with its simple and straightforward business plan. Opendoor is a California-based startup whose simple business model has got the attention or the angel investors and billionaires, and in a latest round, it has been valued at over $1 billion. Here is what Opendoor does: it houses that are not in much polished conditions, do some repair works and sells them at a higher price.
Opendoor has made millions and millions since it was launched back in 2014. It buys houses and invests a little in fixing everything that is wrong with them and lists them for sale. What’s so special about Opendoor? It has infused liquidity in its business model. It actually owns the house before listing them for sale. For years we have seen companies that do not take a step further than matching buyers and sellers on an app or some web platform. Opendoor’s business model is bold and risky. If the real estate market takes a downturn, Opendoor’s business will nosedive. However, there is no such crash in sight. Also, Opendoor does not pick houses randomly. It has some of the best data scientists and industry minds who use their talent to spot the property that has potential. They evaluate houses according to their actual value, using a lot of tools and avoid risk.
Keith Rabois co-founded OpenDoor 2014. Mr. Rabois has worked for famous payments platforms like PayPal and Square. In October last year, OpenDoor raised $80 million in a third funding round led by billionaire Len Blavatnik. It has raised another $210 as of the start of December 2016.
OpenDoor is getting success because it works instantly and offers cash to sellers who want to move out quickly. As soon as a seller fills the form, OpenDoor performs the most important task of market research and evaluation and offers a price. It also sends it experts to visit the property to evaluate the cost of repairs. A deal is offered to the seller and if it goes through, the company offers the cash instantly.
OpenDoor then lists the house for sale. It also installs special locks at the houses owned by it to let people visit houses for sale whenever they want. The locks could be opened by sending a special text to the company. OpenDoor also installs cameras inside the houses to monitor visitors.
Photos: Wall Street Journal, MARK PETERMAN