Innovative and Disruptive US Real Estate Models
by Yvonne von Jena | June 19, 2018
The way consumers go about buying and selling real estate is changing in the US. Consider these three businesses, which have launched innovative and possibly disruptive models:
In April, Zillow launched its Instant Offers program, which lets prospective home sellers visit the Zillow website to receive an offer on their home from iBuyer investors, including companies such as OfferPad, as well as a professional home valuation and comparative market analysis from a licensed real estate agent. The home seller can then choose to take the instant offer from the investor and receive all cash for their home, likely at a reduced rate, or list their home on the open market with an agent and potentially get a higher sale price.
The program has surpassed Zillow’s initial estimates, although it offers an interesting alternative for some select parties in the market, the program is not for everyone. For example, over a 10-month trial period conducted in Orlando and Las Vegas, one third of the sellers who requested an Instant Offer went ahead and sold their home, but 90% of them chose to list with a human agent rather than taking an instant cash offer from an institutional investor.
According to Inman, although Zillow Instant Offers looks a lot like Opendoor; there are a lot of differences but the most important being that Opendoor buys homes while connects sellers with investors.
Opendoor is a US "online real estate marketplace that radically simplifies home buying". It basically purchases homes, paying sellers within a matter of days and allowing sellers to move on to their next home while Opendoor gets the home list-ready. It also handles the maintenance of the home and finds the next buyer. The idea is that time, convenience and being stress-free are important to users.
Opendoor currently operates in 10 US cities, has 600 employees and has been used by nearly 20,000 customers. It will expand to 50 cities with a recent round of financing totaling $325 million. In addition, Opendoor remains in serious talks with SoftBank’s Vision Fund for additional money that could arrive in the next few months, per Recode.
HomLuv.com is a US startup that allows users to build their new home from the inside out and is more experiential. In essence, it flips the way most people look for a home by allowing potential buyers to select rooms based on an array of choices, Pinterest-style, and then pinpointing a developer able to execute those choices, according to Inman.
Mark Law, Vice President of Product Innovation for HomLuv and a veteran of Microsoft, Yahoo and AOL, now says that even before visiting their first home, millennials tend to assemble an online board of what their dream home will look like. Pictures will often be of individual rooms or even furniture choices — a way of looking for property that has inspired their startup.
The new site has four basic functions. First, it allows users to browse photos of new houses, rooms and exteriors. From those pictures, users choose their favorites. Users can share those with their significant other to get his or her opinion and perhaps narrow their choices. Then the site matches the most favored images to actual homes and their builders.
HomLuv currently has 1,100 builders on its site and nearly 12,000 new home communities. It also contains more than 88,000 buildable floor plans and 1.3 million images with all the pertinent listing details, most updated daily. More new homes, builders and communities are being added every day, Law said.