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Opendoor offers its online home buying and selling service in 19 markets and expects to expand faster than expected.
Photo:
: Mark Peterman
SoftBank Group
Corp.
9984 -0.95%
Vision Fund, the Japanese conglomerate, has invested $ 400 million in the Opendoor Labs online shopping market, the two companies announced Thursday.
The investment comes just three months after Opendoor said it raised $ 325 million to support its activities of buying and selling homes exclusively online. SoftBank estimates the San Francisco-based company to more than $ 2 billion, although some of the money will be used to buy shares from existing investors, according to familiar people.
Eric Wu, managing director and co-founder of Opendoor, said the company will use the money to grow faster than expected, which is a common feature of the companies supported by SoftBank. "We planned to launch one city a month, and now we are planning two a month," Wu said. The company offers services in 19 markets.
Real estate has become one of the main business segments of SoftBank and its $ 92 billion Vision Fund, which is largely funded by Saudi and Abu Dhabi money funds. Since 2017, the fund has conducted fundraising campaigns totaling more than $ 8 billion in most of the largest start-ups in the sector. These companies include WeWork Co., a shared office space company, Katerra Inc., a building and architecture firm, and Compass, a residential brokerage firm, which operates in a space similar to Opendoor's.
The Japanese conglomerate is attracted by the real estate sector in part because it is so large and fragmented that even large construction companies and large landowners control only a fraction of the market, according to people familiar with the strategy. of the company.
With a mandate to write big checks, SoftBank's executives focused on start-ups in large sectors where annual expenses reach tens or hundreds of billions of dollars, did they? declared. The value of all US commercial properties is valued at $ 8 trillion, according to real estate broker Savills.
Opendoor is targeting the US residential market, where it believes it can accelerate the sale of homes at the same price as a broker. Squeezing data to make specific offers, it aims to pay sellers a market rate for their homes while charging fees of 6.5%, up from around 8% last year. He then buys the house, cleans the interior and sells the house at the market rate.
Opendoor's strategy is risky because it owns all the houses it sells. While the housing market has strengthened in recent years, it has begun to cool down. Unsold home inventories are rising and homes in a once-hot market are taking longer to sell in a context of moderate price growth. A slower market increases the risk that Opendoor will overpay or have a hard time selling.
Opendoor executives said a slower market could benefit Opendoor by appealing to homeowners who would rather take a quick, all-money deal than play by listing homes on the market. "We can offer it in rising markets, flat markets and bear markets," Wu said. The company also plans to increase the number of services, including buying short-term housing, mortgages and insurance.
Write to Eliot Brown at [email protected] and Laura Kusisto at [email protected]
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