A San Francisco-based startup that helps people sell their old homes and simultaneously moves into new ones is partnering with Miami-based homebuilder Lennar Corp., and amassing real estate funding to more than double its footprint nationwide this year.
Lennar provided $100 million in debt to Opendoor to go with $35 million in recently raised equity from the LA-based real estate-backed venture capital firm Fifth Wall Ventures, according to Bloomberg. The partnership has Opendoor helping Lennar customers sell their old homes and move into their newly built ones.
Opendoor’s so-called trade-in program works like this: a buyer first lines up any home on the MLS. The person then sells the old home to Opendoor, closing on both in the same day and moves. Opendoor invests in repairs to the old home when necessary, and lists it on the market. The company says its average service charge is 7 percent and can close a sale of a client’s old home in as quickly as three days. But it added that customers care more about the getting a fair market value offer quickly — within 24 hours — and then closing on their timeline. That would eliminate eliminate double moves, double mortgages, and would give them the chance to make a stronger offer on a new home, the company said.
Lennar specializes in single-family homes in planned communities and became the largest U.S. homebuilder in October when it agreed to purchase CalAtlantic Group in a cash and stock deal worth $9.3 billion. Combined, they recorded more than $17 billion in deals in 2016 and have an interest in more than 240,000 homes in 49 markets nationwide. It recently purchased a 30-acre development site in Davie, Florida approved for 180 townhomes for $9.65 million.
Fifth Wall was founded in 2016 and has since raised hundreds of millions of dollars for what it calls the first fund backed by real estate money that only invests in property tech startups. CBRE, Prologis, Hines, and Equity Residential are among its investors. Fifth Wall invests in startups that have technology its clients want to use to fund the development of their products, and connects them with their clients, and did so with Lennar and Opendoor. [Bloomberg] — Dennis Lynch