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Opendoor raises $400M

Masa’s SoftBank continues to deploy war chest

Opendoor’s CEO Eric Wu (Credit: Opendoor)

House-flipper Opendoor has raised $400 million from SoftBank at a valuation north of $2 billion. This brings the total equity raised to $1.045 billion. according to TechCrunch.

How it works: Opendoor makes an offer to buy an owners house within 24 hours of an online submission. Although the seller gets less money by foregoing a traditional marketing process, the startup offers convenience and certainty. 

How they monetize

  1. Commision: OpenDoor charges around an 8 percent fee from the seller. 
  2. Buy and Flip: After acquiring the house, OpenDoor makes basic improvements and re-sells it. 
  3. Side services: The firm offers title insurance services and helps buyers secure mortgages.

Takeaway: Key to success in the real estate tech space is to utilize technology and work within the confines of the existing market model. Although the company raises money as a tech unicorn, their strategy isn’t novel.

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