Open Listings, the YC-backed startup that lets buyers purchase homes and get a 50% refund on whatever fee their real estate agent would normally make, has raised $6.5M in Series A funding led by Matrix Partners. Initialized Capital and Arena ventures also participated as new investors.
As a refresher, Open Listings is an end-to-end real estate platform for buyers – meaning you can find a listing, book private showings, make an offer and complete all the necessary paperwork prior to sale.
So how does Open Listings do these things without needing an agent? The answer is that the startup actually does use agents, but has segmented much of the process so agents only handle very specific steps of the transaction, resulting in big savings for the startup, which are passed on to the buyer.
For example, after you find a house you want to see in person, Open Listings will find an agent nearby to show you the property, but without letting them take over any other part of the transaction. Essentially Open Listings has found real estate agents with downtime who want to earn extra cash just showing properties, so the startup can still handle the rest of the process.
And when you’re ready to make an offer, Open Listings pairs you with an in-house agent to help you settle on a price and submit it on your behalf. But again, this agent isn’t responsible for searching for their own clients or even finding or showing the buyer a property, which can typically take up to 80% of an agent’s time.
All Open Listing’s agents do is handle offers and closings, meaning they can save time and focus on what actually makes them commission…the actual sale.
And since Open Listings is closing more homes in less time than a traditional agent, they can refund 50% of the commission to the buyer, resulting in an average savings of $8,000.
Ilya Sukhar, the GP at Matrix Partners who led the firm’s investment and will join the company’s board, noted how important these savings actually are for most customers: “Many of the buyers that Open Listings serves are young families, first time homeowners, and immigrants. They put the commission refund toward closing costs, toward moving, toward renovating their place, buying appliances/furniture, etc.”
The team is currently 23 full-time employees based out of Los Angeles, and they are licensed to buy homes in California and Washington State, with 2 more states coming by the end of the year.
Last month they closed a little over 60 homes, with about 300,000 people looking at properties on their site in California in the same period time.