Open Listings — an online startup that offers on-demand showings, minimized agent interaction and 50 percent commission refunds to buyers in California and Washington — has raised $6.5 million in Series A funding led by Matrix Partners. Initialized Capital and Arena ventures also participated as new investors in this round. This brings their total funding to $12.5 million.
The startup launched in February 2015, with the promise: “Shop without an agent. We’ve got your back.”
What does Open Listings do?
Open Listings provides current market analyses, compares for-sale listings, and will contact a listing agent on a buyer’s behalf when they’re ready to make an offer.
Buyers can view properties from a personalized feed on their desktop or the company’s app. From there, buyers can request that a local partner agent take them to private showings of homes they like.
Once buyers have zeroed in on the home they’d like to purchase, they must provide a pre-approval letter or proof of funds based on if they’ll use a mortgage loan or pay in cash. Next, they complete the offer and closing process all online with the help of an in-house Open Listings agent.
Why did Open Listings reduce its rebates?
Originally, Open Listings rebated buyer’s agent commissions to users minus a flat fee of $5,000. But the brokerage now rebates 50 percent of the buy-side commission when the commission is $5,000 or more.
Co-founder Judd Schoenholtz says the switch was due to the confusion that some buyers had about the flat-fee model.
“The messaging around ‘getting back half of the commission’ has resonated more clearly in an industry where many buyers don’t understand how their agent gets paid,” he said in an emailed statement. Futhermore, Schoenholtz says the switch allowed Open Listings to have a dedicated support team and provide on-demand showings.
In addition to receiving commissions, all in-house agents receive a salary, 100 percent paid benefits, 401K matching and other perks.
A visualization of how Open Listings’ commissions work.
Open Listings says its process allows in-house agents to be more effective since they aren’t responsible for showings or searching for clients, which they estimate takes up to 80 percent of the average real estate agent’s time.
“The key thing here is that we make sure that buyers have the right agent available to help them at the right time,” said Schoenholtz. “Traditional agents try to cover the whole process but often underperform in specific areas and are required to spend much of their time finding new clients.
“We have different teams of agents that are focused on making the buyer’s experience as smooth as possible at each step, whether it’s researching properties, tracking down answers to specific buyer questions, helping buyers get pre-approved, providing on-demand showings, or fully supporting them from offer negotiations to closing,” he added.
All of this, Schoenholtz said, results in buyers getting a streamlined experience they can have at their own pace at less cost to them.
The rebates given at Open Listings’ latest closings. Click the picture to review the complete list.
Real estate professionals and experts have noted the similarities to Redfin’s model in terms of how they pay agent commissions, and their policy for showing listings is similar to QuikShow, an app that allows buyer’s agents to hire an agent to show properties to their clients.
Ilya Sukhar, the general partner at Matrix Partners who led the firm’s investment and will join the company’s board, says Open Listings’ tactics especially benefit buyers who have been pinpointed as having the most difficult time stepping into homeownership — 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.,” Sukhar said in an interview with TechCrunch.
The Los Angeles-based company currently has 23 full-time employees and is planning to expand to two more states by the end of the year. In June, they closed more than 60 homes, with approximately 300,000 people looking at properties on their site during the same time period.
