Former PayPal and Square exec Keith Rabois, now a partner with Khosla Ventures, is closing in on the launch of his new real estate company, which promises to let homeowners sell their houses online in just three clicks. In a recent interview, he said the company is working on closing an investment round and hopes to launch next month.
Rabois has brought on three co-founders — Eric Wu, Jd Ross and Ian Wong — along with another three employees to get the company, currently going by the name Homerun, off the ground. Wu has worked for other real estate companies, including Trulia, and Wong is a former Square data scientist.
Rabois has said he’s long been looking to execute this idea with the goal of stripping out the complexity of home-selling. Homeowners will need to simply enter their street address and verify their identity in some way to list their house or apartment. They will also likely have to input the price they want for their home.
The Homerun team will then analyze both public and proprietary databases to determine whether the selling price is a fair one. He declined to provide any other details on their analysis methods.
“It’s a classic Silicon Valley data problem,” he said.
If the price is not accepted, it’s not clear if Homerun will provide a counter offer. Rabois wouldn’t talk about the process that takes place after a price is agreed to, other than to say it’ll be “easy” and the homeowner won’t have to retain a lawyer.
Sound too good to be true? There is, indeed, a catch. Homeowners looking to sell through the service should be prepared to sell for a discount.
“All markets have a discount for liquidity,” Rabois said. “The question is what is the right discount.”
He said the price discounts will be “much less” than the approximate eight percent discounts car owners are hit with on average, according to Rabois, when they trade in vehicles at dealerships.
I told Rabois that the fact that selling on the platform likely means a lower-than-market-value price makes me think the service will appeal to people in financial trouble. He acknowledged this possibility, but believes that the service will attract homeowners looking to upgrade to a nicer home but who need to sell quickly to secure a mortgage for the new home.
Another target group could be professionals who have to move for work and would rather not let their home sit empty while on the market or be forced to rent it out.
So who is actually buying these homes from the sellers? This isn’t an open marketplace, so not individual buyers. Homerun, or whatever name the company ends up going by, will be the buyer and then look to sell the house quickly for a profit. Call it big-data house-flipping.
“We will be very efficient and very fast in reselling the home,” Rabois said.
How? Rabois, again, declined to say.
And where will Homerun get all that cash needed to buy all these homes, should the service find success?
“Bitcoin,” Rabois said.
“I’m just kidding,” he continued. “Obviously that’s one of the key pieces of this puzzle … access to the right capital at the right prices. That and being able to value [the property] sight unseen.”