If imitation is the sincerest form of flattery, then Opendoor should be delighted by the business models of ZHome and Amne.
On the heels of Knock and OfferPad, these two additional property-exchange platforms have sprung up in recent months, underscoring a groundswell of interest in a new alternative to traditional listing brokerage.
Like Opendoor, Las Vegas-based ZHome and Austin, Texas-based Amne leverage technology to make quick offers on homes, buy and flip them. The two firms also plan to use new services that Opendoor is testing: helping consumers seamlessly upgrade to a newly built home and serving as a listing brokerage with a guaranteed sales price.
It’s “pretty incredible what that company has been able to accomplish,” said Amne Founder Richard Chang about Opendoor. “I think we’re taking the best elements of what we can learn about Opendoor or OfferPad or Knock and seeing if we can build on that experience here in Austin.” (Offerpad and Knock are two other property-exchange platforms.)
Chang is a former partner at Virtu Financial, a high-frequency trading firm where Chang specialized in commodity and currency trading. A former market maker, he hopes to bring his risk-management expertise to bear in his real estate venture.
Amne is a newborn, but still worth keeping an eye on. It’s partnered with a title company and is in the process of securing a line of credit to buy its first batch of homes.
The company will make a cash offer backed up by a comparative market analysis and aims to allow sellers to close in as little as three days.
Property-exchange platforms charge a service fee typically ranging from 6 to 12 percent and purport to buy homes at market value or significantly closer to it than old-school home flippers.
Speaking to a focus on affordability, Opendoor’s gross margin per property resale is only 2 to 3 percent after factoring in financing costs, Dod Fraser, vice president of capital markets at Opendoor, has said.
Amne also is striving to offer the best possible price to consumers.
“We intend our pricing to be on market and we’re building the pricing engine to reflect that,” Chang said.
The company also may consider listing homes on behalf of homeowners while guaranteeing a minimum sales price.
Under this model, property-exchange platforms try to find a buyer for a home, but will purchase the home at a guaranteed price if they can’t by a certain date. Atlanta-based Knock, which recently raised $32.5 million, has used this approach from the get-go, while Opendoor has since begun testing a similar offering.
Some real estate agents have offered guaranteed-sales programs in the past, but property-exchange platforms are supposed to improve on them by offering a much better guaranteed price.
In another experiment, Opendoor is making it easier for homeowners to upgrade to a newly constructed home through a partnership with the national homebuilder Lennar.
Under this program, homeowners can quickly sell their existing home to Opendoor and buy a new one from Lennar through a coordinated transaction. Opendoor charges a reduced service fee of 6.5 percent for this option while Lennar will pay up to $2,000 in moving costs.
OfferPad also offers “trade in” and “trade up” programs in partnership with homebuilders, placing kiosks in new-home sales offices.
ZHome, an Opendoor lookalike with some traction in Las Vegas, is pursuing similar partnerships with builders.
In announcing its launch earlier this month, ZHome mentioned plans “to partner with homebuilders to provide their homebuyers an alternative way to sell their existing home quickly and easily while upgrading to a brand-new home.” Like Opendoor, it also operates a “trade-in” program that lets homeowners swap in their current home for one of its listings.
Promotional image from ZHome’s website.
ZHome, which didn’t respond to a request for comment, is leading Opendoor by listing count in Las Vegas, advertising more than 35 listings there. It has said it plans to expand into other cities and “expects to compete in numerous markets with other recent real estate startups like Opendoor and OfferPad.”
The firm seems to want the world to know it won’t be making any rookie mistakes.
“ZHome is not a traditional startup company due to its extensive experience in the marketplace,” said Craig Burr, a company spokesperson, in a statement. “The principals of ZHome have been in this business through several housing market cycles.”
Homeowners can get a “hassle-free” offer within 24 hours from ZHome. But unlike some other property-exchange platforms, it looks like ZHome will only make an offer after inspecting a home.
“Some of our competitors will make you an offer, and then after the offer is accepted, they will come back to you and ask for numerous credits for repairs,” the company said on its website last week, appearing to cast its post-inspection offers as a fairer to consumers.
(ZHome appears to have since removed this copy.)
Like Opendoor, ZHome uses smart locks that let buyers visit its listings anytime from 6 a.m. to 9 p.m. everyday, provides inspection reports and a two-year warranty plan to buyers, and covers 1 percent of closing costs if buyers use a “preferred lender.”
