Spencer Rascoff, Zillow’s co-founder and longtime former CEO, along with Austin Allison, the founder and CEO of dotloop, announced Thursday the launch of Pacaso, which allows prospective buyers to co-own second homes with other vetted buyers.
“We think about this as a new category of second homeownership,” Allison, who will serve as the startup’s CEO, told Inman. “There are 30 million second homes across the U.S. and Europe, our first two geographies, and while the concept of families buying houses together has been around for years, it’s never been done at scale.”
The vast majority of second homes sit vacant for 10 to 11 months out of the year, while there are millions locked out of owning a second home due to the cost or hassle of managing the property, Allison explained.
The do-it-yourself model of co-ownership poses a number of arduous barriers: you have to formulate a limited liability company, create operating agreements, organize co-owners and put together complicated financing, according to Allison.
Beyond the transaction, there’s also then the management of the property — what the design aesthetic will look like, with what appliances will the home be outfitted and who will take care of the maintenance. Pacaso, according to Allison, will cover all of that.
When you buy into a Pacaso home, you also buy into a design standard, which includes the furniture and type of appliance.
“We’ve come up with a true ownership model that eliminates all those problems,” Allison said. “We basically handle everything from aggregating the buyers, to financing, to managing the property, all the way through making the sale of your Pacaso seamless.”
To cover the management costs, Pacaso charges a fee that equals 1 percent of the total transaction. The company also marks up the sales price of each home 10 percent.
Pacaso will work directly with real estate agents in each market, paying, at minimum, the “full real estate commission,” on both sides of the deal. In many cases, agents are making two to three times that, because each property will inevitably require multiple transactions since it’s being co-owned.
“When we first thought of this business, one of the things that we wanted to make sure we were really leaning into was creating a partnership program that would be really interesting and motivating for our real estate agent partners,” Allison said. “We are not a real estate brokerage, we do not have real estate agents — we partner with great real estate agents in every local market we’re in.”
Elizabeth Olcott, a real estate team leader with Keller Williams Napa Valley: Elizabeth Olcott & Associates, has been involved with Pacaso since its soft launch in Napa Valley. She’s generated more than $175,000 in gross commission income in the three months she’s worked alongside the company.
Working with Pacaso has also brought Olcott a high-end listing, and she’s converted those looking for whole home ownership into sales. “It’s definitely been a nice add to my business,” she said.
Olcott has also seen first hand the reception that buyers have given Pacaso. Since the COVID-19 pandemic hit, inventory has been way down, with the higher end homes snapped up quickly, Olcott said.
“Any time a property goes on the market, for the next two days, I would say anywhere between 75 and 100 calls come in,” Olcott said. “Some of that is people being curious, but there are plenty that are serious.”
The company is being launched with a cadre of former Zillow leaders, including chief marketing officer Whitney Curry, chief revenue officer Andreas Madsen and chief technology officer Daivak Shah.
It’s the third venture for Rascoff this year. Rascoff vacated the CEO role at Zillow, which he occupied for nearly a decade, in February 2019, and this January, he launched Dot.LA, a news service focused on the technology scene in Southern California. And just earlier this week, filings from the U.S. Securities and Exchange Commission revealed Rascoff is co-chairing a newly created special-purpose acquisition company (SPAC), with the intent of finding a tech unicorn to take public.
In addition to the involvement of Rascoff and Allison, Zillow’s former president of media and marketplaces Greg Schwartz is among the first individual investors. Pacaso has raised $17 million in Series A funding with Maveron leading the round and additional investment from Crosscut and Global Founders Capital. Individual investors include Schwartz, former Starbucks CEO and chairman emeritus Howard Schultz, real estate coach Tom Ferry and Amazon executive Jeff Wilke.
The company also secured $250 million in debt financing to assist in homebuying.
“The mission of Pacaso is to democratize second home ownership, a luxury to which millions of American aspire but which seemed previously inaccessible, and is more important than ever as people seek safety, security and serenity amid Covid-19,” Rascoff said, in a statement.
“Nearly every member of Pacaso’s team has experience turning an innovative idea into a company with a household name. From Hotwire to Zillow to dotloop, our team has taken entirely new concepts and created innovation and processes to make them a reality,” Rascoff added. “With this team in place and with $267 million in funding and debt, Pacaso is poised to scale incredibly quickly.”