These real estate startups are raising funds to change the buying/selling process

It's no secret that the process of buying and selling a house is daunting. 

But as we’ve seen across multiple industries in the startup world, the right mix of emotional upheaval and logistical headaches can provide ripe soil for disruption.

Enter the residential real estate startup market where we’re seeing a variety of models play out. While some companies promise lower commissions than traditional brokerages, others buy homes so consumers don’t have to put them on the market. Still others give homeowners a chance to trade in their house and a number of other iterations abound.

Besides talking to a couple of these startups, we’re also going to attempt to quantify this market by looking at the data.

In 2018, American-based real estate companies as a whole raised a combined $4.99 billion across 105 transactions, according to Crunchbase data. While that’s down from the $5.8 billion raised in 95 deals in 2017, it’s still a staggering 10 times higher than the $520 million raised by such startups in 2013, as you can see in the chart below.

For the purposes of this piece, Crunchbase focuses on companies in the residential real estate space. Of that $4.99 billion raised in 2018, startups in the North American residential real estate category raised a total of $532 million in the first half of 2018. That was up from 45 companies raising $314 million in all of 2017.

Where We Are Today

2019 is starting out strong. According to data by Crunchbase (keeping in mind that all deals have likely not been reported yet), there has been $1.9 billion invested in 32 general real-estate related venture deals during the year so far.

In January, REX, a licensed residential real estate brokerage using AI and big data, closed on a $45 million Series C round. Also in January, New York-based online home selling platform Knock.com raised $400 million in a Series B round that was a mixture of equity and debt. Then in March, Arizona-based online homebuying startup Offerpad closed a $565 million Series C round and San Francisco-based Opendoor raised a $300 million Series E at a pre-money valuation of $3.8 billion.

Bottom line: If these massive rounds are any indication, 2019 is likely to surpass last year’s numbers. In the meantime, we talked with two of those massive first-quarter funding recipients, Knock and Offerpad, in an effort to better understand the space.

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