Real Estate Startup Opendoor In Talks To Go Public

Opendoor, a San Francisco-based startup that offers a one-stop-shop for buying and selling real estate, is negotiating to go public with a California blank-check company, Bloomberg reported.

Opendoor is in advanced talks with Social Capital Hedosophia Holdings Corp. II, according to Bloomberg sources. The firm was founded last year to acquire businesses through mergers.

Led by venture capitalist Chamath Palihapitiya, the founder and CEO of Social Capital II is seeking equity to fund the transaction with prospective investors, sources told Bloomberg.

Opendoor and Social Capital II declined to comment to Bloomberg.

If successful, the combined firm would be valued at $5 billion.

Last year, Opendoor raised $300 million, giving it a valuation of $3.8 billion.

That fundraising round included existing investor General Atlantic, Hawk Equity, the SoftBank Vision Fund, Access Technology Ventures, Lennar Corp., Fifth Wall Ventures, SV Angel, Norwest Venture Partners, NEA, GGV Capital, Khosla Ventures and GV.

Like its competitors, Zillow Offers, Offerpad, RedfinNow, Knock and We Buy Ugly Houses, Opendoor promises to pay a fair price for a home in all cash. Sellers bypass working with an agent, finding a buyer, making repairs, open houses and negotiations. Opendoor said its fees range from 5 percent to 6 percent.

But traditional real estate agents, including Florida-based the Erica Diaz Team, say while Opendoor is convenient, homes sold online sell for $15,000 less than on the traditional market. In addition, the agency said while Opendoor advertises single-digit fees, its website says that fees could be as high as 13 percent based on how long the company anticipates it will take to sell a home and comparable home sales.

Social Capital II began trading in April when its initial public offering of 36 million units was priced at $10 per share. On Friday (Sept. 11), it closed at $13.80, a 38 percent rise.

In March, Opendoor suspended its platform, citing public safety concerns due to the spread of COVID-19, HousingWire.com reported.

“Like the rest of the world, we have been closely monitoring the escalation of COVID-19 over the last few weeks,” Opendoor said in a statement at the time.

Since then, its 21 markets have reopened.