CoStar brings it Home
Did you think CoStar was giving up on residential real estate?
After attempts to buy RentPath and CoreLogic fell through, the data giant struck a deal to buy listing platform Homes.com for $156 million in cash, the companies said last week. Homes.com claims to have 1.8 million listings and could bring CoStar up to $10 million in additional revenue during the second half of the year.
Last year, CoStar shelled out $250 million to buy Homesnap, giving it a foothold in the residential sales market.
“Management has made it very clear that their next conquest is to become one of the dominant providers of solutions for the residential housing market,” JPMorgan’s Sterling Auty wrote in an April 14 research note.
In November, CEO Andy Florance estimated the value of residential property was $27 trillion, compared to commercial real estate’s $16 trillion. But other than Homesnap, its recent foray into the space has been rocky.
Although CoStar reached an agreement to buy RentPath for $585 million, RentPath pulled out last year after federal regulators opposed it for competitive reasons. (This month, Redfin completed its acquisition of RentPath for $608 million.) CoStar also bid on CoreLogic, offering as much as $7.35 billion.
After CoreLogic rebuffed CoStar’s offer, CoStar retreated citing rising interest rates. “With interest rates moving up, now is not the time for us to aggressively buy into the residential mortgage market,” CoStar CEO Andy Florance said at the time.
Apparently, those interest rates are looking pretty good again.
“Our plan … is to help agents market their listings in support of the ‘your listing, your lead’ philosophy – which stands in contrast to most players in the industry.”
Will apps get us back to the office?
Big landlords have discounted rents and dangled amenities to entice workers back to the office. Now, they’re using their checkbooks to back “tenant experience” startups.
Cushman & Wakefield, JLL and DivcoWest participated in a $60 million funding round closed this week by HqO. The Boston-based startup has a platform that lets landlords manage tenant-facing tech and amenities. HqO also has a tenant app, analytics tool and marketplace.
Office vacancy in the U.S. rose to 17.7 percent at the end of 2020.
HqO isn’t the only tenant experience app out there: VTS struck a deal to buy Rise Buildings for $100 million and Lane raised $10 million in May.
Also this week, people-counting startup Density said it raised $25 million from prior backers, including Kleiner Perkins, 01 Advisors, Founders Fund, former baseball slugger Alex Rodriguez and others. The round brings Density’s total funding to over $100 million.
The New York-based startup was co-founded by CEO Andrew Farah in 2014 as a way to see if one of his favorite coffee shops was full. Clients include Pepsi, Delta, Verizon, Uber, Marriott and ExxonMobil. Density uses depth measuring hardware and AI to assess crowds.
Telemedicine for the home
The burgeoning market for home-maintenance technology has crowned another winner.
HomeX, a startup that connects homeowners with licensed technicians, raised $90 million after demand for its remote service tool surged 400 percent over the last 12 months, the firm said. CEO Michael Werner called it “telemedicine for home services.”
The Chicago-based firm was founded in 2017 by Werner, whose family started Werner Ladders, and Vincent Payen, a longtime eBay executive. CTO Simon Weaver previously worked at Evi, an AI startup acquired by Amazon as the foundation for Alexa.
The startup’s platform works in a few ways: For consumers, HomeX uses AI to diagnose problems before techs go out in the field. For contractors, it qualifies leads and automates bookings. “You have to provide consumers with the kind of digital, frictionless experience they’re looking for,” Werner said. “You have to help contractors prosper.”
STAT OF THE WEEK
4M
How many homes are needed to close the U.S. housing-shortage gap, per Freddie Mac
Opendoor boosts buying criteria by 35%
Opendoor is going after a bigger piece of the U.S. housing market.
The iBuyer, which went public in December, raised the price ceiling on homes it is willing to buy across the U.S. For example, in Los Angeles it will now purchase homes up to $1.4 million, up from $900,000. It is now also willing to buy older homes (circa 1930s to 1950s, compared to 1960s and 1970s), as well as homes in gated and retirement communities.
Overall, Opendoor is expanding the parameters of homes it will buy by 35 percent, Amit Arora, senior director of investment strategy, operations, and analytics, wrote in a blog post. The company cited tight inventory and rising prices as reasons for the change. The annual median home price is expected to rise 8 percent in 2021, according to the National Association of Realtors.
Landlords still want Amol Sarva to pay up
Amol Sarva lost control of Knotel. But the flex-office founder hasn’t been able to shake off landlords going after him for unpaid rent.
Over the past year, more than 20 lawsuits were filed against Knotel or Sarva; most recently, Knotel’s landlord at 30 Cooper Square alleged Sarva personally guaranteed the company’s lease. The landlord is seeking $11 million, reported Crain’s.
Knotel filed for bankruptcy in January and was later acquired by Newmark. The company subsequently ousted Sarva and top Knotel staff, replacing them with Michael and Eric Gross, former WeWork executives.
In an email this month, Sarva said he was “so disappointed that this was the direction pressed.”
Doorstead nabs $12.5M to guarantee rents
Mortgage startup Maxwell just raised $16.3 million to help small and mid-sized lenders streamline their business.
roperty management startup Doorstead is taking the guesswork out of asking rents.
The San Francisco-based startup uses data to determine a landlord’s optimal asking rent, and then guarantees that rental income will start flowing within 24 hours. The company, which just raised a $12.5 million Series A, handles showings, screens prospects and negotiates rent.
Doorstead was founded in 2019 by Ryan Waliany and Jennifer Bronzo, who previously worked at Uber. It has now raised $17.3 million. The recent funding round was led by Madrona Venture Group, an early backer of Redfin. Other investors include Opendoor, Uber and Docusign executives.
According to Doorstead, business grew 50 percent each quarter in 2020. The company claims it has $10 million in rent under management.
A number of other startups are tackling rent payment problems. Flex, Till and NestEgg put renters on flexible payment plans, which they say reduces delinquencies. Flex, NestEgg and Zumper offer landlords rent guarantees.
Small bytes
📈 JustKitchen, a cloud-kitchen startup, completed a direct listing on the Toronto Stock Exchange after raising $8M at a $30M valuation.
🧂 Saltbox, a flex-warehouse startup, raised a $10.6M Series A.
🛎 Amenify, a concierge platform for apartment buildings, raised $4.8M.
🌬 Oxygen8, which makes HVAC systems to improve indoor air quality, closed a $4M seed round.
💸 Casa Blanca, which is building a Bumble-like app for real estate, raised $2.6M. Potential buyers swipe left or right on homes and get up to 1% back at closing.
🏡 Humming Homes, a home-management startup, raised an undisclosed amount from New Valley Ventures.
👂 NoiseAware, which makes noise monitoring products for homeowners, raised $8M.
🏡 WeWork founder Adam Neumann sold his California estate for $22.4M.
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