A marketplace for transactional real estate

Companies such as Opendoor use algorithms to buy and flip houses in Brazil and the US, while Loft, a Brazilian real estate startup, are doing the same in their country of origin. This has become recognised as “iBuying” But that might not be the end game. They are seeding a marketplace, so you’re still facing a chicken-and-egg dilemma in every new two-sided marketplace. If you don’t have demand you can’t draw supply. And if you don’t have an bid you can’t attract demand.

This broader vision is pretty obvious when going over the investment announcement by a16z that says Loft are developing a transactional marketplace for the world’s largest asset class, beginning in Latin America’s largest market, on a time scale that makes it hard to believe that less than a year has passed since the PowerPoint. They purchase houses, repair them (often in compliance with formulaic requirements given by active buyers), and sell them โ€” what is now known as i-buying โ€” with the goal of making this into a transactional market place.

If successful, these companies will transform the purchase and sale of homes from just “iBuyers” to fully fledged marketplaces. And when this happens (I think it’s a when), it will definitely mean drastic changes to the landscape of the commissions. More than $100 billion in residential real estate commissions are paid out every year across the U.S. today.