Sequoia leads $ 13 million investment in Aalto, an online marketplace that allows owners to sell directly to buyers – TechCrunch
If you’ve ever sold a home, you know how difficult it is to go through the process of listing, submitting, and negotiating to sell your home.
It’s so painful that a lot of people put it off for as long as possible because they don’t want to face it. The result is less housing on the market, exacerbating existing housing shortages in already strained markets such as the San Francisco Bay Area.
In an attempt to fix the problem, a startup called Aalto has created a new kind of market for homeowners. This is a private service that does not rely on MLS and gives sellers more control over how and when their homes are listed, presented and sold. Today Aalto steps out of stealth and announces that it has raised $ 13 million in a Series A funding round led by Sequoia Capital.
Background capital, Challenge partners, Maple VC and Greg Waldorf – Trulia’s first investor – also participated in the financing, bringing the total raised to $ 17.3 million by Aalto since its inception in 2018.
Aalto’s online marketplace, which launched in April of this year, connects owners directly with buyers. The company says a potential seller can list their home on their platform in five minutes, rather than a typical process that’s closer to five weeks. Since launching in the Bay Area, Aalto has built a network of over 30,000 buyers and more than two dozen homes have been sold through the market. Currently, around 85 homes are listed on its platform, with an average of one new home added per day.
Ironically, Aalto founder and CEO Nick Narodny is the son and brother of real estate agents. He concedes that the startup’s platform could be seen as a threat to the industry, but notes that the trade-off is for more homes to hit the market, which helps minimize the region’s affordability crisis. , and sellers see higher returns.
Currently 5-10% of the total on-hand inventory listed in competitive markets such as Dublin, Fremont, Mill Valley and Milpitas are listed on the Aalto platform. And, Narodny said, the company is set to bring more homes to market sooner.
“Buying or selling a home is one of the most important things people will ever experience, but it’s also a tedious and outdated process,” he said.
Aalto aims to double the number of homes on the market in the Bay Area by streamlining the way homeowners can list, without the third parties or contracts required elsewhere. This drastically lowers the bar for selling, according to Narodny, putting homes on the market an average of four and a half months earlier than traditional real estate processes.
The platform offers a list preview feature that allows sellers to sign up without obligation. They can also build a waiting list of qualified buyers for their home while they are considering a sale.
“We extract the tax file and the information to make it very easy and ask the seller to fill out a Q&A,” Narodny said. After filling in this information, sellers can then see interested buyers and buyers who are prequalified or who can make all cash offers.
The process is also less intrusive, Narodny said, giving the seller more say over who sees their home and when. For example, salespeople can also organize virtual or in-person presentations on their own schedule. And they can sell the homes on time, whether it’s in a few weeks or a few months.
For example, a San Francisco-based hand surgeon recently listed his home on the Aalto platform with the desire to move in late October. Over two dozen people were interested and he allowed a few people to tour the house. He was able to sell the house on a schedule that was more advantageous to him.
“People can sell totally on their terms and are much more connected in the process,” Narodny said. Busy professionals such as the surgeon and individuals with directorial and above titles as well as growing families are so far among the most common sellers on the platform.
There is also an economic advantage. By removing a middleman or agent from the process, sellers can earn an average of $ 44,000 more on the sale of their home, according to Narodny. The startup charges a 1% fee, compared to the 2-2.5% commission charged by an agent. But if a salesperson needs help “with the tough stuff,” Aalto has “expert and trusted” people.
The ability to customize the list appeals to some. Sellers can create descriptions of their homes in a way that feels more personal than if an agent did, according to Narodny.
“We ask them to tell their own story of their home,” he said.
The approach also gives them more privacy. For example, an MLS will show when a house has been listed and any price reductions. A home listed on Aalto will not include any of this information. Also similar to Airbnb, the seller’s exact address is not shared, just a radius.
The advantage for buyers – in addition to having more options – is the capacity to set up instant alerts, join waiting lists and schedule screenings on one easy-to-use platform. They can also “prequalify anonymously and share that with a seller,” Narodny said.
Bryan Schreier, partner at Sequoia Capital, considers real estate “one of the last giant industries with an experience of the 1900s”.
“It’s a painful process where the seller has limited visibility and the buyer holds their breath after each offer,” he said. “Aalto is the first company to reinvent the way homes are bought and sold by putting the consumer first. It goes way beyond an ad site and reinvents every aspect of the experience to be customer oriented rather than real estate agent oriented.
Going forward, the company plans to expand beyond the Bay Area to other major metro real estate markets in California and across the country. It also plans to use its new capital to continue improving its technology.
Meanwhile, Narodny insists that while the platform may be viewed as a threat by some agents, it is not a malicious thing.
“My family and I are very close. It’s something I talk about a lot with them, ”he told TechCrunch. “I think Aalto is really additive. We still work with them every day and will continue to… It’s not like the agents are totally replaced.