Instant buyer Open door acquired a tech-focused mortgage brokerage firm Red door, the companies said on Friday.
The purchase comes amid questions as to whether iBuying is a viable business model after Zillow announced on Tuesday that the company is ending its iBuying branch.
Founded in 2018 and based in Sacramento, RedDoor calls itself the “first digital mortgage brokerage” that can pre-approve a loan applicant “in 60 seconds,” likely what attracted the iBuyer.
The company has funded more than $ 200 million in mortgages and partnered with more than 70 lenders, according to its website. RedDoor will be renamed to be part of Opendoor.
An Opendoor spokesperson declined to discuss the cost of buying RedDoor, and messages left at RedDoor have not been returned.
I Buying is empirically a losing money industry, even in the midst of a historic housing boom. But some investors see add services including the mortgage as a possible way for iBuyers to make a profit.
Opendoor launched Opendoor Home Loans in 2019, and the mortgage issuer today operates in 26 markets and eight states. However, one of those states is not California, where RedDoor is licensed to do business.
The current size of Opendoor Home Loans is not entirely clear as the company has not broken down its profits. Opendoor holds $ 25.4 million in mortgages held for sale under a June 30 repurchase agreement, according to a public record.
According to a blog post from Tom Willerer, Opendoor Product Manager, the company heard about RedDoor for the first time: “From someone at Opendoor who had a fantastic experience working with them – in fact she called RedDoor“ magical “. We immediately contacted co-founders Heather Harmon and Ali Mackani. “
Chief Operating Officer of RedDoor, Harmon has a background in real estate. She is still a broker and CEO of Harmon Real Estate in Auburn, California, according to her LinkedIn profile.
Mackani is the CEO of RedDoor. His previous experience includes being part of an ultimately successful effort to maintain the National Basketball Association Kings in Sacramento.
RedDoor appears to have only a handful of loan officers, who are salaried and do not receive any commission.
The RedDoor deal is one of several announcements Opendoor has released ahead of the company’s earnings call next Wednesday.
The company – which has repeatedly maintained it was “open for business” amid Zillow’s struggles – announced a “real-time offers” partnership with Realtor.com, a new technological platform (Full open door), and one hiring plan in Canada all within the last 10 days.