An Ottawa-based online home auction platform that’s aiming to reduce blind bidding on properties has raised nearly $34 million in seed capital as it gears up to expand across the country.
Unreserved, which allows prospective homebuyers to bid on properties in real time while guaranteeing sellers a minimum price, said this week it’s brought in $33.85 million from a series of investors.
Founder and CEO Ryan O’Connor says he contributed $10 million of his own money to the startup, which launched last summer and has since sold 80 properties in the National Capital Region worth a total of $60 million.
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Other investors include Dmitri Vodiansky and John Hinton, two of O’Connor’s partners in online car auction venture E Automotive, Jason Chapnik of merchant bank Intercap Equity and Simon Dean, the former president of Royal LePage.
“Houses are going up in price. We can’t control that. But what we can do is make (the buying process) fair.”
O’Connor says the cash will help finance Unreserved’s move into markets such as Toronto, where the firm expects to auction its first property on Friday. The firm also plans to beef up its staging capabilities and add new features to its platform as it seeks to bring more transparency to the home-buying process.
“We strongly feel that technology needs to play a bigger role in the buying and selling of homes,” O’Connor says. “Houses are going up in price. We can’t control that. But what we can do is make (the buying process) fair. Nobody’s overpaying 100 grand over the next bid because they’re going in blind. We don’t have buyer’s remorse.”
O’Connor says interest in the platform is skyrocketing, noting 2,800 people watched the closing moments of the sale of a two-storey detached home in Barrhaven Thursday in real time – with many of them offering running commentary on the bidding.
“The audience for this is just getting bigger and bigger,” he says.
1% auction fee
The platform allows prospective buyers to see every bid that comes in the instant it’s submitted, with the chance to counterbid. That means no one is left making a blind offer and crossing their fingers that it’s a winner, O’Connor explains.
While realtors typically earn a four to five per cent commission, Unreserved charges a one per cent auction fee to sellers. The company also inspects all houses before listing them and offers a one-year warranty that covers essential work such as roof and foundation repairs to a maximum of $100,000 with a $5,000 deductible.
Unreserved’s employee count has tripled from 30 to 90 since August as it scrambles to keep up with the growing number of auctions on its docket. O’Connor expects the workforce to exceed 150 by the end of the year as the venture builds out its footprint in the GTA and prepares to push into other Ontario cities such as Kingston, Kitchener and London and cross the river into Gatineau.
‘Ton’ of growth potential
The former competitive boxer sees almost an unlimited ceiling for Unreserved. Agents affiliated with the Ottawa Real Estate Board sold nearly $14 billion worth of properties last year, and O’Connor says it’s not a stretch to think the company can grab as much as half a billion dollars of that pie – translating into $5 million in commission revenues.
“There are some agents that view us as a bit of a threat, but there’s a ton of business for everyone to go around,” he adds. “Competition makes everyone better.”
O’Connor says he’ll set his sights on western Canadian cities such as Vancouver once Unreserved has broken through in Ontario and Quebec. While the massive U.S. market is a tempting target for any Canadian entrepreneur, he says he has no plans to take the concept south of the border any time soon.
“Anything’s possible, but the market is so big in Canada right now,” O’Connor says. “We want to focus on becoming a major player here in Canada before even entertaining anything in a different country.”